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CHICAGO CONFERENCE
ON TRUSTS
SPEECHES, DEBATES, RESOLUTIONS,
LIST OF THE DELEGATES,
COMMITTEES, ETC.
GEORGE W. ATKINSON
Governor of West Virginia
W. A. POYNTER
Governor of Nebraska
HAZEN S. PINGREE
' Governor of Michigan
W. E. STANLEY
Governor of Kansas
EDWARD SCOFIELD
Governor of Wisconsin
CHICAGO CONFERENCE
ON TRUSTS
SPEECHES, DEBATES, RESOLUTIONS,
LIST OF THE DELEGATES,
COMMITTEES, ETC.
Held September ijth, iflh, ijth, i6th t 1899
CHICAGO
THE CIVIC FEDERATION OF CHICAGO
1900
COPYRIGHT, 1899
By FRANKLIN H. HEAD
CHICAGO
ci
Cfjt Uafctsftit $rtss
R. R. DONNELLEY & SONS COMPANY
CHICAGO
LOCAL COMMITTEE OF ARRANGEMENTS FOR
CHICAGO CONFERENCE ON TRUSTS.
FRANKLIN H. HEAD, President Civic Federation of Chicago, Chairman.
RALPH M. EASLEY, Secretary Civic Federation of Chicago, Secretary.
LAWRENCE E. MCGANN,
Commissioner of Public Works.
WILLIAM C. HOLLISTER,
Hollister Brothers.
F. W. MORGAN,
Manufacturer of Rubber Goods.
E. S. LACKY,
Ex-Comptroller of the Currency.
A. C. BARTLETT,
President National Association of
Merchants and Travelers.
E. G. KKITH,
Pres't Metropolitan National Bank.
A. M. COMPTON,
Credit Man, John V. Farwell Co.
JOHN W. ELA,
General Counsel National Business
League.
ALEXANDER H. REVELL,
Wholesale Furniture Dealer.
W. D. KERFOOT,
City Comptroller.
GRAHAM TAYLOR,
Warden Chicago Commons Social
Settlement.
LA VERNE W. NOYES,
Manufacturer.
HENRY S. TOWI.K,
President Chicago Bar Association.
JOHN M. STAHL,
Sec'y Farmers' National Congress.
WILLIS YOUNG,
President Northwestern Traveling
Men's Association.
Y\"M. R. HARPER,
President University of Chicago.
D. K. CLINK,
Past Counselor United Commercial
Travelers.
R. S. LYON,
President Board of Trade.
W. B. CONKEY,
President Illinois Manufacturers'
Association.
M. W. PHALEN,
President Traveling Men's Protect-
ive Association.
EmvARD CARROLL,
President Building Trades Council.
JAMES O'CONNELL,
President International Association
of Machinists.
CHARLES W. GINDELE,
President Builders' and Traders'
Exchange.
HENRY WADE ROGERS,
President Northwestern University.
GEORGE A. SCHILLING,
Ex-State Labor Commissioner.
JAMES H. ECKELS, .
Ex-Comptroller of the Currency.
HARRY P. ROBINSON,
Editor Railway Age.
GEO. R. PECK,
General Counsel C. M. & St. P. Ry.
Co.
FRANKLIN MACVEAGII,
Wholesale Grocer.
PAUL J. MAAS,
Ex-Organizer American Federation
of Labor.
JOSIAH L. LOMBARD,
Ex-President Civic Federation of
Chicago.
ROBERT J. BENNETT,
Wholesale Grocer.
WILLIAM A. GILES,
Capitalist.
A. F. GARTZ,
Treasurer Crane Company, Machin-
ery Manufacturers.
ALFRED L. BAKER,
President Chicago Stock F.xchangc.
CONTENTS.
HENRY C. AoAMS/Statistician Interstate Commerce Commission and
Professor Political Economy, University of Michigan. A
Statement of the Trust Problem. 35
J. DANA ADAMS. How to Judge the Right of the Trusts to Live 544
EDWARD C. AKIN, Attorney-General of Illinois, representing Gov-
ernor John R. Tanner. Address of Welcome. 9
G. W. ATKINSON, Governor of West Virginia. Benefits and Hard-
ships of Combinations. . . . ; 98
HENRY D. BAKER, Associate Financial Editor New York "Evening
Post." Trusts an Early Incident, but no Longer the Product of
Present Prosperity 422
EDWARD W. -BEMIS, Bureau of Economic Research, New York.
Trust Evils and Suggested Remedies : A Problem for a Genera-
tion to Setttle 394
HENRY W. BLAIR, of New Hampshire ; ex-U. S. Senator. The Tariff
Not Mother of Trusts, but Mother of American Wealth and
Power 604
CHARLES J. BONAPARTE, Attorney, Baltimore. Trusts a Natural
Industrial Feature and Should Not Suffer Legislative Restraint. 620
JOHN GRAHAM BROOKS, Lecturer University of Chicago. Are the
New Combinations Socially Dangerous ? 57
WILLIAM JENNINGS BRYAN. The Man Before the Dollar: Society
Not Enthralled to an Institution Solely Because the Institution
Exists : The Remedy of Congressional License 496
WILLIAM JENNINGS BRYAN. Reply to Mr. Foulke 582
I. D. CHAMBERLAIN, Executive Committee Order Knights of Labor.
The Trust as a Conspiracy Against Civilization 366
JOHN BATES CLARK, Columbia University. The Necessity of Re-
straining Monopolies While Retaining Trusts 404
W. BOURKE COCKRAN. Effect Produced by Combinations, Whether
of Capital or Labor, upon the General Prosperity of the Com-
. munity 462
W. BOURKE COCKRAN. Reply to Mr. Bryan and Answers to Various
Questions 5^6
COMMITTEE ON ORGANIZATION AND PROGRAM 96
COMMITTEE ON RESOLUTIONS 262
JOHN B. CONNER, Chief Indiana Bureau of Statistics. Neglect of
the Old Principle of "Public Benefit" in Recent Corporation
Laws 340
STEPHEN P. CORLISS, New York Traveling Men's Association.
Trusts : Their Abuses and Remedies 136
E. C. CROW, Attorney-General of Missouri. Restraint of the Cor-
poration I0 6
JEFFERSON DAVIS, Attorney-General of Arkansas. The Arkansas
Anti-Trust Law 271
JAMES B. DILL, North American Trust Company. Overcapitaliza-
tion and Concealment 568
P. E. DOWE, President Commercial Travelers' National League.
Trusts and Their Effects Upon Commercial Travelers 115
JAMES W. ELLSWORTH, Merchant, New York. The Advantages of
Rightful Combination 618
STUYVESANT FISH, President of the Illinois Central Railroad Com-
pany. The Economic History of a Long-Established Factor in
American Transportation 555
WILLIAM FORTUNE, -President Indiana State Board of Commerce.
A Plea for Moderate Action 53
CHARLES FOSTER, ex-Governor of Ohio. Desirability of Trusts 268
WILLIAM DUDLEY FOULKE. Why Trusts Cannot Be Entirely Over-
thrown 451
WILLIAM DUDLEY FOULKE. In Criticism of Certain Views of Wil-
liam J. Bryan 579
GEORGE R. GAITHER, JR., Attorney-General of Maryland. Maryland
and the Trusts 285
M. M. GARLAND, ex-President Amalgamated Association of Iron and
Steel Workers. An Iron and Steel Worker's View of Combina-
tion 349
SAMUEL GOMPERS, President American Federation of Labor. The
Control of Trusts 329
S. H. GREELEY, National Grain Growers' Association. Railroad Re-
sponsibility for Objectionable Combinations: The Farmers and
the Chicago Grain Market -. 202
LAURENCE GRONLUND (since deceased), Socialist, Editorial Staff
"New York Journal." The Trust as a Phenomenon to Be
Handled Fearlessly and Utilized for the Public Weal 569
GEORGE GUNTON, Publisher "Gunton's Magazine." The Public and
the Trusts 276
F. E. HALEY, Secretary Iowa State Traveling Men's Association.
Federal Control by Ex'plicit and Comprehensive Statute 615
J. C. HANLEY, National Farmers' Alliance. Foreign Markets and
, American Shipping: Extension of Competition for Agricultural
Relief 209
AZEL F. HATCH, Member Illinois Bar. Causes, Dangers, and Bene-
fits of Combinations 6=5
JOHN W. HAYES, General Secretary and Treasurer Order Knights
of Labor. The Social Enemy 331
FRANKLIN H. HEAD, President Civic Federation of Chicago. Intro-
ductory Address 7
BYRON W. HOLT, New England Free Trade League. Tariff the
Mother of Trusts 171
WILLIAM WIRT HOWE, New Orleans Board of Trade. Formulation,
by Permanent Chairman of the Conference, of Certain Sug-
gested Methods for the Solution of the Trust Problem 622
E. C. IRWIN, President National Board of Fire Underwriters.
Fire Insurance Cooperative, But Not a Trust : Its Relation to
the Community 437
JEREMIAH W. JENKS, Statistician United States Industrial Commis-
sion and Professor of Political Economy Cornell University.
Elements of the Trust Problem 27
AARON JONES, Grand Master National Grange Patrons of Hus-
bandry. Federal and State Regulation of Trusts 218
SAMUEL M. JONES, Mayor of Toledo, Ohio. The Trust as a Labor-
Saving Machine in the Development of a Large Programme. .. 602
EDWARD QUINTON KEASBEY, Member New Jersey Bar. New Jersey
and Trusts 383
DAVID KINLEY, Professor University of Illinois. Analysis of Indus-
trial Statistics Collected by the Civic Federation of Chicago. . . . 530
MARTIN A. KNAPP, Chairman Interstate Commerce Commission.
Equality of Rights in Transportation Agencies 234
M. L. LOCKWOOD, President American Anti-Trust League. Prop-
erty Rights and Human Rights 375
CYRUS G. LUCE, ex-Governor of Michigan. The Farmer : The Man
Who Can Declare His "Live and Let Live" Policy at the Ballot
Box 230
EMERSON McMiLLiN, Banker, New "York. Combinations in the
Main Beneficial 617
S. A. MARTIN, President of Wilson College. Recognition of the
Inevitable and Adj ustment Thereto 577
Meeting of the Committee on Resolutions 565
THOMAS J. MORGAN, Socialist. The Trust from a Socialist Point
of View 319
J. STERLING MORTON, ex-Secretary Department of Agriculture. No
Monopoly Where Trade and Commerce Free 225
PAUL MORTON, Third Vice-President Atchison, Topeka & Santa Fe
Railroad System. Railroad Cooperation More Economic Than
Unrestricted Competition ' 249
G. W. NORTHRUP, JR., Member Illinois Bar. Practical Remedies for
Industrial Trusts 5 22
JOSEPH NIMMO, JR., President National Statistical Association.
The Limitation of Competition and Combination as Illustrated
in the Regulation of Railroads 156
FRANCIS G. NEWLANDS, Member Congress, Nevada.- Federal Taxa-
tion as a Means of Regulation 305
H. T. NEWCOMB, United States Census Office. Where Competition
Is ^Present Discrimination Cannot Be Absent: An Argument for
the Restoration of the Pooling Privilege with Federal Super-
vision 237
HENRY W. PEABODY, Merchant, Boston. The Menace of Monopoly. 616
y
HAZEN S. PINGREE, Governor of Michigan. The Effect of Trusts on
Our National Life and Citizenship 263
HAZEN S. PINGREE, Governor of Michigan. A Letter to Professor
George Gunton 59^
Louis F. POST, Single Tax League of the United States. Where
Single Taxers Stand : The Lesson of the Giant with His Feet
on the Ground 3 T 4
W. P. POTTER, Member Pennsylvania Bar. Consolidation a
Natural Growth with Many Obviously Good Results 299
Preface 5
LAWSON PURDY, New York Reform Club. The Wrong of Special
Privilege .* 166
JAMES H. RAYMOND, Chicago Patent Law Association. Monopolies-
Under Patents and the Industrial Effects Thereof 514
EDWARD P. RIPLEY, President Atchison, Topeka & Santa Fe Railway
System. How Consolidation Has Worked Out in the Case of
One of the Great Common Carriers 552
SAMUEL ADAMS ROBINSON, American Protective Tariff League.
The Antidote of Free Trade and the International Trust 193
A. E. ROGERS, University of Maine. Historical Development of the
-Corporation, with Exclusion of the Principle of Public Benefit. 409
Roll of Delegates 12
EDWARD ROSEWATER, Publisher Omaha "Bee." Legislative Dis-
cipline to Make Trusts Harmless 459
DAVID Ross, Secretary Illinois Bureau of Labor Statistics. Com-
binations the Inevitable Incidents of Industrial Evolution 371
U. M. ROSE, Little Rock Board of Trade. The Greatest Problem
Since Slavery 310
JOHN F. SCANLAN, Western Industrial League. Trusts and Free
Trade !77
CHARLES A. SCHIEREN, ex-Mayor of Brooklyn, N. Y. Competition
the Best Regulator 621
GEORGE A. SCHILLING, ex- Secretary of the Bureau of Labor Statistics
of Illinois. Strength of the Trusts in Props of Special Privilege 612
J. G. SCHONFARBER, Executive Committee Order Knights of Labor.
Corporate Ownership of Railroads the Backbone of the Trust ;
Protective Tariff Its Right Arm 347
HORATIO W.' SEYMOUR, Publisher Chicago "Chronicle." Excessive
Financial Energy jgg
E. J. SMITH, Birmingham, England. Explanation of the New
Trades Combination Movement in England 141
T. S SMITH, Attorney-General of Texas. The Right of a State to
Regulate All Corporations Doing Business Within It 567
JOHN W. SPENCER. The Free List and a Graduated Corporation
Tax as Trust Remedies ,-33
JOHN M. STAHL, Secretary Farmers' National Congress. A Farmer
on Trusts: Regulation from the Protectionist's Standpoint..'... 222
W. E. STANLEY, Governor of Kansas. William Jennings Bryan
Introduced 496
vi
A. W. STILL, Editor "Gazette," Birmingham, England. A Criticism
of the Smithsonian System of Trades Combination : .Reform
Without an Economic Feature 146
CLEM STUDEBAKER, Manufacturer, South Bend, Ind. The Economic
Advantages of Combination 575
H. H. SWAIN, Montana State Normal School. The Relation of an
Unstable Currency to the Formation of Trusts 537
HOWARD S. TAYLOR, Prosecuting Attorney, City of Chicago. Ad-
dress of Welcome 10
ROBERT S. TAYLOR, Member Indiana Bar. The Main Problem
How Shall We Distinguish Among Corporations ? 72
F. B. THURBER, President United States Export Association. The
Bogey Monster: A Thing to Be Regulated and Encouraged. . . . 124
BENJAMIN R. TUCKER, Editor New York "Liberty." The Attitude
of Anarchism Toward Industrial Combinations 253
WILLIAM H. TUTTLE, Member Illinois Bar. The Legal Status of
Combinations of Labor 354
THOMAS UPDEGRAFF, ex-Member of Congress, Iowa. Protection
and Trusts ; 187
T. B. WALKER, Minneapolis Board of Trade. Trusts from a Busi-
ness Man's Standpoint. . . . . 539
JAMES R. WEAVER, Professor Political Economy de Pau-w University.
Efficacy of Economic Checks in Regulating Competitive
Trusts 293
A. Leo WEIL, Member Pennsylvania Bar. The Combination in His-
tory, Ethics, and Political Economy: Should It Be Prevented
by Law ? 77
HENRY WHITE, General Secretary United Garment Workers of
America. A Period of Doubt and Darkness in a New Industrial
Era 323
C. D. WILLARD, Los Angeles Board of Trade. The Trust as a Logi-
cal Development Impossible to Extinguish and Difficult to
Regulate 545
DUDLEY G. WOOTEN, Member Texas Legislature. Principles and
Sources of the Trust Evil as Texas Sees Them 42
JOHN I. YELLOTT, Member Maryland Bar.- The Trust: An Institu-
tion Pronounced by the United States Supreme Court, in 1895,
Beyond Congressional Control 427
vii
PORTRAITS.
EDWARD C. AKIN 232
GEORGE W. ATKINSON, Governor of West Virginia Frontispiece
HENRY D. BAKER 328
EDWARD W. BEMIS 264
KENRY W. BLAIR . . 72
WILLIAM JENNINGS BRYAN 72
JOHN BATES CLARK 296
W. BOURKE COCKRAN 72
MORRIS M. COHN 136
A. M. COMPTON , 328
JOHN B. CONNER 136
STEPHEN P. CORLISS, Third Vice-Chairman 40
JEFFERSON DAVIS 264
JAMES B. DILL 296
P. E. DOWE 360
RALPH M. EASLEY, Secretary 40
WILLIAM FORTUNE 232
CHARLES FOSTER 72
GEORGE R. GAITHER, JR 264
M. M. GARLAND . . . . , 200
SAMUEL GOMPERS. . . : 200
LAURENCE GRONLUND 168
GEORGE GUNTON 264
F. E. HALEY 456
J. C. HANLEY 520
AXEL F. HATCH 232
JOHN W. HAYES .'. 7T77T! 264
FRANKLIN H. HEAD, Temporary Chairman 40
JOHN HILL, JR 520
BYRON W. HOLT. 360
WILLIAM WIRT HOWE. Permanent Chairman 40
JEREMIAH W. JENKS 232
HENRY V. JOHNSON, Second Vice-Chairman 40
AARON JONES 520
EDWARD QUINTON KEASBEY 200
MARTIN A. KNAPP 104
M. L. LOCKWOOD. 296
ix
CYRUS G. LUCE 104
PAUL J. MAAS 328
THOMAS J. MORGAN 136
J. STERLING MORTON 104
PAUL MORTON 168
H. T. NEWCOMB. 168
FRANCIS G. NEWLANDS 104
JOSEPH NIMMO, JR 360
G. W. NORTHRUP, JR 360
K. W. PALMER. 136
HAZEN S. PINGREE, Governor of Michigan Frontispiece
Louis F. POST 264
W. P. POTTER 456
W. A. POYNTER, Governor of Nebraska Frontispiece
LAWSON PURDY 360
JAMES H. RAYMOND 168
EDWARD P. RIPLEY 296
SAMUEL ADAMS ROBINSON 168
A. E. ROGERS 456
EDWARD ROSEWATER 7 . . 296
DAVID Ross 328
U. M. ROSE. 200
JOHN F. .SCANLAN , 360
GEORGE A. SCHILLING 328
J. G. SCHONFARBER 2O.6
EDWARD SCOFIELD, Governor of Wisconsin Frontispiece
HORATIO W. SEYMOUR 104
T. S. SMITH 520
JOHN W. SPENCER 456
JOHN M. STAHL ." 520
W. E. STANLEY, Governor of Kansas Frontispiece
HOWARD S. TAYLOR 232
ROBERT S. TAYLOR 104
FRANCIS B. THURBER 232
BENJAMIN R. TUCKER 168
WILLIAM H. TUTTLE 328
THOMAS UPDEGRAFF 520
T. B. WALKER 20O
JAMES R. WEAVER I3 6
A. LEO WEIL 200
HENRY WHITE 456
CHARLES D. WILLARD I3 6
DUDLEY G. WOOTEN, First Vice-Chairman 40
JOHN I. YELLOTT 456
x
PREFACE.
The discussion of the general subject of trusts and trade
combinations during the past summer occupied seemingly more
than any other the public mind. The greatest need in such
discussions seemed, to use the happy expression of Lyman
Abbott, to be light and not heat. For the purpose of eliciting
the fullest possible discussion of such subjects from all stand-
points, the Civic Federation of Chicagb invited the Governors of
the various states and the leading commercial, industrial and
labor organizations to send delegates to a conference to be held in
Chicago from the 13th to the 16th of September. A .con-
siderable number also of students of economics from the vari-
ous colleges and universities were invited to give expression
to their views upon the same general topic. The response to
this invitation was gratifying, and a most able and intelligent
body -of men from all parts of the country assembled for such
conference.
The delegates appointed by the governors represented
every interest in the respective states, including congressmen, ex-
congressmen, ex-governors, ex-supreme court judges, attorneys-
general, presidents of banks, presidents of railroads, manufactur-
ing and commercial organizations, and representatives of labor,
agricultural and educational interests.
In the arrangement of the program especial care was taken
that every side of the general subject should be represented in the
discussion by its ablest advocates.
At the opening of the conference there seemed among the
delegates to be a widespread suspicion as to the fairness of the
discussions, and a feeling that some political motive might be
5
behind the call for its assembling. Before the close, however,
of the first day's proceedings this feeling had entirely dis-
appeared, and people who supposed themselves to be entirely
antagonistic as to their aims and the methods of obtaining cer-
tain ends found that all shades of opinion had much ground
in common. The discussion proceeded with an amount of good
feeling and friendliness among the delegates scarcely to have
been looked for among men of such diverse views. At the close
of the conference the whole body of delegates seemed to recognize
that the purpose of the Civic Federation to make the occasion
an educational one by throwing the greatest possible light upon
all phases of the general subject had been accomplished.
The interest on the part of the public grew day by day as
the reports of the proceedings in the newspapers illustrated
the breadth of view covered by the various speakers.
The desire seemed to be general that the proceedings be
published in a permanent form which should make them acces-
sible to the larger public which had not the opportunity of
hearing the various speakers. The debate as set forth in the
pages following gives the widest view yet presented of the
important subjects discussed, and it is hoped that it may reach a
wide audience.
FRANKLIN H. HEAD.
PROCEEDINGS
OF THE
C: [ICAGO CONFERENCE ON TRUSTS.
The conference on "Trusts," called "by the Civic Federation,
was called to order in Central Music Hall, Chicago, at 10:45
o'clock Wednesday morning, September 13, 1899, by President
Franklin H. Head, who stated the objects of the conference as
follows :
FBANKLIN H. HEAD.
President The Civic Federation of Chicago.
The Civic Federation of Chicago is a non-partisan organiza-
tion, embracing in its membership, supporters and well wishers,
a goodly proportion of the active business and professional men
of our city; of the men who in their several ways have helped
to win for our city its position as a metropolitan capital. Some
months since it realized that no topic seemed so widely discussed
as what was designated by the general title of "Trusts" and
that, too, upon no current topic was there so widespread and gen-
eral an ignorance and confusion of ideas. There seemed to us a
crying need for education upon the subject; of an education
which would show the broad distinction between the various trade
combinations and trusts, and to promote such education this con-
ference is now in session.
It is not a trust or an anti-trust conference, but a conference
in search of truth and light. With this end in view the attend-
ance has been solicited of men of every shade of opinion upon
the general subject; from the men who regard trusts and trade
combinations as the standing menace to our national prosperity,
and even to the perpetuity of our system of government, to those
who feel that trade combinations and large aggregations of active
capital are simply a natural evolution in the development of our
industrial and commercial life, and that such aggregations are
absolutely necessary to enable us to compete with the vast ac-
cumulations and experience of the older nations, and their almost
total control outside of food products, of the markets of the
world. We are also to hear from those holding views between
either extreme; those who believe in the value of combinations
properly organized, but who recognize in the reckless and exces-
sive capitalization of many of such combinations a peril leading
to widespread panic and distress from such inflated stocks being
absorbed by the small investors, whose savings may be thus in
great measure lost.
We hope to hear the general subject discussed from all possi-
ble standpoints from the view not only of the organizers of the
combinations, but also from the workmen and customers of the
industrial corporations. We hope that light will be thrown upon
the difference between the class of trusts which tend to monopolies
and the industrial combinations which in many cases seem to
be to the advantage of all.
We are now in a period of a large advance in the prices of
most classes of manufactured goods, especially in iron and steel
products, and we hope that some of our speakers will illustrate
how much of this advance is due to combinations, and how much
to the vastly increased demand, which in all lines has always in
the past resulted in advanced prices under the immutable law
of supply and demand. There has been no trust or combination,
for instance, among our farmers, but we all recollect how two
years ago the short wheat crop abroad caused such an increased
demand as to legitimately advance the price of that staple over
50 per cent within a period of four months, and that later an
enormous demand for wheat from one of our own citizens, Mr.
Joseph Leiter, whose hunger for wheat gave him a world-wide
reputation, caused an advance of another 50 per cent.
The very general response to our invitations to this confer-
ence, from the governors of nearly all the states, who have ap-
pointed as delegates their most eminent citizens -from the great
commercial bodies, the universities and the labor, agricultural,
and other organizations which have sent their ablest men and
most profound students of economic problems- this response has
been gratifying beyond measure, and illustrates the abiding in-
terest everywhere felt in the general subject and its impartial
discussion. This response also fills us with hope as to the great
advantages which will result from the full discussion of all phases
of the most vital topic of the day.
We trust that this discussion may be able, scholarly and dig-
nified, as becomes the subjects and the occasion, and that when
these discussions reach their proper audience the millions of
people in every town and hamlet who from the newspapers re-
ceive the reports of your deliberations, it may lead to such action
af: may tend to preserve in our trade combinations all which is of
value, as well as to point out methods by which the evils of such
combinations may be avoided or done away.
The Civic Federation recognizes also that with the assembling
oi' the delegates to this conference and its brief preliminary exer-
cises, its participation in your proceedings is at an end. You
will, gentlemen, make your own program and plans at the same
time I wish to tender to you on the part of the Federation, with
its best wishes, the services of any of its committees, officers or
members, whenever such services can in any way facilitate your
work.
EDWAED C. AKIN.
Attorney-General of Illinois.
Eepresenting Governor John E. Tanner, Attorney-General
Akin, on behalf of the State of Illinois, welcomed the delegates
to the convention. Mr. Akin said:
The pleasure of addressing you on this occasion is as gratify-
ing as it is unexpected, and the fact that the substitutions were
announced long before either Governor Tanner or myself knew
of any such purpose, is but a deserved compliment to the energy
and prophetic power of the average Chicago newspaper reporter.
Owing to the serious illness of Governor Tanner, which alone
prevents his presence here to-day, the privilege of welcoming
you on this occasion has been generously accorded to me. The
casual stranger, who comes without eviL intent, is entitled to
passive welcome as a matter of mere courtesy, but to you a most
generous welcome is due, because many of you occupy positions of
high trust and importance in the various states you represent, be-
cause among you are the leading minds of the great world of let-
ters and of science. You are entitled to welcome, not alone be-
cause of these, but because of the objects and the purposes that
have brought you together. The chief end of government is
the accomplishment of the greatest good to the greatest num-
ber. Whether that great evolution of modern trade and com-
merce, commonly known as the trust, is to prove of benefit
or injury to the masses of our people, and if of benefit, how it
may safely be promoted, and if of injury, what the remedy shall
be, how and by what authority applied, are questions that lie
close to the well-heing and happiness of our people, and in which
they are to-day above all other matters vitally interested.
The personnel of this conference is guarantee that these great
questions will not only he ably discussed, but along educational,
conservative lines, which are the underlying principles of this con-
ference, and it is because of the courtesy ordinarily due to stran-
gers within our gates, and is due also because of high considera-
tions of personal regard; it is because of the prominence which
you have attained in the public estimation; it is because of the
purposes and objects that have brought you together; and it is
because we believe that as a result of this conference our people
will have a better and a wider knowledge of these great ques-
tions, and that here will be sown the seed which shall blossom
into legislation, if legislation be needed, at once wise and con-
servative, having in view alike the interests of capital and of
labor, of the consumer and the producer.
It is because of all these that on behalf of the great state of
Illinois and on behalf of its governor, I extend to you a hearty
and cordial welcome.
HOWARD S. TAYLOE.
Prosecuting Attorney, City of Chicago.
On behalf of the City of Chicago, and speaking for Mayor
Carter H. Harrison, City Prosecutor Howard S. Taylor extended
a welcome to the delegates to the city, saying:
I am requested by His Honor, the Mayor, now absent from
the city, to be present on this occasion and in his
name' to bid you a most hearty welcome to Chicago, with
the assurance that this great city, whose motto is "I Will,"
shrinks from no problem, but with the characteristic
intelligence and liberality that from ojd Fort Dearborn
till now has always distinguished her welcomes into her forum
with perfect confidence every free utterance and inquiry that may^
give inspiration and wisdom to the great republic of which we
are a constituent part. Chicago, through all her history, has
believed that there is more danger in suppressing truth than in
publishing falsehood; and, therefore, she clings to the old doc-
trine of free and full speech on every question of public interest.
10
The matter that has brought you together is of prime im-
portance to Chicago and to the whole country. We are a nation
of wealth producers and distributors. We can fight if need be
from Washington down to Miles, from John Paul Jones to Ad-
miral Dewey, we have no apologies to make for our conduct on
land or sea. We have also contributed our full quota to the
world's treasury of literature and art; but, after all, Providence
and the genius of our people have, in the main, led us in the
ways of peace and production. To challenge nature, to wring
from her strongholds the material gains that shall make us a
people of happy homes and hopeful hearts, has been the history
of our honorable past and the prophecy of our growing future.
Whatever, therefore, touches the question of wealth production
and distribution touches the center of our civilization and invites
from all our people such counsel and action as shall secure for us
and our posterity the greatest possible good that benevolent
reign of peaceful industry that shall
" Scatter plenty o'er a smiling land
And read its history in a nation's eyes."
That the subject which you are to discuss is one both of em-
inence and imminence is proven not only by your presence here,
but by the wide discussion which is now going on in the maga-
zines and newspapers and in every other place where public
opinion is created or expressed. Gentlemen may differ in their
opinions concerning the nature of trusts, their cause and cure;
but there is no questioning the fact that a new and portentous
phenomenon has risen above the horizon of our national life, and
one of such grave import as to justify the fullest, fairest study
that this convention can command.
His Honor, Mayor Harrison, has his views upon this subject
clear and pronounced; but he entertains them as an American
citizen, and will not take advantage of his official position to
promulgate them. As chief magistrate of the city, he does not
desire to bias nor anticipate your conclusiens; but, confident
always in truth as an end and free speech as a means, he approves
your convention and bids you, through me, a most cordial wel-
come to Chicago.
Attorney-General T. S. Smith, of Texas, moved that Frank-
lin H. Head and Kalph M. Easley, respectively president and
secretary of the Civic Federation of Chicago, be made the tempo-
rary officers of the conference, and that the Civic Federation be
11
requested to furnish the program for the first day, or pending
the formation of the permanent organization. This was sec-
onded by Congressman R. D. Sutherland, of Nebraska, and was
unanimously carried.
Yellott, of Maryland, introduced the following resolution:
RESOLVED, That a committee on organization and program,
composed of one delegate from each state and each organization
represented by invitation of the Civic Federation, of Chicago,
be appointed by such delegation to have charge of the proceed-
ings of this conference, and report on the order of proceedings
that shall govern the same. That the permanent chairman of
this meeting shall act in concert with such committee, and he,
together with the committee, shall determine what papers shall
be read and what lines of discussion shall be allowed.
Rosewater, of Nebraska, raised a point of order, demanding
that a list of delegates be read and credentials be in some manner
passed upon. This was received with applause, but a general
discussion of considerable warmth ensued. The point of order
was sustained, and Secretary Easley read the list of delegates
appointed, and after several minor corrections it was declared the
official roll.
APPOINTED BY GOVERNOR JOHNSTON, OF ALABAMA.
Eyre Damar, Mobile. Wallace Haralson, Ft. Payne.
Gordon McDonald, Montgomery. E. M. Ragland, Tuscumbia.
Reed B. Barnes, Opelika. B. B. Comer, Birmingham.
,W. W. Quarles, Selma.
APPOINTED BY GOVERNOR MURPHY, OF ARIZONA.
M. J. Egan, Clifton. E. M. Does, Flagstaff.
C. W. Wright, Tucson. J. C. Adams, Phoenix.
W. H. Barnes, Tucson. John M. Hamilton, Chicago.
APPOINTED BY GOVERNOR THOMAS, OF COLORADO.
Thos. M. Patterson, Denver. Alva Adams, Pueblo.
T. S. McMurray, Denver. H. H. Seldomridge, Colorado
H. V. Johnson, Denver. Springs.
Mrs. Sarah S. Platt, Denver. Jas. W. Bucklin, Grand Junction.
12
APPOINTED BY J. H. HUGHES, SECRETARY OP STATE,
DELAWARE.
John H. Rodney, Wilmington.
William S. Hilles, Wilmington.
John W. Causey, Milford.
Henry Allaway, Dover.
James L. Wolcott, Dover.
John H. Hoffecker, Smyrna.
Charles M. Cullen, Georgetown.
Chas. F. Richards, Georgetown.
James Ross, Seaford.
APPOINTED BY GOVERNOR TANNER, OF ILLINOIS.
Shelby M. Cullom, Springfield.
David Ross, Springfield.
Charles A. Hill, Springfield.
Lloyd F. Hamilton, Springfield.
Wm. E. Mason, Chicago.
Horatio W. Seymour, Chicago.
Geo. W. Hinman, Chicago.
R. W. Patterson, Chicago.
James H. Eckels, Chicago.
E. S. Lacey, Chicago.
George B. Swift, Chicago.
John A. Roche, Chicago.
John P. Hopkins, Chicago.
George A. Schilling, Chicago.
Clarence S. Darrow, Chicago.
Theodore Brentano, Chicago.
L. C. Collins, Chicago.
John M. Smyth, Chicago.
John W. Gates, Chicago.
George R. Peck, Chicago.
J. Ogden Armour, Chicago.
H. B. Wickersham, Chicago.
John F. Scanlan, Chicago.
Frank F. Holmes, Chicago.
John E. Enander, Chicago.
Joseph W. Fifer, Bloomington.
Adlai E. Stevenson, Bloomington.
Charles H. Deere, Rock Island.
W. F. Eastman, Moline.
W. R. Jewell, Danville.
John W. Fornof, Streator.
S. M. Dalzell, Spring Valley.
Perry C. Ellis, Quincy.
Charles Voris, Windsor.
William P. Halliday, Cairo. (Since
deceased.)
Charles B. Cole, Chester.
Homer Tice, Greenview.
APPOINTED BY GOVERNOR MOUNT, OF INDIANA.
Solon L. Goode, Indianapolis.
Allen W. Clark, Greensburg.
E. B. Martindale, Indianapolis.
John B. Stoll, South Bend.
R. S. Taylor, Fort Wayne.
Josiah Gwin, New Albany.
Aaron Jones, South Bend.
John W. Spencer, Evansville.
Goodlet Morgan, Petersburg.
Jos. Swain, Bloomington.
Leonard J. Hackney, Shelbyville.
Wm. H. O'Brien, Lawrenceburg.
Isaac H. Strouse, Rockville.
William Dudley Foulke, Ricn-
mond.
Daniel P. Irwin, Indianapolis.
Wm. H. Eichhorn, Bluffton.
A. M. Scott, Ladoga.
A. L. Kumler, La Fayette.
M. Winfield, Logansport.
J, N. Babcock, Topeka.
A. P. Kent, Elkhart.
John B. Conner, Indianapolis.
Amos W. Reagan, Indianapolis.
George W. Geiger, Indianapolis.
Charles M. Walter, Rossville.
APPOINTED BY GOVERNOR MAYES, CHEROKEE NATION,
INDIAN TERRITORY.
James S. Stapler, Tahlequah.
Joe M. Lahay, Claremore.
James S. Davenport, Vinita.
W. W. Hastings, Tahlequah.
Charles O. Frye, Sullisuw.
John C. Dannenburg, Tahlequah.
F. H. Nash, Ft. Gibson.
.13
APPOINTED BY GOVERNOR SHAW, OF IOWA.
James G. Berryhill, Des Moines. Ambros P. McGuirk, Davenport.
Georgis E. Clarke, Algona. Paul MacLean, Creston.
Thomas Updegraff, McGregor. Edward H. Thayer, Clinton.
W. R. Green, Audubon. Cato Sells, Vinton.
Robert H. Moore, Ottumwa. John J. Hamilton, Des Moines.
John Story, Lake Mills.
APPOINTED BY GOVERNOR STANLEY, OF KANSAS.
W. J. Bailey, Baileyville. Harry L. Pestana, Russell.
George H. Buckman, Winfield. Charles E. Elliott, Wellington.
W. A. White, Emporia. C. Wood Davis, Peotone.
John E. Hessin, Manhattan. J. K. Cubbison, Kansas City, Mo.
APPOINTED BY GOVERNOR BRADLEY, OF KENTUCKY.
W. C. P. Breckenridge, Lexing- William Lindsay, Frankfort.
ton. W. H. Holt, Frankfort.
P. W. Hardin, Harrodsburg. W. P. Kimball, Lexington.
John W. Lewis, Springfield. John W. Yerkes, Danville.
APPOINTED BY GOVERNOR POWERS, OF MAINE.
Henry B. Cleaves, Portland. S. D. Leavitt, Eastport.
A. H. Gardner, Rockland. Henry C. Emery, Brunswick.
Nathaniel Butler, Waterville. Wm. H. Newell, Lewiston.
J. P. Bass, Bangor. Cyrus H. Blanchard, Wilton.
Chas. H. Prescott, Biddeford. Victor W. McFarlane, Greenville.
APPOINTED BY GOVERNOR LOWNDES, OF MARYLAND.
Charles J. Bonaparte, Baltimore. Benj. F. Newcomer, Baltimore.
Wm. T. Dixon, Baltimore. Stevenson A. Williams, Bel Air.
John K. Cowen, Baltimore. Herbert B. Adams, Baltimore.
Felix Agnus, Baltimore. John I. Yellott, Towson.
APPOINTED BY GOVERNOR PINGREE, OF MICHIGAN.
Russell A. Alger, Detroit. George B. Horton, Fruit Ridge.
J. N. Klock, Benton Harbor. L. D. Watkins, Manchester.
J. W. Hannen, Traverse City. Fred A. Maynard, Grand Rapids.
George W. McBride, Grand Edwin Henderson, Detroit.
Haven. E. C. Davidson, Escanaba.
William H. Lockerby, Quincy. Phil B. Kirkwood, Negaunee.
Fred Stone, Hillsdale. Elliott G. Stevenson, Detroit.
Cyrus G. Luce, Coldwater. Henry C. Adams, Ann Arbor.
A. P. Greene, Eaton Rapids.
APPOINTED BY GOVERNOR STEPHENS, OF MISSOURI.
F. M. Cockrell, Warrensburg. L. A. Vories, St. Joseph.
E. C. Crow, Jefferson City. C. C. Fuller, Mound City.
Joseph A. Graham, St. Louis. Frank P. Sebree, Kansas City.
Alexander G. Cochran, St. Louis. F. C. Farr, Kansas City.
David R. Francis, St. Louis. John S. Haymes, Buffalo.
F. W. Lehmann, St. Louis. L. F. Cotty, Edina.
Emil Pretorius, St. Louis. Marsh Arnold, Benton.
John A. Hockaday, Fulton, N. O. Nelson.
APPOINTED BY GOVERNOR McLAURIN, OF MISSISSIPPI.
J. W. Cutrer, Clarksdale. S. S. Calhoon, Jackson.
John Sharpe Williams, Yazoo A. H. Whitfield, Jackson.
City. Henry Christmas, Tchula.
Frank Burkitt, Okolona. E. H. Moore, Rosedale.
APPOINTED BY GOVERNOR SMITH, OF MONTANA.
Martin Maginnis, Helena. J. E. Rickards, Butte.
J. K. Toole, Helena. H. H. Swain, Dillon.
Chas. S. Hartman, Bozeman. W. F. Sanders, Helena.
A. J. Campbell, Butte.
APPOINTED BY GOVERNOR POYNTER, OF NEBRASKA.
Edward Rosewater, Omaha. William Jennings Bryan, Lincoln.
Lorenzo Crounse, Calhoun. A. H. Hippie, Omaha.
William V. Allen, Madison. Frank T. Ransom, Omaha.
R. D. Sutherland, Nelson.
APPOINTED BY GOVERNOR ROLLINS, OF NEW HAMP-
SHIRE.
Henry W. Blair, Manchester. Chas. H. Sawyer, Dover.
John P. George, Concord. Edward H. Wason, Nashua.
H. B. Viall, Keene. Dorrance B. Currier, Hanover.
J. W. Remick, Littleton.
APPOINTED BY GOVERNOR VOORHEES, OF NEW
JERSEY.
S. H. Grey, Trenton. Henry H. Isham, Elizabeth.
Eugene Stevenson, Paterson. Allan L. McDermott.
Edward Q. Keasbey, Newark.
APPOINTED BY GOVERNOR OTERO, OF NEW MEXICO.
jfrank Springer, East Las Vegas. A. R. Graham. Hudson.
Frank A. Manzanares, East Las J. W. Dwyer, Raton.
Vegas. E. V. Chavez, Albuquerque.
Thomas D. Burns, Parkview. C. J. Gavin, Raton.
Anthony Joseph, Ojo Caliente. Albert Lawrence, Catskill.
APPOINTED BY GOVERNOR ROOSEVELT, OF NEW YORK.
Chauncey M. Depew, New York Henry White, New York City.
City. Stephen P. Corliss, Albany.
John G. Carlisle, New York City. John McMackin, Albany.
W. Bounce Cockran, New York John B. Clark, New York City.
City. Jacob G. Schurman, Ithaca.
Albert Shaw, New York City. Robert B. Adam, Buffalo.
George Gunton, New York City. Thos. M. Osborne, Auburn.
Francis B. Thurber, New York George E. Green, Binghamton.
City.
15
APPOINTED BY GOVERNOR FANCHER, OF NORTH
DAKOTA.
David Morgan, Devils Lake. John M. Cochrane, Grand Forks.
James D. Benton, Fargo. David Bartlett, Cooperstown.
M. H. Jewell, Bismarck. David Wellman, New Rockford.
A. W. Edwards, Fargo. Wm. T. Perkins.
Roderick Rose, Jamestown.
APPOINTED BY GOVERNOR BUSHNELL, OF OHIO.
John Sherman, 1 Mansfield. F. S. Monnett, Columbus.
J. B. Foraker, Cincinnati. Jas. E. Neal, Hamilton.
Charles Foster, Fostoria. C. L. Kurtz, Columbus.
M. E. Ingalls, Cincinnati. Selwyn N. Owen, Columbus.
Asa W. Jones, Youngstown. I. F. Mack, Sandusky.
Washington Gladden, Columbus. R. E. McKisson, Cleveland.
Paul J. Sorg, Middletown. John P. Jones, Columbus.
APPOINTED BY GOVERNOR GEER, OF OREGON.
M. C. George, Portland. B. F. Alley, Baker City.
Sylvester Pennoyer, Portland. Walter L. Tooze, Woodburn.
C. W. Fulton, Astoria. Wm. Colvig, Jacksonville.
M. A. Miller, Lebanon.
APPOINTED BY GOVERNOR STONE, OF PENNSYLVANIA.
M. M. Garland, Pittsburg. Lyman D. Gilbert, Harrisburg.
W. P. Potter, Pittsburg. A. Louden Snowden, Philadelphia.
Joseph N. Pew, Pittsburg. H. W. Palmer, Wilkes Barre.
Wm. C. Bullitt, Philadelphia. A. Leo Weil, Pittsburg.
APPOINTED BY GOVERNOR ELLERBEE, OF SOUTH -
CAROLINA.
J. H. Marshall, Charleston. J. S. Brice, Yorkville.
L. W. Youmans, Fairfax. A. H. Williams, Lake City.
J. E. Boggs, Pickens. S. H. Rodgers, Port Royal.
T. L. Gantt, Spartanburg. A. C. Kaufman, Charleston.
APPOINTED BY GOVERNOR LEE, OF SOUTH DAKOTA.
R. F. Pettigrew, Sioux Falls. Freeman Knowles, Deadwood.
W. T. La Follette Chamberlain. M. S. Sheldon, Watertown.
John E, Kelley, Flandreau. W. E. Kidd, Aberdeen.
S. H. Wright, Chamberlain. Chauncey L. Wood, Rapid City.
APPOINTED BY GOVERNOR McMILLEN, OF TENNESSEE.
C. E. Snodgrass, Crossville. T. W. Sims, Linden.
John VV. Gaines, Nashville. Rice A. Pierce. Union City.
J. D. Richardson, Murfreesboro. E. W. Carmack, Memphis.
N. N. Cox, Franklin.
16
APPOINTED BY GOVERNOR SAVERS, OF TEXAS.
T. S. Smith, Austin.
Cecil Smith, Sherman.
Dudley G. Wooten, Dallas.
L. J. Wortham, Austin.
R. E. Prince, Corsicana.
A. B. Davidson, Cuero.
W. T. Burns, Houston.
E. R. McLean, Austin.
Eugene Williams, Waco.
W. L. Grogan, Sweetwater.
E. B. Perkins, Dallas.
E. P. Curtis, Temple.
APPOINTED BY GOVERNOR WELLS, OF UTAH.
Geo. W. Bartch, Salt Lake City.
Jos. L. Rawlins, Salt Lake City.
Geo. C. Cannon, Salt Lake City.
C. C. Richards, Ogden.
Lafayette Holbrook, Provo.
D. O. Rideout, Draper.
APPOINTED BY GOVERNOR ATKINSON, OF WEST
VIRGINIA.
Randolph Stalnaker, Wheeling.
W. B. McMechen, Wheeling.
Philip C. Adams, Sutton.
E. S. Hutchinson, Maybeury.
R. B. Cassiday, Charleston.
J. W. Roche, Charleston.
James R. Smoot, Newberg.
S. H. Gramm, Grafton.
Samuel Dixon, Macdonald.
Hullihen Quarrier, Wheeling.
Darwin E. Abbott, Huntington.
I. Schwabe, Charleston.
E. C. Gerwig, Parkersburg.
E. Tracey Tobin, Philadelphia, Pa.
W. A. McCorkle, Charleston.
John W. Harris, Lewisburg.
Daniel B. Lucas, Charles Town.
John W. Mason, Fairmount.
John Brannon, Weston.
F. J. Hearne, Wheeling.
Z. T. Vinson, Huntington.
APPOINTED BY GOVERNOR SCOFIELD, OF WISCONSIN.
John C. Spooner, Madison.
Wm. J. Anderson, West Superior.
John V. Quarles, Milwaukee.
Madison Halford Erickson, West
Superior.
J. J. Jenkins, Chippewa Falls.
S. S. Barney, West Bend.
Wm. F. Vilas, Madison.
Edward S. Bragg, Fond du Lac.
John M. Whitehead, Janesville.
A. M. Jones, Waukesha.
Thomas M. Blackstock, Sheboy-
gan.
George F. Merrill, Ashland.
John Hicks, Oshkosh.
John Nagle, Manitowoc.
E. T. Wheelock, Wausau.
J. G. Monahan, Darlington.
Ellis B. Usher, La Crosse.
Emil Baench, Manitowoc.
APPOINTED BY GOVERNOR RICHARDS, OF WYOMING.
F. W. Mondell, Newcastle. Andrew McMicken, Rawlins.
B. B. Brooks, Casper.
C. P. Arnold, Laramie.
R. W. Breckens, Cheyenne.
J. Dana Adams, Sheridan.
Robert Hinton, Evanston.
GOVERNORS.
G. W. Atkinson, West Virginia.
W. E. Stanley, Kansas.
R. B. Smith. Montana.
Charles S. Thomas. Colorado.
W. A. Poynter, Nebraska.
F, B. Fancher, North Dakota.
L. M. Shaw, Iowa.
H. S. Pingree, Michigan.
J. R. Tanner. Illinois.
L. V. Stephens. Missouri.
Edward Scofield, Wisconsin.
J. A. Mount, Indiana.
17
ATTORNEYS-GENERAL.
Wm. L. Taylor, Indiana. John C. Davies, New York.
E. R. Hicks, Wisconsin. J. A. Van Orsdel, Wyoming.
G. R. Gaither, Jr., Maryland. W. B. Lamar, Florida.
C. J. Smyth, Nebraska. A. C. Bishop, Utah.
E. C. Crow, Missouri. T. S. Smith, Texas.
A. A. Godard, Kansas. Jefferson Davis, Arkansas.
E. P. Rucker, West Virginia. Horace M. Oren, Michigan.
C. B. Nolan, Montana. Milton Remley, Iowa.
W. B. Douglas, Minnesota.
CONGRESSMEN NOT ON DELEGATIONS.
D. B. Henderson, Dubuque, la. John A. T. Hull, Des Mpines, la.
Vespasian Warner, Clinton, la. R. R. Hitt, Mount Morris, 111.
James H. Lewis, Seattle. Wash. J. A. Tawney, Winona, Minn.
George W. Taylor, Demopolis, J. H. Davidson, Oshkosh, Wis.
Ala. George W. Prince, Galesburg. 111.
H. A. Cooper, Racine, Wis. E. L. Hamilton, Niles, Mich.
Francis G. Newlands, Reno, Nev. Walter Reeves, Streator, 111.
James S. Sherman, Utica, N. Y. Theodore Otjen, Milwaukee, Wis.
L. F. Livingstone, Atlanta, Ga. Charles Dick, Columbus, O.
S. W. Smith, Pontiac, Mich. A. J. Hopkins, Aurora, 111.
E. D. Crumpacker, Valparaiso, D. Meekison, Napoleon, O.
Ind. J. P. Dolliver, Fort Dodge, la.
George W. White, Tarboro, N. C. James R. Mann, Chicago, 111.
D. S. Alexander, Buffalo, N. Y.
MILLERS' NATIONAL ASSOCIATION.
Frank Barry, Secretary, Milwau- B. A. Eckhart, Chicago, 111.
kee, Wis.
BRICKLAYERS' AND MASONS' INTERNATIONAL UNION
OF AMERICA.
M. R. Grady, Chicago, 111.
NATIONAL GRANGE PATRONS OF HUSBANDRY.
George B. Horton, Fruit Ridge, H. E. Huxley, Neenah, Wis.
Mich. C. O. Ranie, Benjamin, Mo.
Oliver Wilson, Magnolia, 111. S. H. Ellis, Waynesville, O.
COMMERCIAL TRAVELERS' NATIONAL LEAGUE.
P. E. Dowe, President, Bedford Park, New York City.
NEW ENGLAND FREE TRADE LEAGUE.
Byron W. Holt, New York City.
COMMERCIAL CLUB OF TOPEKA.
George W. Crane, Topeka, Kan.
18
ORDER OF RAILROAD CONDUCTORS.
E. E. Clark, G. C. C., Cedar W. D. Anderson, Associate Editor
Rapids, la. Official Organ, Order of R. R.
A. B. Garretson, Assistant Grand Conductors, Cedar Rapids, la.
Chief ' Conductor, Cedar Rapids,
Iowa.
LITTLE ROCK BOARD OF TRADE.
LITTLE ROCK, ARK.
U. M. Rose. Chas. T. Abies.
S. R. Cockrill. W. S. Holt.
John F. Fletcher. H. L. Remmel.
John M. Moore. W. J. Thompson.
Edward Fitzgerald. Morris M. Cohn.
Charles F. Penzel. George R. Brown.
T. H. Bunch. B. J. Brown.
Herman Hahn.
INTERNATIONAL ASSOCIATION OF MACHINISTS.
James O'Connell, Washington, D.C. George Preston, Washington, D.C.
THE NATIONAL ASSOCIATION OF AGRICULTURAL
IMPLEMENT AND VEHICLE MANUFACTURERS.
H. C. Staver, Chicago, 111.
COMMERCIAL CLUB OF TERRE HAUTE.
TERRE HAUTE, IND.
W. C. Ball. J. C. Kolsem.
Adolph Herz, Charles H. Ehrman.
J. Smith Talley.
ORDER KNIGHTS OF LABOR.
J. G. Schonfarber, Baltimore. Md. August E. Cans, Chicago, 111.
I. D. Chamberlain, Pueblo, Col. E. J. Lindholm, Chicago, 111.
John W. Hayes, General Secre-
tary, Washington, D. C.
NEW YORK BOARD OF TRADE AND TRANSPORTATION.
W. H. Parsons, President, New Charles A. Schieren, Brooklyn.
York City. John H. Washburne, New York
G. Waldo Smith. New York City. City.
S. A. Robinson, West New Brigh-
ton, Staten Island, N. Y.
NEW ORLEANS BOARD OF TRADE.
W. W. Howe, New Orleans, La.
ST. LOUIS TRAFFIC BUREAU.
A. J. Vandlandingham, Commissioner, St. Louis, Mo.
19
THE MERCHANTS' AND MANUFACTURERS' ASSOCIATION,
MILWAUKEE, WIS.
A. K. Hamilton.
G. G. Pabst.
O. C. Fuller.
E. P. Hackett.
B. Leidersdorf.
WISCONSIN STATE GRANGE PATRONS OF HUSBANDRY.
S. C. Carr, Milton Junction, Wis.
AMERICAN FEDERATION OF LABOR.
Samuel Gompers, Washington, D. C.
CHAMBER OF COMMERCE, LOS ANGELES, CAL.
C. D. Willard.
INTERNATIONAL TYPOGRAPHICAL UNION.
Samuel B. Donnelly, President, Indianapolis, Ind.
CHAMBER OF COMMERCE, NEW HAVEN, CONN.
Max Adler, President.
COLLEGE REPRESENTATIVES.
J. W. Jenks, Cornell University,
Ithaca, N. Y.
Wm. F. King, President Cornell
College, Mt. Vernon, la.
R. I. Holaind, Georgetown Col-
lege, Washington, D. C.
S. A. Martin, President Wilson
College, Chambersburg, Pa.
Charles F. Thwing, President
Western Reserve University,
Adelbert College, Cleveland, O.
David Kinley, University of Illi-
nois, Urbana, 111.
Frank W. Taussig, Harvard Uni-
versity, Cambridge, Miss.
George A. Gates, President Iowa
College, Grinnell, la.
Robt. B. Robinson, The John Hay
Normal and Industrial School,
Alexandria, Va.
J. H. Kirkland, Chancellor Van-
derbilt University, Nashville,
Tenn.
Isaac Althaus Loos, Prof. Political
Science, University of Iowa,
Iowa City, la.
Wm. J. Kerby, Catholic University,
Washington, D. C.
Richard T. Ely, Professor Politi-
cal Economy, University of
Wisconsin, Madison, Wis.
Henry C. Adams, University of
Michigan, Ann Arbor, Mich.
Edward C. Mitchell, President
Leland University, Newton Cen-
ter, Mass.
John F. Forbes, President John B.
Stetson University, DeLand,
Fla.
John Graham Brooks, Lecturer
University of Chicago, Cam-
bridge. Mass.
Henry Wade Rogers, President
Northwestern University,
Evanston, 111.
James R. Weaver, Department
Political Economy, De Pauw
University, Greencastle, Ind.
A. E. Rogers, Professor Political
Economy and History. Univer-
sity of Maine, Orono, Maine.
STATE RAILROAD COMMISSIONERS.
R. S. Kaylef, Ohio. D. N. Lewis, Secretary State"
Benjamin F. Chadbourne, Maine. Board of R. R. Commissioners,
C. M. Runyan, Statistician Ohio Iowa.
Railroad Commission. Edward A. Dawson, Iowa.
Union B. Hunt, Indiana. . David J. Palmer, Iowa.
I. A. Macrum, Oregon.
STATE LABOR COMMISSIONERS.
H. U. Thomas, North Dakota. Thos. P. Rixey, Missouri.
I. V. Barton, West Virginia. W. L. A. Johnson, Kansas.
INTERSTATE COMMERCE COMMISSION.
Martin A. Knapp, Chairman, W. J. Calhoun, Danville, 111.
Syracuse, N. Y. Charles A. Prouty, Newport, Vt.
THE NATIONAL BOARD OF FIRE UNDERWRITERS.
E. C. Irwin, President, Philadel- Charles S. Hollingshead, Philadel-
phia, Pa. phia, Pa.
Thomas S. Chard, Chicago, 111. George W. Babb, New York City.
M. D. Driggs, New York City. I. S. Blackwelder, Chicago, 111.
THE COMMERCIAL CLUB OF BIRMINGHAM, ALA.
John W. Tomlinson.
INDIANA STATE BOARD OF COMMERCE.
Wm. Fortune, President, Indian- J. R. Goodwin, Evansville.
apolis. Mortimer Levering, Commercial
C. J. Murphy, Secretary, Evans- Club, Lafayette.
ville. Chas. R. Lane, Commercial Club,
John H. Holliday, Commercial Ft. Wayne.
Club, Indianapolis. D. M. Parry, Board of Trade, In-
A. M. Higgins, Commercial Club, dianapolis.
Terre Haute. A. F. Potts, Indianapolis.
FARMERS' NATIONAL CONGRESS.
B. F. Clayton, Indianola, la. J. J. W. Billingsley, Indianapolis,
H. E. Heath, Omaha, Neb. Ind.
Lafayette Funk, Shirley, 111. John M. Stahl,. Secretary.
ASSOCIATION OF WESTERN MANUFACTURERS.
Edward P. McFetridge, President, H. G. Niles, Jr., South Bend, Ind.
Baraboo, Wis. E. C. McFetridge, Beaver Dam,
Walter Fieldhouse, Secretary and Wis.
Treasurer, Chicago, 111. Richard Yates, Jacksonville, 111.
George Brickner, Sheboygan Falls,
Wis.
BOARD OF TRADE, SPRINGFIELD, ILL.
F. W. Tracey. L. E. Wheeler.
S. P. Wheeler. D. W. Smith.
J. T. Peters. J. F. Miller.
21
NORTHWESTERN TRAVELING MEN'S ASSOCIATION.
George J. Reed, Chicago, 111. S. H. Crane, Chicago, 111.
John M. Levis, Chicago, 111. G. M. Pennoyer, Chicago, 111.
R. A. Scovel, Chicago, 111. Willis Young, Chicago, 111.
W. H. Cribben, Chicago, 111. George W. Bailey, Chicago, 111.
BUSINESS MEN'S LEAGUE-OF DUBUQUE, IA.
James McFadden. John Mehlop.
A. F. Frudden. Robert W. Stewart.
John M. McDonald. M. M. Walker.
J. F. Merry.
IOWA STATE TRAVELING MEN'S ASSOCIATION.
DES MOINES, IOWA.
F. E. Haley, Secretary and Treas- T. M. Langan, Chairman Board of
urgf#; Directors.
MILLERS' NATIONAL ASSOCIATION.
C. B. Cole, President, Chester, 111. F. H. Magdeburg, Milwaukee,
B. A. Eckhart, Chicago, 111. Wis.
Frank Barry, Milwaukee, Wis.
BUSINESS MEN'S LEAGUE OF ST. LOUIS.
J. C. Birge. Leo Rassieur.
S. M. Kennard. Corwin H. Spencer.
Edward Devoy. J. S. Finkenbiner.
BOARD OF TRADE, CHICAGO.
R. S. Lyon, President. D. E. Richardson.
Wm. T. Baker. B. A. Eckhart.
F. G. Logan. George F. Stone.
CINCINNATI BOARD OF TRADE AND BUREAU OF
TRANSPORTATION.
James J. Hooker, President. W. J. Breed.
J. Gordon Taylor. E. P. Wilson. .
J. M. Macdonald.
COMMERCIAL CLUB OF OMAHA.
Euclid Martin. I. W. Carpenter.
H. W. Yates. W. D. McHugh.
George W. Wright.
NATIONAL GRAIN GROWERS' ASSOCIATION.
S. H. Greeley, Chicago, 111. M. S. Blair, Ojatta, N. D.
M. P. Moran, Graceville, Minn. S. Lindsay, Irene, S. D.
J. C. Hanley, St. Paul, Minn.
TARIFF REFORM COMMITTEE. REFORM CLUB OF NEW
YORK.
Lawson Purdy.
22
INDIANAPOLIS BOARD OF TRADE.
John S. Lazarus, President. Samuel E. Morss.
John L. Griffiths.
DETROIT CHAMBER OF COMMERCE.
George H. Barbour. W. A. Pungs.
Homer Warren. J. C. Hutchins.
W. A. C. Miller.
ST. LOUIS MANUFACTURERS' ASSOCIATION.
J. W. Van Cleave. R. L. Blackmer.
W. E. Nolker. John C. Roberts.
Elias Michael.
NATIONAL FARMERS' ALLIANCE AND INDUSTRIAL
UNION OF AMERICA.
John C. Hanley, St. Paul, Minn. Miss Bessie Murray, Wintersette,
John Hill, Jr., Chicago, 111. Iowa.
P. H. Rahilly, Lake City, Minn. Thomas Dodd, Hope, N. D.
J. B. Sossaman, Charlotte, N. C. A. S. Stephens, Beardsley, Minn.
PATENT LAW ASSOCIATION OF CHICAGO.
Taylor E. Brown. James H. Raymond.
L. L. Bond. P. C. Dyrenforth.
Lysander Hill.
MINNEAPOLIS BOARD OF TRADE.
Cyrus Northrop. J. S. McLain.
W. W. Folwell. S. A. Harris.
T. B. Walker. Frederick W. Lyman.
W. S. Dwinnell.
UNIVERSITY OF CHICAGO.
Wm. R. Harper, President. Oscar Lovell Triggs.
Harry Pratt Judson. Shailer Mathews.
Frank Frost Abbott. Charles Zeublin.
Adolph Caspar Miller. James Hayden Tufts.
Charles Herbert Thurber. William Isaac Thomas.
Francis Wayland Shepardson. Ralph C. H. Catterall.
William Hill. Albion W. Small.
ILLINOIS COMMERCIAL MEN'S ASSOCIATION.
James O'Donnell, Chicago, 111. George W. Smith.
L. A. Tyler, Chicago, 111. R. A. Cavenaugh.
George H. Holden, Chairman
Board of Directors.
DETROIT MERCHANTS' AND MANUFACTURERS'
EXCHANGE.
George H. Barbour. John S. Gray.
Clarence A. Black. Fred F. Ingram.
Edwin Armstrong. Walter S. Campbell.
John B. Howarth. O. R. Baldwin.
James Inglis.
23
MICHIGAN STATE MILLERS' ASSOCIATION.
J. J. Hanshue, Secretary and Treasurer, Lansing, Mich.
SINGLE TAX LEAGUE OF THE UNITED STATES.
Richard Dalton, Saverton, Mo. Millard F. Bingham, Chicago, 111.
F. H. Monroe, Chicago, 111. John Z. White, Chicago, 111.
Louis F. Post, Chicago, 111.
AMERICAN ANTI-TRUST LEAGUE.
M. L. Lockwood, Zelienople, W. B. Fleming, Kentucky.
Pennsylvania.
STATEN ISLAND CHAMBER OF COMMERCE.
Samuel Adams Robinson, West New Brighton, S. I.
COMMERCIAL TRAVELERS' AND HOTEL MEN'S LEAGUE.
E. M. Tierney, Binghamton, N. Y.
AMERICAN ACADEMY OF POLITICAL AND SOCIAL
SCIENCE.
E. J. James, Chicago, 111. Clinton Rogers Woodruff, Phila-
Stuart Wood, Philadelphia, Pa. delphia, Pa.
John H. Gray, Evanston, 111. Franklin MacVeagh, Chicago, 111.
CINCINNATI CHAMBER OF COMMERCE.
Wm. M. Alms. A. H. Mci^eod.
James N. Gamble. J. J. Hooker.
C. H. Kellogg.
OSHKOSH BOARD OF TRADE.
J. W. Hollister. E. R. Hicks.
M. H. Eaton. John Hicks.
W. J. Wagstaff. B. J. Daly.
F. H. Josslyn. J. H. Davidson.
Geo. A. Buckstaff. F. C. Stewart.
Charles Barber. Leo Haben, Secretary.
CLEVELAND CHAMBER OF COMMERCE.
J. G. W. Cowles.
AMERICAN SOCIAL SCIENCE ASSOCIATION.'
C. R. Henderson, Chicago, 111. W. H. Daly, Pittsburg, Pa.
Wm. A. Giles, Chicago, 111.
BALTIMORE BOARD OF TRADE.
Blanchard Randall.
COMMERCIAL CLUB OF INDIANAPOLIS.
John L. Griffiths. Justus C. Adams.
S. E. Morss. Evans Woollen.
W. L. Taylor.
NATIONAL ALLIANCE OF THEATRICAL STAGE EMPLOYES.
Lee M. Hart, Chicago, 111.
DAVENPORT BUSINESS MEN'S ASSOCIATION.
C. A. Ficke. A. R. Judy.
G. Watson French. M. J. Eagal.
J. R. Nutting.
ILLINOIS RETAIL HARDWARE DEALERS' ASSOCIATION.
Z. T. Miller, Bloomington, 111.
CHAMBER OF COMMERCE.
ST. PAUL, MINN.
E. V. Smalley. Ambrose Tighe.
E. W. Peet. Ross Clarke.
W. L. Chapin.
CHAMBER OF COMMERCE.
MILWAUKEE, WIS.
C. A. Chapin. David Vance.
E. P. Bacon. C. E. Lewis.
John Johnston.
UNITED STATES INDUSTRIAL COMMISSION.
Jas. H. Kyle, South Dakota. Theo. Otjen, Wisconsin.
J. W. Jenks, New York. L. F. Livingstone, Georgia.
J. M. Farquhar, New York. C. J. Harris, North Carolina.
CHAMBER OF COMMERCE.
QUINCY, ILL.
Charles H. Williamson. Edmund H. Botsford.
Cicero F. Perry. Perry C. Ellis.
AT LARGE.
Benjamin R. Tucker, Editor Liberty, New York City.
E. P. Ripley, President A., T. & S. F. Ry., Chicago.
James B. Dill, North American Trust Company, New York City.
Theodore C. Search, President National Manufacturers' Association,
Philadelphia, Pa.
P. J. McGuire, General Secretary United Brotherhood of Carpenters and
Joiners of America, Philadelphia, Pa.
Stuyvesant Fish, President Illinois Central Railroad, New York City.
P. H. Morrissey, Grand Master Brotherhood of Railroad Trainmen,
Peoria, 111.
James H. Eckels, ex-Comptroller of the Currency, Chicago.
D. K. Clink, Past Counselor United Commercial Travelers, Chicago.
M. W. Phalen, President Traveling Men's Protective Association,
Chicago.
Paul J. Maas, ex-Organizer American Federation of Labor, Chicago.
Franklin H. Head, President The Civic Federation of Chicago.
Ralph M. Easley, Secretary The Civic Federation of Chicago.
35
Joseph Nimmo, Jr., President National Statistical Association, Wash-
ington, D. C.
Samuel M. Jones, Mayor, Toledo, O.
Geo. A. Schilling, ex-Secretary Illinois Bureau of Labor Statistics,
Chicago.
Laurence Gronlund, Editorial Writer (since deceased), New York
Journal, New York City.
Howard K. Wood, Corporation Trust Company of New York, Jersey
City.
E. S. Lacey, ex-Comptroller of the Currency, Chicago.
Harry P. Robinson, Editor Railway Age, Chicago.
Graham Taylor, Warden, Chicago Commons, Chicago.
A. M. Compton, John V. Farwell Co., Chicago.
A. C. Bartlett, President National Association Merchants and Travelers,
Chicago.
W. D. Hoard, President Farmers' National Congress, Ft. Atkinson,
Wis.
James W. Ellsworth, New York City.
H. T. Newcomb, United States Census Office, Washington. D. C.
Edward W. Bemis, Bureau of Economic Research, New York City.
John R. Commons, Bureau of Economic Research, New York City.
Thomas J. Morgan, Chicago, Socialist.
A. M. Simons, Chicago, Socialist.
The roll was corrected and approved at 12:05 o'clock.
An amendment was offered by Kaymond, of Illinois, to Yel-
lott's resolution providing that the committee on organization
and program be appointed by the chair. The amendment was
accepted by mover, but after a hot debate, McGuirk, of Iowa, and
Jones, of Wisconsin, leading the opposition, was lost.
An amendment was offered by Gans of Illinois, and seconded
by Cockran of New York, providing that the committee include
one delegate from the Knights of Labor and one from each
organization of more than state "scope represented in the con-
ference. The amendment was accepted and adopted, after dis-
cussion, and the motion with the two amendments prevailed.
Pending the appointment and organization of the committee,
unanimous consent of the conference was given to proceed with
the program as originally planned.
J. W. JENKS.
Statistician United States Industrial Commission.
With the preface that the speaker represented the industrial
commission as an expert in the investigation of "trusts," the
chairman introduced Professor J. W. Jenks, head of department
of Political Economy of Cornell University, who said:
With the preface that the speaker represented the Industrial
Commission as an expert in the investigation 01 - trade, u.u
answering them. It is certainly true that a long step has been
taken toward the solution of any problem when the problem itself
has been clearly stated. It was thought that it might be of ser-
vice, therefore, if various questions which the present combina-
tions of capital have raised (and toward the solution of which
this conference may well contribute much), were to be brought
together at the beginning of the deliberations. I cannot expect
to state clearly all of those questions. I mention some of the
most important ones as they have been called to my attention.
1. Competition versus combination.
It has often been assumed that industrial combinations are
monopolies that have abolished competition. On the other
hand, managers of the most important ones invariably assert that
they have much competition, and that the principle of competi-
tion is still active as long as anyone is legally free to set up a rival
establishment. Many students of the question have asserted that
among great industrial organizations, competition is fiercer than
among smaller establishments, and that combination does not
abolish competition, but simply raises it to a higher plane. So
long as there is not a state monopoly like that of the postoffice,
or a legal monopoly, like that established by a patent, there is of
course at least potential competition. The law permits a rival to
enter the lists. But a question still remains : How far do large
combinations of capital possess a monopoly in fact, if not in law?
How far are these large industrial combinations able to fix prices
on the monopolistic principle of securing the highest net returns
with little reference to what others charge, even though there
may exist in the business some few other, but relatively speaking
unimportant establishments? How far can an establishment
which sells a high percentage, from 75 to 90 per cent, of the
total product, secure monopolistic gains? Is competition to be
considered free when one establishment controls from 75 to 90
27
per cent of the total product in market? Will not the fear of so
powerful an organization deter rivals from entering the field?
2. Combinations of capital and combinations of labor.
Some most active opponents of organized capital have been
found in the ranks of organized labor. Some managers of indus-
trial combinations assert that they have been forced to combine
on account of the power of organized labor. They assert that the
principle of combination is the same in both cases, and that labor
organizations are no less tyrannous than are organizations of capi-
tal. Before legislation regarding combinations is undertaken,
the question should be clearly answered, whether the two classes
of organizations are the same in principle, and whether a law
which restrains one will be held by the courts to restrain the other
also. The differences in principle, if they exist, should be made
perfectly clear.
3. Combinations caused by special privileges.
(a) Mr. Havemeyer has lately asserted that the "mother of all
trusts is the customs tariff law." Many industries, however, in
which great combinations exist, have no protection of their prod-
ucts by the tariff. Managers of combinations which have been
formed in protected industries assert often that it has been the
fierceness of home competition that has driven them into combina-
tion, and that if the tariff has been in any sense the cause of the
combination, it has been such only by developing the home indus-
try to so great an extent that fierce competition was unavoidable.
How large a proportion of the trusts does the protective tariff
favor? Would a lowering of the tariff on protected industries
in which industrial combinations have been formed destroy the
combination, or would it merely lead to international combina-
tion such as already exists in at least one or two instances, or,
without breaking the combination, would it have the effect of
lowering prices through foreign competition?
(b) Other combinations of great power have been formed in
industries protected by patents, and have secured monopolistic
prices through the aid of the patent laws. Would it be in the
interest of the public, and would it be practicable so to amend
our patent laws as to remove from them the element of monopoly,
while still securing to the inventor, by royalty or otherwise, a
suitable reward for his inventive skill?
(c) It has been frequently asserted that the success of many
of the leading combinations of capital has been due to special
favors granted them by the railroads. On the other hand, some
declare that the most successful combinations of the present day
find it rather for their interest to observe strictly the interstate
28
commerce law, and to insist upon it that the railroads shall make
no discriminations for anyone, whereas it is for the interests of
those small combinations that are still struggling for a firm foot-
hold to secure such discriminations. It is believed by many peo-
ple that railroad discriminations are very frequent. Most im-
portant questions to be solved are first, one of fact: To what
extent, and to whom do the railroads grant discriminating rates?
and do these discriminations build up trusts? And second:
What further remedy can be found for such discrimination be-
yond that which now exists under the interstate commerce law
and the laws of the several states? Shall the Interstate Com-
merce Commission prescribe for the railroads their methods of
bookkeeping, and shall the commission be given the power offi-
cially to inspect and audit their books? Is the national owner-
ship and management of the railroads a feasible proposition for
the United States to-day?
4. Other causes for the formation of combinations of capital.
Managers of the great capitalistic organizations usually assert
that they have been driven into combination through the fierce-
ness of competition; that without combination, fair earnings on
capital could not be realized ; and that the trust instead of being
an aggressive combination, is really capital on the defensive.
They also assert that it is only through the power that comes
from a large aggregation of capital that they are able to meet
foreign competition in foreign trade, and that without such com-
bination our export trade could not well be developed. They
declare that with the development of foreign trade brought about
through the combination of capital, they are enabled so to in-
crease their output that not only the profits of capital, but also the
demand for nome labor is greatly increased. How far is such a
statement true? The president of one of the large combina-
tions told me a few days ago that he expected during the coming
year to bring in to the United States for investment here, half a
million dollars in profits from their export trade in the far East.
All of the raw material for this export trade was produced in the
United States, and he asserted that the number of laborers set to
work here in producing the raw material for this export trade far
exceeded the number of those thrown out of employment by the
combination. How far is this example a typical one, and how
far are these arguments of the capitalists to be considered valid?
In this connection it must not be forgotten that a clear distinc-
tion is to be drawn between a large and powerful organization
and a monopoly. The fiercest competition is that among the
giant corporations.
29
5. Over-capitalization.
Most of the newer combinations of capital have issued large
amounts of stock, common and preferred, as well as of bonds.
It is important, at least for the investor, to know the facts regard-
ing it: How much of this capital is represented in plants at a
fair valuation? How much in patents or brands? How much in
good- will in the proper sense of that word? How much is
"water"? It is asserted by -some that no harm is done the public
even though the capitalization be much beyond the value of the
plants; that the amoimt of capitalization has no effect on prices.
Others, who believe that in these combinations an element of
monopoly is found, think that an attempt to pay dividends on a
large capitalization does increase prices. One class of persons
asserts that capital stock should be limited to the amount of capi-
tal actually paid in in cash, or in plants taken at a conservative
valuation. Another class believes that capitalization should be
fixed by the probable earning capacity of an establishment. It is
urged as an example, that a newspaper with a plant valued at a hun-
dred thousand dollars may well earn large dividends on a million
owing to the genius of the editor. Why, it is asked, not capi-
talize at a million? But on the other hand it is asked, should
we put into permanent securities to be bought by the investing
public a value depending so largely upon the talents of one
short-lived individual? Again, a street railway which costs
$500,000, and whose franchise may have cost nothing, may well
pay good profits on $1,000,000, "or $2,000,000. Is it in the
public interest that a public franchise be thus capitalized into
permanent securities, so as to pay dividends on $1,000,000 or
$2,000,000, especially if the people are prevented thereby from
seeing the source of profits? Most persons would readily
grant that genius, or even the nerve that is shown in investing
capital in new enterprises should meet with a fitting reward. It
is a question not yet practically settled, and one which most peo-
ple have not yet even settled in principle in their own minds,
whether it is in the interest of the public that by high charges
dividends should be earned on capitalization which represents a
public franchise, or on that which represents the monopolistic
element created simply by the aggregation of capital, without the
application of special talent or exceptional skill. Is it desirable
to limit capitalization or to give to the public by taxation part of
the profits or to make the nature of the capitalization of each
organization public, so that any investor can readily learn how
large a proportion in every case is represented by plant, how
much by patents or special brands, how much by good-will, and
30
how much is nothing but ''water' 5 ? Would, such knowledge ade-
quately protect the investor? Would such knowledge, by invit-
ing competition, if real profits were made public, sufficiently pro-
te'ct the consumer? Many of our best thinkers think no further
remedy is needed. Are the interests of the stockholders in the
stability of business and the interests of the consumers in steady
and low prices, under present industrial conditions, tbe same?
6. Effects of the combinations.
(a) On prices. It remains- still to be fully established what
the effects of these combinations are upon the prices of raw mate-
rial and of the finished products. Are prices of raw materials
held lower than is normal by the combination? Are the prices
of the finished product lowered or made higher by the combina-
tion? Is it possible that competition can force prices so low,
that by driving into bankruptcy a large number of establish-
ments the interests of the public will be seriously injured? Is
it in the interests of the laborers and of the public at large,
that the fiercest possible competition in prices be encouraged?
One of the leading rivals of the sugar combination has lately
asserted that he believed the formation of the sugar trust had the
effect on the whole of lowering prices. Although the trust im-
mediately put prices up, had competition continued longer so
many more refiners would have failed, he thought, that the short
supply on the market would have pushed prices far above the rate
established by the trust.
(b) On wages. Despite the fact that the wage-earners them-
selves seem to be in good part opposed to the industrial combina-
tions, it is often asserted by the managers of the trusts that com-
binations of capital have increased the wages of the laboring
men. The laborers themselves assert often that these combina-
tions throw many men out of employment. They believe also that
combinations, by controlling practically all of the plants of any
one industry, are in much better condition to resist the demands
of labor, and to endure any pressure that can be brought upon
them by threats of strikes. A strike in one or two, or several
establishments, will not affect the combination materially, pro-
vided it can carry on production in its other establishments at
the same time. The growth of great corporate organizations of
capital, they think, therefore, will give the death blow to trade
unions. But the question is not yet settled. May the laborers
possibly, by making also a thorough combination covering the
whole of any one industry, be as well able to deal with their em-
ployers as they are at the present time? If their organization
covers only two or three plants, they appear to be at a disad-
31
vantage. If their organization covers the entire industry, can
the laborers and capitalists then act together as a unit in fixing
wages over the whole territory? Through their agreements on
wages, can they more readily control the prices to consumers th&n
has ever been the case heretofore? Would not the capitalists
prefer to tax the consumer, rather than the workman if he has a
choice, and if one must suffer, to give him his profit ? If so com-
plete a system of organization of labor is difficult to start and to
manage, will it be in the interest of the employers to aid the labor-
ers in making, and holding, this organization, in order more
effectively to control prices? These questions are not yet settled ;
and a fertile subject, not for speculation merely, but for serious
thought, remains in the possibility of such an extension of labor
unions that the employers and employees throughout an entire
industry, can, with little fear of successful opposition, practically
fix prices arbitrarily by agreement. Another form of union to
reach the same end, and one which has already a basis in success-
ful experience, is for the workmen to become stockholders in the
combination, and thus to divide with the capitalist the profits of
monopoly. How generally can this plan be made practicable?
The effects upon the consuming community at large of any such
union of employer and workingman need also careful study.
(c) Upon middlemen. A third complaint against great capi-
talistic organizations comes from the middlemen, particularly
from jobbers and wholesale dealers, who assert that the trusts
are eliminating them. Is this elimination of the middlemen, as
well as the saving of labor, to be considered on the whole a gain
to the community or a loss? If the trust can deal directly with
two or three large jobbers, can fix their prices, and guarantee
their profits, will there be enough saving in energy to the com-
munity to make up for the loss to the others who are driven out of
business temporarily? Will it also be possible within a compara-
tively short time for those persons whose business is thus ruined,
as well as for the laborers who are driven out of employment by
the combinations, to secure employment elsewhere through the
added demand that may come from the saving of cost and of labor
energy, and from the increase in the export trade ?
It is asserted that the trust, by killing the small establishment,
checks the growth of individuality in young business men, making
of them mere hirelings. Others assert that no one is fit for com-
mand till he has first learned to obey ; that in the great organiza-
tions there are many positions of responsibility, in which indi-
vidual initiative can have full play; that the distribution of
rewards to men of real merit is much more certain and just when
32
business is well organized ; and that the places at the top are much
more worthy the ambition of the man of great individual power.
An example has been lately suggested: If a dozen small
railroads unite into one great system, few men lose posi-
tions. The general superintendents of the small roads be-
come division superintendents of the large system, with n'o
decrease in pay, with substantially the same duties and respon-
sibilities, although frequent reports are required from a general
superintendent. Before the consolidation, reports went to the
president and directors. The best men have better opportunities
for higher position; the average men do not lose; the poor men
are more surely thrust down to pure routine labor. Will not the
same effect be generally found in all consolidations?
The question is perhaps the most vital one of the whole dis-
cussion. Only experience can give the final answer.
On the whole, then, are we to consider the new form of organ-
ization a means of saving energy comparable with a new inven-
tion like the steam engine or the railroad, so that we may be
fairly sure that, although temporary suffering occurs, there will
be enough saving to lower prices and to increase the demand for
goods to so great an extent that the total demand for labor will
in the long run be increased and the public benefited? Or, on
the other hand, is the new form of organization a conspiracy of
the few rich and powerful to oppress the many? Each view is
taken by thousands.
7. Legislation.
If the state needs to interfere in this modern industrial move-
ment, what form of legislation is wisest? Should it be destruc-
tive, attempting to prevent combination, or should it be regu-
lative, permitting combination freely, but attempting so to con-
trol that evils to the public may be avoided? Of legislation aim-
ing at destruction we have had many examples. The question
still remains unsettled as to how far this legislation will prove
effective. Some points have been given interpretation by the
courts ; some have yet to be tested ; experience only will show the
outcome.
So far as legislation is to be regulative, will it be sufficient to
secure publicity, or can something be done to prevent undue
raising or lowering of prices and wages?
A second question of not less import is this,- How far can
s.uch legislation be national under the general provisions of our
constitution regarding interstate commerce, and how far must the
legislation be state?
To be more specific as we summarize: Can there be, if it
seems desirable, within a reasonable time, a national incorpora-
tion of great industries, over which the federal government shall
have sole control? Can organizations then, which place them-
selves under federal supervision and control, be exempt from a
variety of legislation, either friendly or hostile, of the several
.states?
Can Congress now, under our present constitution, providing
for the regulation of commerce between the states, secure by new
legislation full information regarding the nature of the property
and business of great corporations, railroad and others, and fre-
quent reports regarding the condition of the business with power
of inspection of records, so that confidence may be assured? If
such publicity is sought, must a special commission or bureau be
created for the administrative work?
If such inspection shows very high profits, will the fear and
possibility 'of competition so lower prices as to distribute these
profits among the public, or would it be wise to attempt, without
destroying the spirit of enterprise, to give part of the profits to
the public through taxation?
Can the separate states, by any of the measures suggested, or
by others, effectively promote the interests of their citizens by
legislation without substantial uniformity of legislation among
them all? Can such uniformity be secured, or even hoped for?
There are other problems created by the industrial combina-
tions. I have mentioned the most important ones to which my
attention has been called. It is hoped that wise counsel and
conservative though bold action, may, in no long time, solve some
of them.
If it will not be considered out of place, may I venture to sug-
gest that the security of the state, and the welfare of the people,
is always best attained, not through suspicion and denunciation,
but through confidence in an opponent's honesty of purpose, and
through an earnest endeavor to get the other man's point of view.
I have known many of the trust leaders and advocates, and many
of their chief opponents. In uprightness, sincerity, public spirt,
patriotism, there is little difference among them. Likewise in
earnest determination to look out for themselves and to protect
what they consider their own, there is little difference. We all
have our weaknesses: few of us are all bad. The chief endeavor
of men in legislatures or elsewhere should be not as opponents,
for each to hold his own regardless of right, as is only too natural,'
but as students, for each to be sure that he understands the other
34
and respects the other's sincerity. Lincoln's dictum of "char-
ity for all" was not only Christlike, it was also statesmanlike.
The true statesman seeks the truth and through candor and fair
dealing and mutual respect can one best attain the truth.
At 1:10 o'clock the conference took a recess until 3 o'clock.
AFTERNOON SESSION, SEPTEMBER 13.
The caucuses of the delegations in selecting the members of
the committee on organization and program prevented a full
attendance, of delegates until some time after the afternoon ses-
sion was called to order by Chairman Head at 3 o'clock. The
galleries were filled, however, and an ovation was given Professor
Henry C. Adams, head of department of Political Economy of
the University of Michigan, when he was introduced.
HENRY C. ADAMS.
Statistician Interstate Commerce Commission.
I have been requested to undertake a statement of the ques-
tions that arise in the consideration of the trust problem. In
doing this I shall say nothing that is new, nor shall it be my aim
to be exhaustive. It is possible, however, that questions which
are familiar may present themselves in a new light when brought
together in a single statement.
Whatever the trust problem may be, it has to do with busi-
ness organization, and on this account the first question that
suggests itself is one that pertains to the science of economics.
We observe in almost every form of business that industrial
power is concentrating itself, that organizations are growing in
size, that individual industry and small enterprises are being
crowded to the wall, and that the sphere of competition is con-
stantly being narrowed. This tendency is opposed to the theory
upon which our system of jurisprudence rests, and it is pertinent
to inquire whether it is inherent in the nature of the industries
that are thus tending toward consolidation, or whether its ex-
planation is to be found in the peculiar conditions under which
industry at the present time is carried on. This is a most im-
portant question; for if the tendency toward consolidation be
natural, remedial legislation should address itself to the control
35
of the industrial forces thus brought together. If, on the other
hand, this tendency be artificial, the legislature in dealing with
the situation must seek to restore those conditions under which
individual enterprise may be able to maintain itself. Without
undertaking the analysis of industrial conditions and motives
which a consideration of this question involves, I shall state at
once what seems to be the correct opinion upon this subject.
Industries are not all of the same kind. They do not all possess
the same character. Some tend toward consolidation and com-
bination, while others are well fitted by their character to con-
tinue a separate and a competitive existence. The transportation
industries are of the former class. The manufacturing indus-
tries are, speaking generally, of the latter class. Kailways by
their very nature tend toward combinations and consolidations.
The biscuit industry, the manufacture of nails, the refining of
oil, on the other hand, are well fitted for individual management
and administration. If these latter, like the former, show a ten-
dency toward consolidation, the explanation will be found in the
peculiar conditions under which they are carried on. Thus again,
upon the threshold of this discussion, do we discover the im-
perative necessity of industrial analysis, as a guide to right policy
and sound legislation.
Before coming to questions of general policy, there is another
question which will undoubtedly be made the subject of warm dis-
cussion by this convention. Are the combinations commonly
called trusts advantageous or disadvantageous? Is the tendency
toward consolidation one to be approved or disapproved? It is
likely that this discussion will turn upon three points: First,
does consolidation of manufacturing industries tend toward the
reduction of cost? Second,' will manufacturing under trusts, by
measuring the output to the current demand, tend to guard
society from the evils of commercial panics and commercial de-
pressions? And lastly, is this new organization of industry in
harmony with a democratic organization of society? Here again
I must ask the privilege of expressing an opinion, as the time
allotted this paper does not permit a full statement of the reasons
upon which my opinion rests.
It is common to say that increase in the size of a manu-
facturing plant permits the production of commodities at less
cost than would otherwise be the case. There is undoubtedly
some truth in this statement. The development of machinery
has gone hand in hand with the growth of factories, and as a
result the product is furnished at a cheapened rate. But there
is a limit to the application of this rule. Every manufacturing
industry, considered from the point of view of production, has at
any particular time a size which may he regarded as its normal
size of maximum efficiency. This normal size of maximum effi-
ciency is determined hy the extent to which division of lahor and
the use of machinery can be applied. To increase such an indus-
try by one-half would not result in a decrease of the cost of man-
ufacture, for it would occasion a less effective application of the
principle of division of labor. While, therefore, it is true that
the concentration of capital and labor under a single direction
is followed by economy up to a certain -point, it is not true that
combination and concentration beyond that point tends to reduce
the cost of production. He who accepts this statement of the
case must conclude that manufacturing combinations (I say noth-
ing of other forms) contribute nothing to the reduction of the
cost of manufacture beyond what would be contributed should
each of the industries continue its independent competitive ex-
istence. This is a curt answer to a profound question, but it is
believed to rest upon sound analysis and .to lead to the conclu-
sion that the motive for a trust organization of manufacturing
industries is not found in a desire to benefit the public by the
reduction of cost.
It is not so difficult to suggest the line of reasoning upon the
second question submitted. The chief argument in favor of com-
binations among producers is that by this means product will be
measured to demand, and consequently there will be no over-
stocking of the market, no commercial depression, and no com-
mercial panic. I shall not undertake to argue this proposition,
but conten^ myself with a single comment. Opposed to this
theory of commercial depressions stands the well-wrought theory
of socialistic writers which rests upon the claim that a stocked
market is due to an uneconomic distribution of values, and not
to an overproduction of goods. It certainly is true that goods
cannot be sold when the property in the goods, as also the money
with which to purchase them is in the same hands. A steady
market implies an equation between goods on the one hand and
purchasing power in the hands of those for whom the goods are
made on the other. You perceive at once the bearing of this
line of reasoning upon the claim that combinations tend to stead-
iness of trade. For if the trusts which tend to concentrate indus-
trial control, concentrates also industrial values, it is evident upon
the theory of industrial crises just related that such organizations
intensify the conditions that lead to commercial crises. An
adjustment of the output to the ctirrent effective demand is of
the utmost importance.. It may be questioned, however, whether
37
a yet further concentration of industrial power than that which
now exists is the best means of attaining this result.
In addition to these purely industrial considerations it is
necessary to inquire respecting the general social and political
results of trust organizations before one can accept them as a
healthful tendency in modern life. It must be remembered that
our industrial society rests upon English jurisprudence, that Eng-
lish jurisprudence acknowledges the individual as the center of
all industrial activity, that it provides for him the institution of
private property, holds him to strict accountability, and assumes
that competition between producers, on the one hand, and pur-
chasers, on the other hand, is a guarantee of justice and equity
in all industrial conduct. Do trusts fit naturally into this theory
of society? For the preservation of democracy there must be
maintained a fair degree of equality in the social standing of citi-
zens; do trusts tend to such equality? For the normal workings
of that industrial society which is the product of six centuries of
history the door of opportunity must not be closed; do trusts tend
to close the door of opportunity? For the realization of the
American idea of government there must be a balance of power,
not only between the several departments 'of government, but
between the government on the one hand, and the interests that
lie outside the government, on the other hand ; do trusts tend to
destroy this balance of power? I would not claim, without dis-
cussion, that the trust organization of society destroys reasonable
equality, closes the door of industrial opportunity, or tends to
disarrange that fine balance essential to the successful workings
of an automatic society; but I do assert that the questions here
presented are debatable questions, and that the buroTen of proof
lies with the advocates of this new form of business organization.
If the current tendency toward consolidation in manufactur-
ing industries does not spring from the nature of the industry,
and if the benefits accruing to the public from these consolida-
tions are at least questionable, it is incumbent upon us next to
inquire out of what conditions these modern industrial organiza-
tions have sprung. I shall venture but three suggestions in this
connection. Doubtless many more will be presented as this con-
vention proceeds in its deliberations.
The inequalities which exist in established schedules of rail-
way rates, as also the proneness of railways to depart from pub-
lished schedules in order to secure the business of large shippers,
works toward the consolidation of manufacturing industries and
commercial enterprises. It is not intended to say that mal-ad-
ministration on the part of railways is of itself responsible for
38
present industrial tendencies. It is, however, true that in so far
as railways discriminate in favor of large shippers, they present
a motive to shippers to become as large as possible. This is too
familiar a fact to call for discussion. The truth is that the busi-
ness of transportation underlies all other businesses, it determines
the conditions upon which other forms of industry are carried
on, and by the manipulation of rate schedules tone, color and
character can be given to industrial society at large. While the
solution of the railway problem would not necessarily cause all
trusts and combinations to disappear, its solution is essential for
dealing wisely with the trust problem. No one can deny that
inequitable railway charges and discriminations in railway rates
are important elements in the conditions that foster commercial
combinations.
In further explanation of the current tendency toward busi-
ness combination on the part of industries that by their nature
are not monopolistic, reference may be made to the fact that the
commercial jurisdiction of modern business is much broader than
the political jurisdiction of the governments whose protection
they seek and by whom they should in theory be controlled. The
federal government has no authority over many of the questions
raised by a study of trusts, while the state governments are con-
fined in the exercise of their authority to their local jurisdictions.
Such a condition must result in confusion of laws, in uncertainty
of procedure, and in enabling the interstate enterprises which
rest upon state fotindations to become a law unto themselves, so
far as the conduct of their affairs is concerned. Competition
cannot work inequitably under such conditions. Justice attends
competition only when competitors stand on an equal footing.
It is, therefore, no occasion for surprise to one who is familiar
with the present condition of state laws upon industrial affairs
that small and localized industries should find themselves at a
disadvantage in their struggle for existence with the great com-
binations. A national market has taken the place of the local
market, but we still rely upon local law for its regulation and con-
trol. Uniformity of law and harmony of procedure is as essen-
tial as uniform railway rates and absence of discrimination, to
restore those conditions in which competition can effect its nor-
mal and beneficent results.
We are thus carried by our analysis from the consideration
of economic relations to the stupendous question of political
organization and legislative procedure. He who believes in local
government will not readily consent to the proposition that the
federal Congress should assert exclusive authority over commer-
cial and industrial conditions. Nor, on the other hand, will he
who appreciates the significance and the beneficent results of a
world's market consent to the suggestion that the business trans-
actions of a state concern should not extend beyond the borders
of a state. Here is a problem for statesmen to contemplate, and it
is possible before arriving at its solution that the constitutional
relations between the local and the federal government will be
subjected to modification. Without entering upon this phase of
the subject, may I submit for consideration the following propo-
sition: The true function of a central government in dealing
with problems of internal economy is to determine the funda-
mental principles of legislation, while the true function of local
government is to express those principles in the terms of local
conditions and to administer the laws thus expressed. By this
means harmony of action at least would be secured and one of the
conditions out of which industrial combinations spring will have
been set aside.
My third suggestion in explanation of the persistence of com-
binations in industries which from their nature are subject to
competition is found in the unsatisfactory condition of state laws
of incorporation. This is a question that should be considered
by a lawyer, but by the lawyer who is familiar with the industrial
history of the English speaking people. Originally a corpora-
tion created by the state was regarded as an arm. of the state.
Individuals were clothed with some degree of public authority
because they undertook to perform what were regarded as public
duties. The East India Company, which planted an empire, is
an illustration of such a corporation. The modern idea of a cor-
poration is entirely different. It is regarded merely as a busi-
ness organization. I have not time to discuss this abstruse ques-
tion, even had I the ability, but of one thing I am confident : The
theory of law which now prevails respecting industrial corpora-
tions should be so changed that the public element is again
brought into prominence. Industries- should be classified, and
the right of incorporation granted to one class and denied to
another, and special restrictions, if not constant supervision,
should be exercised over such industries as are incorporated be-
fore we can again reintroduce into this modern, complex
machine-organized industrial society the conditions favorable to
the normal working of the beneficent principle of competition.
Whatever may be said upon the questions thus far submitted,
there is one point respecting which all should agree. Industrial
combinations, whatever their form, whatever their purpose, what-
ever their explanation, are matters of public concern. It is said,
40
OFFICERS OF THE CONFERENCE
DUDLEY G. WOOTEN
First Vice-Chairman
FRANKLIN H. HEAD
Temporary Chairman
STEPHEN P. CORLISS
Third Vice-Chairman
HENRY V. JOHNSON
Second Vice-Chairman
WILLIAM WIRT HOWE
Permanent Chairman
RALPH M. EASLEY
Secretary
we do not know enough of this new form of industrial organiza-
tion to judge properly respecting it. If this be true, and if on
this account trusts are to be allowed a probationary existence, it
is the plain duty of government to hold them meantime to strict
account. The statistician should be pressed into service, the
keeping of books should be regarded as of paramount importance,
and the rule according to which accounts are kept and reports
made should be formulated in the interest of investigation. The
propriety of this suggestion can be questioned by no one. If
trusts are what they claim, that is to say, the vanguards of a new
industrial organization which holds within itself great industrial
benefits, the sooner this fact is recognized by the public, the better
for all concerned. If, on the other hand, there is danger in the
extreme application of this form of organization, the government
certainly has a right to possess itself of all facts necessary for a
judicious opinion and for effective legislation. It would be a
step in the right direction should the states make provision for
an interstate organization of statistical inquiry and confer upon
i such an organization adequate authority for the uniform prose-
cution of its investigation. Where competition controls, the
government may safely refrain from interference, but where com-
petition is excluded, or where the conditions for its exercise are
such as to give one competitor an advantage over another, noth-
, ing remains but public supervision; and, I repeat, the most
important, indeed the essential agency for legislation or for ad-
ministrative supervision is a thoroughly organized bureau of
statistics and accounts clothed with authority over the auditing
departments of these industrial associations.
Permit me in closing to pass in rapid review the questions, so
far as they have been presented, which underlie the problem now
claiming your attention. It was first suggested that industries
differ in their fundamental character and that no wise policy can
be adopted until those which are naturally monopolistic are sepa-
rated from those which by nature are subject to competitive con-
trol. It was, in the second place, suggested that before a reason-
able opinion could be entertained respecting trusts their relation
to prices, to commercial depressions, as also their influence upon
democracy, should be clearly grasped. Turning, then, in the
third place, to a consideration of the current tendency toward
monopoly in industries which naturally are subject to competi-
tive control, it was stated that the explanation of this tendency is
found in the conditions under which manufacturing and com-
mercial enterprises are carried on. Three of these conditions
were mentioned: First, the fact that railways do discriminate
41
in favor of large shippers ' second, that the extension of commer-
cial relations beyond the jurisdiction of the states has. resulted in
confusion of law and uncertainty of procedure a condition espe-
cially favorable to the encouragement of great interstate indus-
tries; third, attention was called to the unsatisfactory condition
of the laws of incorporation as one of the elements in the condi-
tions by which trusts are fostered. And finally, your attention
was called to the fact that whatever else may be determined upon,
provision should be made by the states for an efficient, compre-
hensive and harmonious control over the auditing departments of
such industries as choose the trust organization for the prosecu-
tion of business.
The question before this convention is indeed a great ques-
tion. It moves in many directions and embraces many considera-
tions. It is at bottom a question of social theories and social
ideas. Its vastness will be appreciated when it is observed that
its judicious treatment will result in securing for the people the
advantages of the industrial development of the past century,
while to ignore it or to fail in its solution would result in prosti-*
tuting the wealth created by an hundred years of phenomenal
development to the service of a class.
DUDLEY G. WOOTEK
Member Texas Legislature.
At the conclusion of Professor Adams' remarks, the chairman
introduced Hon. Dudley Goodall Wooten, of the Texas Legisla-
ture. Mr. "Wooten was the first speaker on the uncompromising
anti-trust side of the debate. The gallery audience was in
sympathy with his views, and, carried away by the eloquence of
the gifted orator, punctuated his address with salvo after salvo
of applause. Mr. Wooten said:
The delegates from Texas are highly sensible of the
honor of having one of their number called upon to address
this learned and representative body upon the first day of its
assembling. It is I believe understood that this day's session
shall be devoted to a general discussion of the problems under
consideration, leaving to the subsequent proceedings of the
Conference the detailed and special examination of the various
phases of the subject. I therefore feel less hesitation in respond-
ing to the call made upon me at this time, and in the remarks
42
that I shall endeavor to submit I shall attempt to merely present
in outline and in general terms the views entertained by my peo-
ple. In what I shall say I make no pretense of discussing Trusts
and Monopolies from the standpoint of an economic expert, but
prefer rather to address myself to the broad features of these
combinations and the principles that seem to me to underlie their
causes, promote their consequences, and must accomplish their
reformation or removal.
We come from a state whose location, area, resources and
population, in our judgment, entitle us to entertain very positive
and pertinent convictions upon the great problems that have
called this assembly together, and which will hereafter provoke
the learned discussions of the distinguished gentlemen here pres-
ent. First of all, we are mainly producers of raw materials and
consumers of manufactured products, and whatever tends to ar-
bitrarily control the prices of the one or to monopolize the output
of the other is a direct injury to our people and their industrial
pursuits. In the next place, aside from the material aspects of
the subject as affecting the markets in which we buy and sell,
we believe that there is a fundamental principle of political ethics
and governmental science involved in the problems under discus-
sion. We believe that there are some things more valuable, more
to be desired and more worthy to be contended for by a free people
than mere industrial activity, commercial progress or the accumu-
lation of worldly wealth. We do not believe in that school of
political philosophy that despises the wisdom and experience of
the fathers of English and American liberty and law, that rejects
as antiquated and inadequate the great precepts and principles of
a venerable jurisprudence at the behest of modern monopoly, that
salves the wounds of freedom with the oil of avarice, and con-
dones a constitutional crime with the argument of pelf and greed.
In the Constitution under which we in Texas live handed
down to us by the heroes of the Alamo and San Jacinto we are
taught that "monopolies are contrary to'the genius of a free gov-
ernment, and shall never be allowed" ; and we adhere with unhesi-
tating loyalty to both the letter and the spirit of that declaration.
In the Federal Constitution under which we all live handed
down to us all by the heroes of Lexington and Saratoga and York-
town we have been taught that "all rights not delegated to the
United States nor prohibited to the States, are reserved to the
people" ; and among the most valuable of those reserved rights we
esteem the traditional freedom of trade, contract and labor that has
been cherished and defended by Anglo-Saxon yeomen in every age
since their history began. Nay, more than that, Mr. Chairman,
43
accepting in good faith that Amendment to the federal Constitu-,
tion which the heroic legions of the South resisted unto death-on
a thousand battlefields, we believe that "neither slavery nor invol-
untary servitude, except as punishment for crime, shall exist in
the United States or any place subject to their jurisdiction" ; and
we confidently assert that the commercial and industrial bondage
being rapidly imposed upon the toil and talents of seventy mil-
lions of American citizens by the syndicated wealth of a few great
corporate monopolies, is more dire and dangerous than the slavery
that once bowed the heads and burdened the backs of four mil-
lions of Southern black men.
And above and beyond these great written guarantees of equal-
ity and justice, we look to the lessons of history and appeal to the
authority of experience. When we are told that the spirit of
commercial combination promises golden rewards to the present
tendencies of our economic system, we remember that no republic
has ever survived the mercenary despotism of merchants and
money-changers. We recall the fate of that little group of Ital-
ian states whose political institutions were wrecked by the touch
of commercial greed and whose republican freedom vanished be-
fore the breath of commercial ambition. Their glittering frag-
ments strewed the shores of the Mediterranean like shattered
baubles as soon as their commerce became mightier than their
constitutions, and tbeir shipping more potent than their states-
manship. We recollect that from the day the Saxon set his sway
on British shores, through all his successive conquests and assimi-
lations of Celtic, Danish and Norman invaders, the one virtue
that made him strong and kept him free and proved him trium-
phant was his invincible loyalty to the genius of that liberty that
springs from the soil and that civilization that centers in the
rights and aspirations of the individual man. And we reflect to-
day that, although the sails of imperial Britain whiten every sea,
while her commercial activit}' stirs every port and dominates half
the globe, yet she has preserved the immemorial virtues of her
Saxon lineage. The source of all her strength and the citadel of
all her civilization are still housed beneath the roofs of her sturdy
yeomanrv, proud of their natural rights and tenacious of their
inherited freedom. The commerce of the world has made her
glorious and rich, but the independent citizenship of her personal
subjects sustains the fabric of her national power,
"Broad bas'd upon her people's will,
And compass'd by the inviolate sea."
Coming to this Western World, we remember the fortitude
and sagacity that founded this republic upon the same great tra-
44
etitions of civil and political rights that had glorified the centuries
of English constitutional growth, but framed its institutions
along yet broader and freer lines. We love to recall that Wash-
ington warned his countrymen against the dangerous seductions
of commercial power and the corrupting influence of consuming
wealth; that he commended to them the frugal methods and easy
paths of individual enterprise, and, with his last breath, bade
them beware the encroaching tyranny of ambitious greed. We
admire the intrepid radicalism and daring democracy of Jeffer-
son when he proclaimed that he "would rather see the whole earth
reduced to a single pair and them free, than to behold a populous
world groaning beneath the exactions of privileged monopoly."
We recollect that the elder Adams said that "the highest ideals
of political perfection are not compatible with the selfish stan-
dards of material prosperity," and that Webster declared that
"the deadliest canker that can attack the heart of the nation is
the corroding disease of commercial avarice."
Line upon line and precept upon precept this cumulative creed
of political philosophy comes down to us from the lips and lives of
all our sages, heroes and statesmen, and is verified in every step
and stage of our national career.
In the face of such lessons and such authority we must be per-
mitted to dissent from the academic arguments that seek to reason
away our faith and history, and to repudiate utterly the scholastic
speculation that would silence the voices of our wisest patriots
and reverse the judgments of our soundest jurists. The academic
element has never been friendly to practical freedom nor con-
tributed, sensibly to the solution of any great social or political
problem, and its attitude in this discussion is in line with its
historic assumption of authority without wisdom and counsel
without sympathy.
Kemembering and revering these ancient and approved prin-
ciples and precepts, we must be allowed to believe that the mod-
ern trust and its more modern successor the consolidated corpo-
rate monopoly are the practical realization of the commercial
spirit in its most despotic form; that they represent in crystall-
ized and perfected triumph the concentrated evils that have been
resisted by our ancestors and denounced by our laws and tradi-
tions since Anglican freedom had its birth and American institu-
tions began their growth.
Developing under the frown of judicial disfavor, the modern
trust has passed from the loose and imperfect combination of
affiliated corporations until it issues in the condensed and con-
solidated union of huge capitalized monopolies under one charter
45
and a centralized control. Their fundamental purposes are to
reduce expenses by lowering the prices of raw materials, minimiz-
ing the cost of labor, and concentrating the expenditure of energy
into the smallest possible compass; to destroy competition by
absorbing all rival industries, squeezing out the small, coercing
the weak and amalgamating the strong; to monopolize and con-
trol trade and industry by absolutely dominating the market and
subsidizing or terrorizing the free and normal course of com-
merce, transportation and labor. These arg the avowed "and
undisguised objects of every great manufacturing and commercial
syndicate of the age. They seek to justify their operations on
the plausible ground that they improve the quality and increase
the quantity of manufactured products, Deduce the prices to the
consumer, save money, time and labor to the customer, and add
to the aggregate wealth and prosperity of the country. It might
be admitted for the sake of argument that some of these conten-
tions are true, while the monopoly is perfecting the machinery of
its despotism, but ultimately none of them is true or possible in
the nature of things. But suppose some of these things to be cor-
rectly stated; are there no other factors to be considered in the
problem? At what and whose expense are these much praised
results attained? At the expense of the producer of the raw'
materials, whose products are forced upon the market at ruinous
prices; at the expense of discharged employees and laborers,
whose places are filled by fewer hands or improved machinery,
whose wages cease, whose families must starve or steal or join the
great army of tramps and paupers, whose crimes and penury are
the shame and the menace of the republic; at the expense of the
toil and enterprise of every honest competitor, who is driven out of
business by the combination or closed up by forcible absorption;
at the expense of every customer who is compelled to handle the
trust goods upon arbitrary terms and at such profits as the syndi-
cate may prescribe ; at the expense of the entire public, which is
sooner or later left no choice but to submit to such exactions as
the triumphant monopoly may dictate. And who is benefited
thereby? The few fortunate employees who are able to retain
their employment under the new system; the speculators in the
watered stock that was floated at the inception of the enterprise
and which has become valuable by the manipulations of the
monopoly; and the limited number of promoters who have
amassed millions of money by the scheme that defrauded, impov-
erished and enslaved millions of men. "Wealth and prosperity
and a limited degree of happiness have perhaps blessed a few sel-
fish incorporators and their more selfish families, while poverty,
46
discontent, despair and the bitterness of ruined hopes and homes
have darkened the minds and desolated the hearts of countless
thousands of honest, industrious, aspiring citizens of a free
republic.
This is merely the material side of the picture, but to describe
it is to announce it as a drama of wrong and woe. I say nothing
of the grievous injustice and inequality of any political system
that permits such a monstrous perversion of all the traditions of
our liberties and laws. To recite the outlines of English and
American constitutional history is to denounce in every line and
landmark the whole origin, operation and consequences of the
modern commercial and industrial trust.
Entertaining as we do these deliberate and decided convic-
tions, there is in our view of the matter but one phase of the prob-
lem left open for discussion, and that is how best to remedy the
evil and remove its causes. Upon this branch of the subject there
may well be differences of opinion among those otherwise agreed
upon the propositions just advanced. When we come to devise
and to enforce remedies against these disastrous agencies, we
confront a difficult and delicate question of both law and fact.
It involves vested rights, the obligations of contract, the im-
munities and privileges of citizenship, and the intricate mechan-
ism of trade and economics. But these are mere details of
method and reform. We prefer at this time to brush them aside
and go direct to the heart of the subject. If we may find the
germs that give vitality to the whole system of syndicated mon-
opoly and combined capital, it ought to be possible to contrive
means for their extermination or control.
The courts of the country have uniformly and correctly held
that, but for the existence and methods of private corporations,
trusts and monopolies in their present form could not exist for. an
hour. The loose and risky methods of personal enterprise, the
legal limitations and vicissitudes of individual investments, and
the motives of selfish caution that control the actions of men or
firms engaged in business on their own responsibility, all render
it impossible for great industrial and commercial monopolies to be
built up in that way. It is only by the corporation, with its
peculiar and artificial attributes, that trusts and trade combina-
tions can be successfully carried out. Here, then, we have the
root of the evil, and here, too, we are again confronted with a
profound question of political and governmental science. It
has been said that thia question of trusts is not a political ques-
tion. We beg to say that it is, of all other questions of the age,
fundamentally and essentially a political one. Its discussion and
47
solution involve the vitals of our whole political system and insti-
tutions. They are inseparably connected with the first principles
and practical philosophy of republican government.
The trust and its parent, the private corporation, are radically
opposed to that individualism whose full and free exercise is the
basis of all democratic forms of government. The predicate
upon which are laid the whole theory and argument of the Declar-
ation of Independence and the provisions of our Constitutions,
state and federal, is the inalienable and indestructible sovereignty
of individual manhood and natural citizenship. When it is de-
clared that "All men are created free and equal, and endowed
with certain inalienable rights," we are to understand natural
men, with the sentiments, sympathies, aspirations, hopes and
limitations of human nature. When it is said that all rights not
otherwise disposed of in the Constitution are "reserved to the
people," we must believe that the fathers of the Union meant a
real people, created by Divine power, embodying the instincts,
attributes and capabilities breathed into man by his Maker
loving freedom, despising despotism, responsive to the impulses
of patriotism, bound by the ties of gratitude and the motives
of generosity, dutiful to the obligations of humanity here and
conscious of an everlasting responsibility hereafter. Upon no
other kind of foundation can a free and stable government stand ;
of no other kind of citizenship can a prosperous republic be com-
posed.
And yet, within the past fifty years, there has grown up under
the sanction of the Constitution and with the approval of the
courts, congresses and legislatures, a new and dangerous innova-
tion upon the original conceptions of the framers of our institu-
tions. Side by side with the natural man created by God, there
has arisen an artificial person, conceived by the mischievous
ingenuity of mercantile greed, created bv the capricious legisla-
tion of human assemblies, protected by the fictions of fallible tri-
bunals, vested with practical immortal itv, endowed with every
attribute, power and function that may belong to the natural per-
son, and exempt from every limitation, influence and restraint
that render human nature honest, charitable, generous and con-
scientious. And. worst of all, by the verv nature of their consti-
tutions and the opportunities of their artificial methods, and the
capacity which they enjoy for indefinite combinations of power
and illimitable acquisitions of wealth, these cold and calculating
creatures of the law, though few in numbers as compared with the
mighty ma O f the true citizenship of the country, have been
enabled to engross the bulk of the national resources, to dominate
48
the popular will, and to dwarf and paralyze the sovereignty of the
individual manhood of the republic.
Forty years ago Abraham Lincoln declared that this republic
could not exist "half slave and half free/' and the titanic struggle
of a four years' war vindicated the prophetic wisdom of his
declaration.
Would that some second Lincoln could arise, with the sublime
courage and majestic patriotism of that splendid seer, to tell this
generation of Americans that the Union cannot endure nor its
freedom be insured half composed of natural citizenship and half
of artificial citizenship. Nay, the condition is even worse than
that. Under the sinister conditions brought about by the inordi-
nate growth and overshadowing power of private corporations,
the division is not even in equal portions, for the government-
created citizens completely dominate their natural rivals and
crush out the divinity and the manhood of the individual sover-
eigns of the nation. Not satisfied with the inequality that arises
from the very nature of these artificial creatures of law and
license, the government itself has established and maintained a
system of tariff laws avowedly framed for the especial benefit of
these unnatural giants of commerce and industry. The artificial
immunities and franchises conferred upon corporate citizenship
by legislation and judicial favor have been supplemented by the
protective duties levied and enforced for the purpose of enriching
incorporated monopoly at the expense of the independent and
unprotected industries of personal enterprise. The tariff has
enabled the corporations to establish and solidify their despotism
by forty years of legalized plunder of the people, and to-day it
hides behind them as behind the breastworks its own iniquities
have erected.
It is along these lines that all efforts to curtail and control
trusts and monopolies must be directed in our judgment. The
germ of the syndicated system is the private corporation and its
favored privileges, and these must be shorn of their hurtful power.
Legislation of a radical kind is necessary, and the nature of our
governmental institutions points the way for proper and effective
laws on this subject. Our government is a dual system, partly
federal and partly state, and all action, to be practical and success-
ful, must comprehend a harmonious co-operation of both the fed-
eral and the state authorities. In the economy contemplated by
the founders of the republic it was intended that where the states
failed by reason of local restrictions, the federal power should sup-
plement their sovereignty over all matters of universal concern,
49
and this problem calls for the highest and widest exercise of all
the jurisdiction of the states and the Union.
The great bulk of the commercial traffic and industrial trade
of the union is interstate commerce, subject to the jurisdiction of
the federal government alone, and subject also to the jurisdiction
of the federal courts by reason of the diverse citizenship of the
parties engaged. Properly speaking the whole subject of corpo-
rations engaged in interstate business ought to be under the con-
trol of the federal authority for that reason, but in order to
accomplish that end there must first be concert of action and har-
mony of policy and sentiment on the subject. For the several
states to do anything effective and valuable they must co-operate.
If there be need for uniform statutes on marriage and divorce,
wills, insolvency and other similar interests in which the entire
country has a common and identical share, then certainly there is
need for it on this the most vital question that affects the pros-
perity, happiness and freedom of the republic at large. It was
this consideration that induced the governor of Texas to call the
meeting of governors and attorney-generals which will convene in
St. Louis next week, and it is to be hoped that some harmonious
and united plan of legislation will be agreed upon by them. If
we are asked along what lines this universal and nnif orm legisla-
tion shall be framed, then we unhesitatingly answer that it should
be in the direction of limiting the purposes for which private cor-
porations shall be chartered, so as to reduce their number, and by
limiting also the amount of capital stock for which a company
may be incorporated so as to curtail their enormous power to
amass undue wealth and exercise despotic control over the com-
merce, industry and policies of the nation.
It is one of the most alarming symptoms of the age that no
sort of private enterprise can be inaugurated without the artificial
aids of incorporation. The original and normal purpose for
which corporations were intended was to enable those things to be
done that were of such magnitude that individual effort and capi-
tal could not successfully manage them, and yet were of such
utility and public importance as to be proper and desirable to
exist. In other words, they were only meant for enterprises of a
quasi-public character. Corporations for private ' profit are in
themselves essentially vicious and inconsistent with that equality
of right and absence of special privilege guaranteed by the insti-
tutions of a free republic, but if they must exist then they should
be limitefl to as few purposes as possible, and their capital stock
should never be beyond that which a fair and reasonable conduct
of private business requires. It is folly to complain of trusts and
50
suppress pools and combinations between several corporations,
and at the same time permit the formation of single corporations
with larger capital than any syndicate yet known. The fact is all
such consolidated corporate enterprises are simply trusts in dis-
guise, they are so declared by the recent Texas statute, and they
ought to be rendered impossible by allowing no company to be
chartered for any other than a quasi-public purpose with a capital
authorized beyond a reasonable amount commensurate with the
equality between natural and artificial citizenship and industry.
These are the lines along which we believe that the remedy lies,
so far as the states can furnish and apply that remedy.
But the burden of this great work can not and ought not to
be thrown entirely upon the states. Notwithstanding the high
authority of the attorney-general of the United States and his
presumable familiarity with trusts in their natural habitat, we
believe that the federal government both can and should assume
the initiative in the movement to suppress and restrain these
great corporate monopolies. First of all, it can and should dis-
solve the iniquitous partnership that exists between trusts and
syndicated wealth, by abolishing the tariff system that has been
the most prolific and profitable adjunct the trusts and monopolies
have had for the past thirty-five years. It is useless and dishonest
to denounce these oppressive and unjust combinations and aggres-
sions on the part of commercial and industrial capital, while the
government itself is promoting and sustaining them by its revenue
system and adding to their strength by the legalized plunder of
the people. The day that witnesses the withdrawal of the sus-
taining arm of the federal tariff from the unlawful combines and
trusts of the country, will witness the most signal and significant
movement possible toward their extinction. In the next place,
Congress can prevent all corporations connected with monopolies
and trusts from engaging in interstate commerce. Of this power
and duty on the part of our federal legislature there can be no
question, and the moment it is exercised the main support and
means of despotism over the trade of the union by these combina-
tions will have been destroyed. And finally, if it shall become
necessary and the states can arrive at a harmonious and united
line of policy on the subject, the federal authority can assume
entire control of corporations engaged in interstate business,
issuing them their charters, limiting their capital stock, curtail-
ing the purposes for which they may exist and enforcing upon
them the most rigid and exact compliance with the rights of the
public and the freedom of the citizen. This no doubt might re-
quire an amendment to the Constitution, but if that is the only
51
way the desired end can be attained the people will eventually
indorse it.
By these two means state and federal legislation combining
to reduce the number, power and privileges of private corpora-
tions the rapid growth and menacing tyranny of the corporate
monopolies can be controlled and restrained, but in no other that
we can perceive. The methods suggested may appear radical and
revolutionary to some, but the time has come when the country
must face the crisis and solve it conscientiously, courageously and
completely, unless we are to surrender those principles for which
the union was formed and without which it is not worth preserv-
ing. The qualities of all others required in this conflict between
the just and equal rights of the masses against the classes, be-
tween the independent freedom of individual enterprise and cor-
porate monopoly, between republican institutions of liberty and
law and syndicated combinations of mercenary power, are the
qualities for which our ancestors, English and American, have
always vindicated their characteristic loyalty. Devotion to man-
hood rather than money, to the principles of freedom and free
institutions rather than a servile worship of mere material ideals,
to the fundamental rights of the citizen in his personal relations
rather than the grandeur and power of collective might. If gov-
ernment of the people, by the people and for the people is to con-
tinue in this republic, then we must place national righteousness
above national wealth, ethics above economics, political principles
above pecuniarv profit, the Constitution above the commerce of
the country. To do these things at this time and under the over-
shadowing menace of established industrial and commercial con-
ditions will require a degree of courage and constancy never be-
fore demanded by any crisis that has arisen in the history of the
nation.
The glory and fascination of war and strenuous struggle for
the life of the government as our people understood it have made
heroic the annals of the past and shed luster upon the fortitude,
loyalty and self-sacrifice of every section of the union. But in
this straggle the cold and calculating spirit of avarice and artifi-
cial ambitions will combat the patriotism and fidelity of the peo-
ple, the seductions of wealth, the corruptions of mercenary greed,
the pampered power of government-created and government-pro-
tected monopolies, the nlausible arguments of scholastic specula-
tion and the sordid schemes of venal statesmanship will all be
arrayed against tbe plain and practical traditions and principles
of our institutions and our inherited love of freedom and justice.
So far as the men of mv state are concerned thev are readv for the
52
conflict and will not be found to falter in its prosecution. We
have not forgotten the heroic periods of our own history. We
remember now as did the soldiers of San Jacinto the splendid
tragedy of the Alamo and Goliad. We recall the names of our
earlier worthies, and as we recollect how they faced the physical
despotism of an empire in arms against a handful of hardy pio-
neers, we are not afraid that our citizenship of this age will be
less sturdy and valiant in the great moral, social and political
battle that now confronts the whole Union. Texas will make
good her right to wear the heritage of her illustrious past, and will
be found standing by the side of all the states in the endeavor to
rescue the labor and enterprise and freedom of our whole country
from the paralytic grasp of monopoly and greed.
At the conclusion of his remarks, Mr. Wooten was given an
ovation, and it was some moments before the chairman was
able to introduce William Fortune, President of the Indiana
State Board of Commerce, who made an earnest plea for conserva-
tive procedure as a more hopeful course than the application of
revolutionary or too radical measures to an evolutionary problem.
He suggested the danger capital may bring to itself by heedless
abuse of its power, and indicated the importance to it of seeking
proper regulations which will make trust methods acceptable
rather than obnoxious to the people by whose permission and tol-
eration only can their existence continue. His speech was a plea
for the practicable rather than theoretical approach to the subject,
which, in its present stage, the speaker believed to be too imma-
ture to give basis for conclusive judgment as to the extent of either
its harmful or beneficial effects. He said in the course of his re-
marks :
WILLIAM FORTUNE.
President Indiana State Board of Commerce.
In the progress of civilization we have advanced step by step
in methods of co-operation. In various ways the great institu-
tions of the world have been wrought by union of effort. The in-
stinct of association has made society, the sympathy of aspiration
has made the church, appreciation of preparation of the individ-
ual for the duties of life has brought to us our educational system,
men have been rallied into armies to fight for common cause, and
53
6ft the demand for equal rights of all in the pursuit of happiness
is based the greatest government of the world. These, our cher-
ished institutions, have been made possible by methods of co-
operation, and patriots do not cry out against them, but well we
know that they would not be held as cherished institutions if
there was aught but common good in their aims.
Step by step, the tendency for ages has been toward
increase of organized forces. In some of its differentiations
this tendency was first resisted, then encouraged and fos-
tered as a rightful means of advancing human welfare where the
individual suffered from single-handed strife against the com-
petitive system. The evolution of organization has carried us
rapidly through different forms of progress and co-operative ben-
eficence, all of which we have regarded with more of approbation
than apprehension, but now when we are confronted with vast
developments, which have come by natural processes from social,
industrial and economic tendencies, we awaken to the discovery
that we have been running with our eyes shut. A startled cry
of danger ahead echoes over the land, and in the first flush of
excited feeling there is a general demand from the people for pro-
tective measures. This demand comes too late to check the ten-
dencies which have gathered irresistible force from the sources
of their rise and too early for the formation of unerring judgment
as to what may best be done. For the instant we stand as helpless
before the vast problem as the spectator of a passing cyclone. We
regard it with alarm, we expect to find destruction and wreckage
in the path it sweeps, but we know that all will not fall victims to
the mighty power of its passing.
A pause for investigation will afford the best preparation for
averting whatever may be the dangers of the future. If there is
good cause for the present alarm it is well to know as definitely
as possible the extent of the harm and how it is wrought. When
this is clearly determined we will know better what to do to eradi-
cate the evils and break the power that now terrifies ere it touches
people. The clamor raised by politicians may carry them into
office, but too often it has no other result to warrant faith in it as
a means of solving a great problem. A rush of legislation is apt
to be as ineffectual as the premature and misdirected fire of troops
who indiscreetly attack before they discover the position and force
of the enemy. Much of truth may be revealed or indicated in the
discussions at this convention, and there will be much of helpful
thought advanced to lead the way to sound conclusions, but there
is risk of falling into serious error if we assume that at this stage
of approach to the evolutionary problem before us, it is possible to
54
know all that should be known, as the basis of an adequately com-
prehensive doctrine applicable to commercial combinations.
It is clear that there is both good and evil in the present
operations of the trust scheme. In the good features there is
enduring vitality ; it is the evil that the people will seek to elimi-
nate, and there is nothing surer than that in this they will ulti-
mately succeed. Methods of co-operation which will inure fairly
to the benefit of any set of men will not, when understood, be
obnoxious to the public ; but when, through selfishness and greed,
there is a perversion of these methods that results in fraiid, in
oppression of or exactions from one class for the illegitimate
advantage of another class, there is manifestly need for the exer-
cise of the restraining power of government in the maintenance
of equitable relations between the people. Common justice and
morality demand this. A government by the people will not fail
to protect the people in their rights. Dishonesty in capitalization
and practices Avhich violate good morals, must, like other criminal
acts, be brought under governmental restraint. It will be folly
to undertake reckless warfare for the annihilation of trusts, but
the claws of the monster, if that it be, can be cut, and, under the
restraining influences of good regulations, this Behemoth, biggest
born of commerce, may become a docile, harmless and really
amiable family pet. It is not to be expected that regulations can
be reasonably established which will eliminate individual hard-
ships. We know that economic progress has ever been pitiless in
its sacrifices, and that in its conflict with human industry its
advance cannot long be hindered. This humanitarian cry against
the individual hardships of trusts, however distressing it may be
and however much it may appeal to sympathy, will not be more
effectual than has been the outcry for the same reason against
labor-saving machinery and methods. It is not clear that the
power of regulation can be effectively exercised in any other way
than by the application of fundamental moral principles for the
protection of rights of men and in the interest of public policy.
Economic operation is in itself, an inexorable law. Theories of
revolutionary effect may be helpful indications of what may ulti-
mately come, but, in wise procedure, the first steps should be in
the direction of experimental test of powers that have served us
well in the past. More radical measures will come if necessary,
but, in the light of present knowledge, can any careful thinker
say that this problem, now in its evolutionary stages, can best be
solved by revolutionary measures? Is it not better to patiently
seek to apply practicable thought to the correction of natural
tendencies? Jf radical measures should become necessary their
success will be hastened by preceding failure in reasonable efforts,
as history proves in the instances of great changes brought about
in the past. A wise radical is first a patient conservative.
The danger now most gravely apprehended is not that labor
will suffer from combinations of capital, but that aggregated capi-
tal will drive out of competitive channels the weaker capital, and
that commercial monopoly will result in oppression of multitudes
of consumers who have no share in the benefits of combinations.
The defensive power of labor, wisely directed through organiza-
tion, is strong enough to compel capital to accord to it the share
due it. There is a nearer approach to identity of interest between
the two, which tends to bring them into closer relationship as
allies, than ever before. In some instances a primary factor in
combinations of capital has been to compel higher prices from the
consumer to enable the employers to pay increased wages to
employees. The unorganized classes who are consumers and who
are accorded no direct benefits from the allied interests of com-
binations, are the unprotected, but there is ultimate safety for
them in their numbers, for they constitute a majority of the peo-
ple, and if they move in alarm to demand a broader application of
the benefits of unity it must be perceived that there are possibili-
ties ahead which have, from the present point of view, chaotic
aspects. Labor can well afford to view the situation more com-
placently than might reasonably be expected from capital, but the
pig in the trough is always unmindful of his surroundings while
the swill holds out.
While it seems that manipulators and beneficiaries of trusts
are heedlessly making the most of their opportunities, it must be
recognized that these opportunities exist by permission of the
people, and abuses can continue only so long as there is toleration
of them. In their quick development they have grown beyond
established restrictions. It must be recognized that they spring
from ineradicable conditions, and that as larger developments of
economic progress thev have the elements of vitalitv from which
civilization has derived its greatest strength. Shall thev be
brought under the regulation? which we have sought to establish
for the protection of society? Shall they be brought under the
light of publicity and examination so that the good and bad in
their tendencies can be better determined, so that dishonesty and
unfairness in their method? mav be discovered, so that the in-
equitable effects of their operations may be judged? It is the
right of societv to know if this new-born creature of condition? is
humanitv's offspring or is a coiled serpent. If it is of us and for
us it will have our care ? but it should be brought up as a member
of the family in the way it should go. More should be known
about it than is known now; it should be studied as it grows, but
at all times it should be required to conform strictly to the regula-
tions which preserve good morals and protect the rights of the
majority. It seems clear enough that it can be regulated; it is
doubtful if it can be deprived of existence; we do not know that it
is desirable that it should be destroyed ; on the contrary, the con-
ditions from which it has grown have brought us our best realiza-
tions and it may be, when perfected, our greatest boon. The
darkness of ignorance must first be dispelled. Only those who are
gifted with the ready assumption of prophecy can tell us all that
we want to know, and however interesting this may be, it is not
competent evidence. "We know enough now to make it clear that
the first steps should be in the direction of regulation, and as we
proceed with regulation, study the development of the problem.
These are practicable gradations of progress, and though the
promise be less the results will be quicker than the uncertain
realization of Utopian hopes or radical demands."
JOHN GRAHAM BROOKS.
Lecturer University of Chicago.
Mr. Fortune was loudly applauded, as was also Professor
John Graham Brooks, who followed, speaking on the subject:
"Are the New Combinations Socially Dangerous?" He said:
It is our misfortune that no opinion upon the so-called trust
has at present much value. The movement is too new it is too
vast, it is, above all, too undeveloped. People are frightened by
the new phenomenon, as many were alarmed a century ago by a
quickened tendency of business to pass into corporations. The
man of most insight at that time, Adam Smith, thought to quiet
the unrest by saying in effect, "Corporations can't do much harm
because only a few simple routine branches of business can pos-
sibly be carried on bv corporations. People won't work for cor-
porations as they will work for themselves."
His ideal was the old common partnership. This partnership
was, at a still earlier stage, thought to be very dangerous. Men had
hitherto carried on business alone by themselves. The partner-
ship brought them into a common organization. People then
considered tbis a " restraint on trade." What was to become for-
sooth of manly independence, if several men were to combine
their business interests ? As the market extended and finer divi-
57
sion of labor became possible, the partnership approved itself as
the necessary agency of doing business under the new conditions.
But the partnership finally reached its limits and a still wider
market compelled new and further organization. The utter un-
fitness of the old partnership has now grown clear to the slowest
man upon the street. The corporation slowly took the place of
the partnership for an enormous part of the world's business.
We have lived to see a large part of the world's work done under
corporate form. We have also learned that for nothing will men
toil harder than for a corporation. At the close of this century,
the instinct toward still vaster and more compact organization is
everywhere asserting itself, and again men are frightened. Are
there signs that the monster is dangerous to the common weal?
It would be very simple-minded to answer by an unqualified yes,
or no. We do not say a corporation is good or bad until we know
what the corporation is, or does. If the business is properly safe-
guarded, the corporation renders a social service as essential as
the college, the library, or the church. If the larger combina-
tions, now under discussion, can be so far controlled, even as well
as a large part of Massachusetts corporations are controlled, I
should say " The trust is not to be feared, but to be welcomed."
The supreme question that confronts us, is that of possible regu-
lation.
This discussion, if it is to help us, has to assume one moment-
ous fact, viz., the pitiful lack of anything like adequate organiza-
tion over large areas of industrial life. Several great primary
industries are in a state so chaotic as to affront our intelligence.
The extreme clumsiness of organization, both in production and
distribution, has thus far had no searching investigation. One
gets a hint of it when he sees at a single hotel in a small city five
drummers competing against each other in selling the same prod-
uct. I have heard one of the most successful business men in
the East say, " If people generally knew how stupidly and waste-
fully much of the large business is carried on, we should become
objects of ridicule." Has not the chairman of the Interstate
Commerce Commission himself used the following words about
railway management?
"I undertake to say that if the worst enemy of the railroads
whom you can name were elected President of the United States,
and if he should pack the Interstate Commerce Commission with
the worst Populists of the land, those men would never dare to
do the reckless and indecent things which the managers of rail-
roads themselves have done. Can you name any five men so
ignorant, so prejudiced, so inimical to' the common interests of the.
59
country that they would upset the commerce of the country and
demoralize rates and business in the way the railroad men have
done by putting in force the rates that now prevail to the seaboard
by way of Galveston from the Missouri River? Would they let
the Missouri River rate be as low as the Chicago rate? Would
they allow flour to be carried from Minneapolis to the Atlantic
cheaper than from Chicago? In such things the railroads are
making a fearful misuse of their power."
This puts no slander on the intelligence of the managers; it
shows the pass to which an unregulated competition has brought
things. What boasting there has been about the marvels of
organization in insurance. Yet, I have heard from one of the
foremost men in that business this criticism : "It would not be
safe to have it known how badly and how extravagantly things
are managed, or to what sorry shifts we are driven." I asked in
this city a very, prominent insurance man if this were fair criti-
cism, and he replied, "Oh, competition has got us now where the
only dress we ought to wear is the cap and bells."
It would be silly for an outside observer to offer opinions like
these. I am therefore careful to go to competent and unbiased
authority. On the avenue in which I live in Cambridge there
have come, at the same time, as many different milk concerns as
there are houses. This has long been the stock illustration of
crude and preposterous lack of method, but the slightest study in
detail shows that scores of our great industries have crudities
almost as grotesque. To the extent, then, that these charges are
true, I submit that the time is at hand for some kind of wide,
thorough and effective organization. Nor do I believe it open to
doubt, that the immense pressure of this necessity is producing
the so-called trust. It makes itself far more than it is made.
Men will fight it as they fought machinery, and with precisely the
same results. From the United States law of 1890 to the various
attempts in different states there is thus far no hint that these
colossal forces toward new organic forms can be hindered. They
can be made worse, as in the anti-pooling legislation. They can-
not be stopped. I believe it to be the beginning of practical
sense to understand that the new combinations can in no sense
bo permanently smashed. The party which proposes to do this,
in the sense of absolutely checking them, will have plenty of
leisure to regret it. The real problem, immediate and imperious,
is, how to regulate and guide the new force that stands merely for
the latest stage of industrial growth. If the combinations are to
work for public as well as for private good, three things, two of
them now largely under the voters' control, must be brought
59
about: (1) As absolute a publicity of methods and accounts;
(2) Every artificial advantage given by the tariff must be re-
moved. Not to do this, is to allow the trust to play against the
community with loaded dice. It is of extreme interest that
already Canada has deliberately deprived monopolies of tariff
protection. One of the chief practical dangers at the present
moment is that the public will be drawn away from the possible
uses of the trust, to consider far too exclusively the abuses. The
tariff directly and powerfully aggravates those abuses and thus
adds to the general bewilderment. Nor do I mean by this that
the tariff, as is often said, causes trusts. The proof that it does
not is that free-trade England shows, though on a far more modest
scale, all that is essential to these combinations. They spring
straight from the new conditions of an intense competition
widening into a world market. But no disinterested person will
deny that a high tariff strengthens a trust, giving it a power that
is purely artificial and one not depending on its own business
merits. This difficulty will prove less formidable, as there are
plenty of signs already that if trusts show rapid growth they will
themselves develop the most powerful antagonism that the tariff
ever has met. (3) A third requisite, just as vital, is that railroad
discriminations shall not be allowed to these combinations.
There is probably no difficulty more desperate than this. No one
but a socialist can solve it with gay and final confidence. But
whatever the future may have in store, we are not yet ready for
state control of railways. For the immediate future (a decade or
two) the best intelligence must go to this special evil of railroad
discrimination. The trust plus special railroad favors can never
be other than a danger because it makes directly for an economic
inequality that is based on secret privileges that are impudently
unfair. What is even more serious, it opens the door' to those
forms of political corruption that have become the gravest peril
to the commonwealth.
I therefore assume that no answer is possible to my subject,
"Are the new combinations dangerous?" Unless that measure of
control is secured which is represented by (a) complete publicity;
(b) removal of tariff privileges; (c) the ending of special railway
favors, I should defend this opinion not upon theoretical
grounds, but upon such practical experience as one may observe
already on the field.
Of these restraints upon abuses, I believe an absolute above-
board method of doing business (as complete as that to which the
national banks must now submit) to be by far the most important.
This remedy lies, moreover, along the line of practical and pos-
60
sible achievement. "No one in the community knows better the
necessity of such publicity than the very men who make the
trusts. NOT have I even heard this necessity stated so strongly
and so convincingly as by some of these gentlemen. I say that
this remedy is practical because there is now a wide and various
experience for our guidance. Germany has plenty of these
larger corporations that we are now discussing under the anti-
quated name of trusts but the rights of the stockholders, to
every whit of information necessary to their security, are assured
in that country. A competent writer upon trusts, like Dr. von
Halle, is astounded in his investigations in the United States
that a people famous for practical business shrewdness should
suffer the gross abuses which this secrecy involves. England has
also her powerful " alliances." A good authority has estimated
that capital has been shifted from the smaller to the larger cor-
porations to the extent of two billions of dollars within the last
dozen years. But the law gives to the stockholder very definite
rights of publicity, and the Lord Chief Justice, since the Hooley
scandals, says that these rights must be made more exacting still.
The forced publicity for private as well as for public corporations
in Massachusetts makes any dangerous degree of stock-watering
extremely difficult. Evasion in the case of private corporations
is still to some degree possible ; but it is certain that the law has
proved so far successful that it may be made the basis of further
legislation of a most hopeful character.
Give us, then, an absolute publicity of methods and special
dangers like "over-capitalization" are practically met. If the
trust movement spreads, as now seems likely, by far the larger part
will go to the wall from sheer speculative bravado. The people
meanwhile will be rapidly educated, and above all, the banks will
be swift to learn the lesson, and refuse to underwrite if the venture
is too daring in- its risks. Only those trusts will survive that
are prudently organized, and deal with a product which lends
itself to the conditions imposed by the new combination.
Economic discussion is at last so far popularized that the people
will take a passionate interest in the coming debate. Popular
economic training always tells if it turn upon vivid concrete
events that stir great waves of interest. No industrial event ever
gave a more magnificent occasion for education upon what is
deepest in the so-called social question. The essence of the new
combination is that it is a more cunning, and more powerful
machine applied to industry. That means that it carries in it the
very heart of the social question. The pithiest formula I could
give of the social question (on its material side) is this : It is the
struggle for the advantages of applied science and invention to
industry. At bottom, this is the fight in our great strikes. The
coming contest in our municipalities is accurately this : Who is
to control the vast machinery such as lighting and transporta-
tion? Socialism itself cannot be better defined than by its atti-
tude toward machinery. Industrial organization on a great scale
did not begin until after the Civil War, say 1867. Then, begin-
ning with the railroad, we had an outburst of vast organization
of business. At this point trade unions begin an entirely
new epoch in their history. They, too, strike for organization -on
a far wider plan. More significant still : here, too, are the begin-
nings of large farmers' alliances. Whether as Grangers or as
Populists, no one will explain the farmers' movement without
constant and closest reference to the angry feeling that the great
machine that touched them (the railroad) was somehow used
unfairly agairist the farm interests. Now another period for
necessary reorganization is upon us. The mechanism for this is
the yet more stupendous combination we are considering. It
will do precisely what the great machinery has always done:
create temporary disturbance. It will shut hundreds of of-
fices, and drop thousands who were working on the displaced
machines. But meantime the new work has to be done under
new forms, and when the readjustment comes, more men and not
fewer will be required to do it. What right has one to say that?
There is now the most absolute proof that the growth of industrial
machines is putting to work a larger and larger proportion of the
people of the United States. The new combinations that survive
are not likely to act differently in this respect from the weaker
corporations which preceded them. But the alarm is raised
about " absolute monopoly." "The trusts are to corner the very
necessities of life." How much evidence do we need to show that
this cannot be done? Attempts have been made by the thou-
sand, but almost without exception, it is a history of dismal fail-
ure. Certain " practical monopolies " may be formed, and have
been formed, but they cannot endure unless they put some kind
of economic superiority upon the market. They must serve the
consumer better, or they will be crowded from the field. The
Standard Oil is too exceptional in its nature to furnish a safe
analogy. The sharp geographical limits that shut in our anthra-
cite coal would seem to oifer a, rare chance for autocratic monop-
olizing of prices, but a dozen states, filled with soft coal that can-
not be monopolized, constitute a powerful and permanent check.
Is there a sign that sugar powerfully organized as it is can be
absolutely monopolized? Or can we imagine bread, shoes, bricks,
62
clothing, lumb'er to be brought under complete and permanent
monopoly? The simple fact that capital is increasing so much
faster than population, and is pressing at every point for profit-
able investment, goes far to prove this fear groundless. This is
" the ever possible competition " of which economists have made
so much. It acts with increasing and with relentless power to
put the monopolist upon his good behavior. Nor does any day
pass that does not make the complete monopoly of wide necessi-
ties over long periods. of time less and less possible. A great
deal of money will be made, especially by the earlier successes.
But the very nature of the risks makes this inevitable. A bit of
history is very wholesome for us on this point.
Whenever a great change has come in economic evolution,
there is naturally extreme danger connected with the new under-
taking, because traditional methods can not be depended upon.
The dangers of disaster are extreme, and only men of great bold-
ness, willing to take larger risks, come to the front. It is this
type of man that has caught the wave as it rose, and made, if. he
succeeded, enormous profits. Human wit has never yet pre-
vented this, and it is more than doubtful if it would be well to do
it, if we could. A single illustration is worth giving : When the
new organization of the factory began there was such extreme
uncertainty, the dangers of disaster were so great, that only the
more far-sighted and courageous were willing to take the risks.
Those who took them and succeeded, made enormous profits.
Profits of 200 per cent, 300 per cent, and 400 per cent were not
uncommon in England during the formative period. Does any-
one believe that, in the state of knowledge then existing, this rich
tribute of the successful could have been stopped? Two things
steadily lowered these extraordinary returns to capital: competi-
tion, and the control of factory legislation. Very few trusts will
make 200 to 300 per cent profits. But nothing under heaven will
prevent the daring and successful from reaping for a time unusual
rewards from the new ventures. If competition plus legal regu-
lation work now as they have worked, however bunglingly in the
past, nothing will long prevent the consuming public from shar-
ing the advantages of the coming organizations. Note further
that when the house and village industries were crowded out by
the factory, there was extreme and widespread alarm. "What 'is
to become of the independent worker?" it was said; "the factory
destroys independence and makes an army of dependents." But
after legislation had done its proper woVk it became clear and
indisputable that the dependence of the village and house indus-
try was in every essential point greater than in the factory. The
63
iiew organization in the long run made for a more complete inde-
pendence. When competition has reached such terrible limits
as it now has in many phases of making and distributing wealth,
it is, according to our mood, the climax of humor or pathos to talk
too loudly of universal economic independence. As all may
observe, it is for a large percentage of small business men a most
haphazard and tottering independence.
It is this helter-skelter condition that we have to compare with
what the new combinations will eventually bring about.
Once more, it is said of the trusts, "they will raise havoc with
our politics." That this is a far graver peril than any economic one
is too clear. Kecognizing the magnitude of this danger and with
no desire to minimize it, I express this hope. The trust that
stays will bring the very ablest men to the front. They will very
soon have to carry on business in an atmosphere of public opinion
thoroughly alert and aroused upon these issues. It appears to
me very unlikely that men of first ability will so fail in tact as to
disregard and affront an alarmed, suspicious and powerful public
opinion.
Nor have I the slightest question that if it become plain to the
people that the combinations manipulate politics to their own
private ends and persist in this, they will have themselves to
thank for driving the country further and faster into socialism
than any and all forces that have ever shown themselves in our
public life.
N"o disinterested student of this new period of organization
that has come upon us will fail to look with alarm at the signs of
risk and danger it may bring to organization among the wage-
earners. If organization is so all-important, as the capitalist
employer claims, the importance cannot be good and necessary at
the top alone. It should be good and necessary at the bottom
also. Nowhere does competition work more powerfully and
more pitilessly than among the laborers. In this desire to see
fair play, will not the public insist that if organization be indeed
so essential for the employer, it is just as essential for the em-
ployed? It is also to be hoped that the exigencies of organization
among the laborers will tend (as it does among employers) to
bring the really strong and able men to the front in the trade
unions?
AZEL F. HATCH.
Member Illinois Bar.
The general movement toward industrial consolidation, which
is recognized and assumed by the call for this conference, did
not come into heing without causes, and cannot be explained as a
popular delusion.
Nothing is more conservative than capital. It always clings
to the established order until something better has been demon-
strated. When, therefore, we observe great industries forming
into national organizations, changing the form of investment of
hundreds of millions of dollars; when transportation companies
become continental in their spheres of influence ; and when this
drift includes within its scope almost everything in manufactures,
transportation and commerce, and almost every form of labor,
we intuitively search for adequate causes.
The rush and roar of the torrent of combinations now attract
the attention of all, and create the impression that the movement
is of present origin simply because we have not observed nor
recognized as capable of their present development the causes
which have for a considerable period been shaping, accumulating
and accelerating the industrial development of the country. For
more than twenty-five years there Jiave been constant efforts, in
the formation of pools, "gentlemen's agreements," trusts and
traffic agreements, to avoid the intolerable conditions which un-
restrained competition have produced, and to find a way to make
secure a fair compensation for invested capital. These efforts
have generally failed after short periods of existence, because they
could not be enforced. It was only when some of the states had
passed liberal and comprehensive laws authorizing the formation
of corporations, with powers commensurate with the necessities
of modern methods of business, that an effectual way to combine
and consolidate great industries was found.
Among the causes which have tended to inaugurate the pres-
ent movement toward consolidation of industries, are to be
found the following:
First The modern multiplication and perfection of the
means of communication and transmission of intelligence have
rendered possible a vastly enlarged supervision and control by
the individual manager. The telegraph, the telephone, the fast
mail, and the limited express have nearly eliminated time and
distance in his transactions, and the stenographer and type-
writer have multiplied his capacity to dispatch business, The
intelligent use of modern facilities for the transaction of busi-
ness has rendered possible and practical the concentration and
consolidation tinder single management of a magnitude and
multiplicity of business interests which a generation ago would
have been physically impossible.
Second The great increase in this country of unemployed
capital and the steady decrease of interest rates have made it
possible to secure the necessary capital for large enterprises.
When, therefore, liberal corporation laws made investments in
industrial enterprises secure, a new and attractive field for in-
vestment was opened up, and corresponding opportunity and
impetus were given to industrial expansion and development.
Third The enactment of liberal laws authorizing the or-
ganization of corporations, with unlimited capital and for the
transaction of all kinds of lawful business, has opened up many
avenues heretofore closed. The progress toward greater liber-
ality has been general, and in some of the states has been very
ma'rked, and during the last twenty years has been more rapid
than ever before. This has been a positive and direct stimulus
to" organization and co-operative investments, and has done much
to familiarize the people with investments in corporations.
Fourth Probably the most potent cause is to be found in
the folly and wastefulness of unrestrained competition. Sev-
eral salesmen striving to secure a single order; making sales
without profit or at a loss, to prevent a competitor from selling;
the Useless multiplication of selling agencies and selling ex-
penses; the necessity of meeting the prices of rivals or necessi-
tous competitors who are selling at less than cost; these prac-
tices, and many others almost too foolish and suicidal for cre-
dence have converted competition in many industries into a
ruinous warfare, destructive to all engaged in the industry.
Combination in such cases becomes a means of self-preservation.
The simple fact is that the wonderful developments of manu-
facture in this country, through improved machinery and di-
vision of labor and other causes, have reached a stage where the
present domestic market is inadequate to keep the wheels in mo-
tion. We must restrict production, find new markets, or go
into bankruptcy.
^ Fifth The enumeration of some of the economies of con-
solidation is another way of pointing out the loss and waste-
fulness of the present methods. A consolidation of a large per-
centage of an industry is able to buy in large quantities and at
original sources, and upon correspondingly advantageous terms.'
6*5
It also sells in large quantities. It can do the "business with
fewer salesmen and with a smaller number of branches or places
of business and- at a smaller percentage of expense. By reason
of its extent, and because it handles a large percentage of the
product of the entire industry, its managers can obtain a better
knowledge of the market, and avoid the necessity of carrying
large stocks. By" diminishing the aggregate of stocks it makes
a saving in interest, insurance, storage, and shop wear. By the
greater specialization of manufacture, it is enabled to employ
the several plants upon those lines of manufacture for which
they are best- adapted. Those plants which are best equipped
can be run full capacity and to the best advantage. The ad-
vantages of patents and of special machinery can be more fully
utilized. The best quality of goods can be produced, the num-
ber of styles diminished, and the best and most profitable kinds
of manufacture prosecuted to the full capacity of the plants.
Experience and skill and improved methods of manufacture have
larger fields for their employment and usefulness, and the grade
of goods can be improved by comparative administration of
the several plants. The plants situated in various parts of the
country can supply the demand in their several neighborhoods,
thus saving a large amount of cross-shipments and freights. The
ability to reach out for foreign trade and to prepare for and meet
every demand is very greatly enlarged. In the case of fire,
flood, or local strikes, the work goes on elsewhere, and prevents
loss upon contracts, or loss in trade. The terms of sale are more
uniform and the credits safer.
I think the foregoing causes explain to some extent why the
proprietors of industrial enterprises have recently received sug-
gestions of combination with so much favor. They show how
and why such combinations can be accomplished now more read-
ily than formerly.
It does not follow, however, because economies and advantages
in consolidation are found in one industry, that they are to be
found to the same degree or at all in every other industry. While
it is undoubtedly true that some of the advantages above men-
tioned will generally apply to combinations, the degree of bene-
fit must be largely determined by the nature, extent, and situa-
tion of the industry.
If it be admitted or stands proven that combinations in an
industry, when properly managed, are economical; that they
prevent waste and more fully utilize the fruits of industry, the
conclusion follows that they are a natural evolution in industrial
67
and are analogous to all other improvements in busi-
ness, like improved machinery, department stores, and improved
facilities in transportation.
If the foregoing conclusions are sound then industrial com-
binations have come to stay. The world of industry is not march-
ing backward. Nor is it an evidence to the contrary that some
are injured by combinations. Every advance leaves somebody
behind. All improvements which work economies result in dis-
placing certain elements of labor. Consolidations will displace
salesmen, will close stores, and in some cases manufactories, and
will dispense with the services of middlemen, just as the reaper
and mower displaced the scythe and the cradle, and the thresh-
ing machine the flail and the threshing floor. The railroad
rendered the stage antiquated and displaced thousands engaged
in the old methods of transportation. The sewing machine threw
thousands of needle workers out of employment, but the ulti-
mate result of all these changes in industry was for the ad-
vantage of the whole community, notwithstanding the hardship
to some individuals.
That criticism which calls every corporation or consolida-
tion a trust, and which condemns every aggregation of capital
as a public danger, is both ignorant and vicious. Corporations
are no better nor worse than the individuals who manage them.
Some are law-abiding and are entitled to the same protection
of the laws and the same support and encouragement in develop-
ing the resources of the country and in affording employment to
its inhabitants, that are given to the public-spirited individual.
The powerful always need restraint. Great corporations are
no exception to this rule. They should be compelled to ob-
serve the same methods of business, to obey the same laws, and
to confine their operations to the same limits to which individ-
uals are confined. They must be compelled to pay their share
of taxes and to bear their portions of public burdens. They
must be fair in their methods of competition. They must be held
to terms of equality in freights and in all other semi-public deal-
ings. No public favors, by tariffs or otherwise, should be ex-
tended to them.
Some of the dangers to the public from these organizations
are to be found in the great power placed in the hands of single
individuals, and in their ability to influence legislation and to
become factors in political management and manipulation. This
danger emphasizes the necessity of removing every temptation
to influence legislation on the part of the man in business. Aside
from tariff legislation, there is little which can affect the interest
68
of manufacturers or those engaged in general commerce, but this
is a danger which has long been in existence, and the evils of
which are not confined to present or future combinations. All
of the methods of unfair competition which have been employed,
may, in the hands of a great organization, become greatly in-
tensified and aggravated. The public should be protected against
all such aggressions and all of the evil-doers, whether great cor-
porations or powerful individuals, should be punished alike.
It is not to be gainsaid that these organizations are beset by
numerous dangers. The loss of the good-will of the business
of the constituent members of the consolidation is one of its
greatest dangers. There is always the possible danger that
managers of sufficient ability to control, direct, and successfully
manage a great corporation cannot be found. It is one thing
to manage a small business under the immediate observation of
its owner, and another to successfully manage a large number
of plants scattered all over the United States, and aggregating,
in the volume of trade and business, many times any one of its
constituent parts. There is always the danger that the indi-
vidual interest of the local managers will not be aroused and
their best efforts will not be secured in the same sense that they
are in the case of private ownership. These are matters to be
determined by experience, and if these combinations are to suc-
ceed, methods must be found to enlist the thorough and con-
sistent efforts of all of the employes of these great organizations.
Some of the changes which are brought about by the great
consolidations in progress are factors of business safety. In every
consolidation there is a great liquidation of the indebtedness of
the several concerns entering into the consolidation. The lines
of credit theretofore extended to the several constituent con-
cerns are extinguished. The new company generally begins
business with a large cash working capital. If it has debts,
they are in the form of long-term bonds, instead of demand
accounts and short -time notes, which in times of contraction and
financial distress become an element of danger. The movement
to that extent becomes a contraction of credit, and is an ele-
ment of conservatism and safety. The large organizations are
generally doing business upon a cash basis, or upon a more con-
servative basis than the constituent members of which the or-
ganization was composed. This is true to such an extent that
there has been a noticeable decrease in the amount of commer-
cial paper offered at financial centers during the last few months.
'Another element of safetv i found in the ability to oversee
the field of industry and prevent unnecessary and ruinous gluts
C9
in the market. A man who manufactures and sells but two
or three per cent of the products in an industry never can be
sure that his business indicates the general condition of the
trade, but the manager who handles sixty or seventy per cent
of the products of that industry can much more safely gauge the
extent of the market and the future demand. This tends to pre-
vent an unnecessary extension of credit and an overproduction
in manufacture.
Another factor of safety is to be found in the ability to en-
large the market by the extension of foreign trade and by the
steadier and safer market due to the extent of the domestic sales.
The larger and broader the market, the steadier and safer it is.
Again, by means of the great extent of the corporation and
the placing of its securities upon the general exchanges of the
country, its stock becomes distributed among a large number
of holders, and has a known value and a ready market. The or-
ganization thereby becomes a distributer rather than a con-
centrator of wealth. Where the original owners were numbered
by hundreds, the ultimate stockholders are numbered by thou-
sands.
The control of prices, which is often apprehended, can be
brought about permanently only by such a superiority in the
methods of manufacture as will successfully defy competition.
Any price established by a combination which enables competi-
tors to make a reasonable profit will soon encourage such com-
petition as will reduce the price. No permanent monopoly,
not founded upon some governmental privilege in the nature
of a patent or a public license or a tariff protection, can long
existy unless founded upon the superior excellence and_economy
in manufacture. The present combinations do not destroy com-
petition. They, on the contrary, are themselves the creatures
of competition. The fundamental cause of these combinations
has been an effort for self-preservation against the evils of unre-
strained competition. The wise manager of a combination,
even if he has it within his power temporarily to control the prices
in any industry, will not raise those prices to a point which en-
courages the establishment of competing plants. The econo-
mies of consolidation and a fair return upon capital invested
afford a sufficient protection and encouragement to every con-
solidation without an attempt to control prices.
While a corporation engaged in a private business, and hold-
ing no rights or privileges by public grants, is under no obliga-
tion to disclose its business to the public generally, any more
than an individual in the same business, the managers, officers,
and" directors of every corporation are trustees for its stock-
holders, and are bound to exercise perfect good faith toward
them. Any concealment from such stockholders which operates
to their injury, and every advantage gained by the trustee which
he appropriates to his personal gain, is a plain dereliction of duty,
and should be punished by law. Stockholders should have ac-
cess to the books and records of the corporation at all reason-
able times, and should have the power to compel disclosure of
all information necessary for the protection of their interests.
All corporations which appeal to public support by placing their
stocks upon the public exchanges, thus inviting investment by
the public in their securities, should give the greatest degree
of publicity to their affairs. If the public are invited generally
to invest in the securities of a corporation, the truthfulness of
all representations made should be enforced, and the same de-
gree of publicity to which the stockholder is entitled should be
extended to the public. This is founded not on any supposed
right of the public to pry into the private business of people
associated in the form of a corporation, but to prevent fraud and
imposition upon the public in selling the stocks of corporations.
This publicity should be enforced not only by the stock ex-
changes where these stocks are dealt in, but by public statute.
If I am invited to buy the stock of a corporation, I have a right
to know what assets it represents, and what its earnings and ex-
penses are, and all the details which give light upon the value of
the stock, and, having bought the stock, I have a right to know
how my interest in the company is being administered by its
officers and directors.
This publicity would make overcapitalization comparatively
harmless. The facts which go to the question of success of the
business of a corporation are those which determine whether
or not it is doing its business at a profit, and whether or not it
is indebted. If it is free from debt and doing business- at a
profit, it is immaterial, so far as the business success of the cor-
poration is concerned, whether its stock be worth ten or a hun-
dred, or whether it be one million or ten millions in amount.
Multiplying the number of shares of a corporation does not affect
its assets nor its earning power. It is difficult to understand
how an attempt to pay dividends on a large capitalization in-
creases prices, as some claim, unless we assume that the man-
agers of corporations with small capitalizations do not try to
make as large profits as they can, and voluntarily depress prices
to their own disadvantage. We have never discovered such a
charitable disposition in business, even among managers of cor-
71
porations organized on a cash basis. It is safe to assume that
everyone in business will make his profits as large as he can.
Overcapitalization is a danger to the investor, rather than to
the corporation or to the public dealing with the corporation.
It is a kind of inflation. It amounts to a creation of fictitious
stock, which affords an opportunity to impose upon the unwary
investor. This is an evil wherever there is any concealment of
the affairs of the corporation. Issuing a false, prospectus or a
false statement of a corporation ought to be punishable here, as
it is in England.
E. S. TAYLOE.
Member Indiana Bar.
At the beginning of the recent remarkable movement toward
large combinations in business, the organizations were in the
form of trusts, properly so called. The associated corporations
put their stock, with its voting power, into the hands of a trustee
or trustees ; and so, while the different corporations retained their
separate legal existence, they became subject to a single, central
control. Such arrangements are very vulnerable. They are so
plainly combinations in restraint of trade that they are easily
reached under the law. Hence they have been, for the most
part, abandoned and replaced by great, single corporations; and
these, for want of a better name, we continue, quite inappropri-
ately, to call trusts. But it is material to note that the things
with which we have to deal are corporations, lawful and regular
in form and ostensible objects, and differing from the ordinary
corporation only in the scale of their operations.
Legal remedies are directed against legal wrongs. The ascer-
tainment of the wrong logically precedes the study of the remedy.
What real harm, therefore, do these great corporations do or
threaten to society which calls for intervention by the law?
It is manifest that we are just now in the midst of a trust
craze. But that will have its day, and end probably in a crash.
Many persons who are investing in the inflated stocks and bonds
of these "industrials" will suffer heavily. That the law should
lay some restraining hand on the formation of such organizations
for the protection of investors is very obvious and very easy
to say.
_ But the interest of investors in the shares of such enter-
prises is a small consideration beside the interest of the general
mass of the people whose food, clothing, and transportation are
controlled by them. Nothing can be more certain than that the
72
WILLIAM JENNINGS BRYAN
CHARLES FOSTER
W. BOURKE COCKRAN
HENRY W. BLAIR
day of small, divided, competing industrial organizations has
gone by. The growth of corporations is one feature of the uni-
versal evolution. The big ones we have are here to stay in some
form, and grow larger, rather than smaller. They will survive
the collapse of their inflated capitalization just as the railroads
have survived a like experience. What harm will they do to
society as permanent institutions?
There is one result attending them which it is impossible to
contemplate without a feeling of regret, whether the feeling be
entirely justifiable or not. It is the limitation of individual op-
portunity and the diminution of individual independence which
the new order involves. But these are inseparable concomitants
of the system. They can be prevented by law only by forcibly
breaking up the large organizations and compelling men to go
back to the old business methods. That, I assume, is not re-
garded as possible by any intelligent man.
The other most important result of the aggregation of busi-
ness in few hands, and the one which we think and talk about
most, is the control which it places in the hands of the great
organizations over production, supply and prices. Does this
menace the welfare of society, and is there any legal remedy for
that wrong?
Such a situation contains within itself some elements of self-
regulation against extremes. The putting of a very extravagant
price on a commodity defeats its own purpose by breeding insup-
pressible competition, or, if the price be maintained, by restrict-
ing the market. But within these limitations there is a margin
of overcharge which will yield a maximum of profit and may be
permanently maintainable. One mill per pound on sugar would
mean about half a cent a month per capita for the people of the
United States not much of a burden, even if it were an unjust
one, but amounting in the aggregate to $4,500,000 per annum.
If the sugar trust is doing 75 per cent of the business of the
country, as is said to be the case, and receiving one-tenth of a
cent a pound more than a just price, it is taking from the people
more than three and a third million dollars a year to which it
is not in justice -entitled. And with its terrible power to punish
competition, it might be able to maintain that unjust imposition
permanently. That may be, and probably is, in some measure,
what the Standard Oil Company has been doing for years past
enforcing prices so little too high that they do not invite dan-
gerous competition, nor provoke violent resistance from con-
sumers, but enough too high to constitute a wrong toward the
public of great magnitude in the aggregate. If all commodities
73
should be brought under similar control by like organizations
and treated in the same way, the immensity of the robbery of
the public would be enormous, and none the less robbery because
perpetrated by means of infinitesimally small extortions. It
is to some such complexion' as*this that the present development
seems to me to point as its ultimate result.
Here we have elements of permanent and serious evil. The
levying of unjust prices, or the exercise of unjust, arbitrary con-
trol over production or exchange is a wrong, simple, primary and
direct, which is not mitigated by its skillful distribution among
its subjects in such manner that they can bear it, and live to
bear it to the natural end of life. The building up of vast for-
tunes in few hands by means known to be iniquitous but never-
theless tolerated by law, and the discontent and disloyalty to gov-
ernment and law which such things are bound to produce, are
evils even greater in magnitude.
Here we have, to my mind, the main problem. How shall
we. distinguish among corporations? Shall we put arbitrary
limitations upon their capital or the amount of business they
may do, or the territory they may occupy with their trade? Shall
we attempt to exercise a control by law over the great ones which
we do not exercise over the smalf ones? In the exercise of that
control, shall we prescribe prices by law, and undertake to say
beforehand how much the sugar trust and the Standard Oil Com-
pany shall charge the people for sugar and oil? Is the legisla-
ture wise enough to exercise such a power safely? If it were,
could it do it without impairing the principle of free competi-
tion?
In nearly all our legislation, so far, we have followed the
the common law that the power to control the produc-
d prices of commodities is one so sure to be abused that
dangerous to be entrusted to anyone, and that the rem-
idy against such wrongs is to forbid outright all organizations
and combinations of men the effect or operation of which will
iat power in their hands. But nothing can be clearer
For 1 mefi f tf lness of such laws to meet present conditions.
s past, the states have been enacting them in terms of
while the trusts and combines have been
.though anti-monopoly statutes were only food for
Tl,n i Shdl /am nothi *g ^ persevering in that
The law must change its methods. It mSst direct
ions and penalties against the real wrongs. It is im-
poss i to meet the conditions of 1900 with the laws of 1700
We must recognize and deal with the situation as itTs
It does not hurt us to get our sugar from one trust and our
oil from another, if we get them at fair prices. It does not hurt
us that railroads agree on rates, if they are fair ones. If the
courts of the United States had been at liberty in dealing with
the Trans-Missouri Freight Association to inquire into the just-
ness and fairness of the rates fixed by it, the merits of the ques-
tion could have been considered and the real wrong, if there was
any, would have been reached. But the Sherman bill, as the
Supreme Court decided, gave the court no such power. It was
compelled to declare the association illegal because it was for-
bidden; and it was forbidden because there was, in the judg-
ment of the law, danger that it would use its power to injure the
public. If the Constitution would give Congress power over the
whole subject of railroad transportation, state as well as inter-
state, and Congress would give the courts the power to investigate
rates, charges, rules, and regulations which it has given to the
Inter-State Commerce Commission, and render judgments ac-
cordingly, or would give the Inter-State Commerce Commission
the powers of a court, little more would be required to put that
great department of public concern under the complete control
of the law.
I think the time is ripe for this step forward. The Inter-
State Commerce Commission has done an invaluable work, one
beneficial in its immediate results, but still more valuable in
leading the way toward a more perfect system. The people are
quite prepared. in their minds now for governmental supervision
of railway rates;' not the fixing of rates in advance, but the
declaration by law of principles upon which rates shall be estab-
lished and a compulsion by law of the observance of those prin-
ciples. We have come to this frame of mind with regard to rail-
roads because the combinations and consolidations which they
have made among themselves have placed the public at their
mercy. Nothing but the strong hand of the government can
protect the people from extortion by the railroads if they choose
to practice it.
We have not quite reached the same attitude of mind with
regard to commodities. But when we come to the point at
which all commodities will be supplied to us as sugar and oil are
now, each by a single concern powerful enough to control the
trade of the country in its line, and the fact becomes apparent
that that vast centralization of control is to be a permanent con-
dition, we shall be as ready for governmental interference in
those fields as we are now with regard to railroads. If we are to
have such interference, it is none too soon to begin to feel our
way toward it now.
He would be one of those who -"rush m where angels tear to
tread" who would undertake to formulate offhand a plan for
dealing with so great and difficult a problem. But a man would
confess his disbelief in the capacity of the race for self-govern-
ment who should give it up as unsolvable. It is the glory of the
common law that it grows with the needs of society, and, either by
its own processes, or by pointing the way to the necessary legisla-
tion, finds an adequate .remedy for every new wrong. The wrong
to be remedied in the case of oppressive dealing with the public
by the trusts is the abuse of a power over production and trade
secured by great aggregation of capital and working instrumen-
talities in the imposition of unjust prices. Where a wrong of
that kind has been perpetrated, it ought to be possible to allege
and prove the fact and punish the perpetrator. While the law is
not wise enough to say what the price of sugar ought to be next
year, it ought to be able to find out with reasonable certainty
whether or no a given price was a fair one last year.
A bit of useful side-light is thrown upon the trust problem by
its analogy with the labor problem. The labor union is only
another form of trust and combination. Every organized strike,
the object of which is to compel an employer by some kind of
punishment to do something that he is unwilling to do is as dis-
tinctly unlawful by all the law in the books as the combination
of employers to control priees or production. And yet we can-
not abolish labor unions by law. N"o one is proposing to do it.
The people will not permit it. It would be ruinous to the best
interests of society to do it. If workingmen were forbidden to
organize if each one of them were required to make his own
terms with the great employers and hold his place at his em-
ployer's mere option they would speedily become slaves, eating
their bread by the grace of their masters. Having permitted and
recognized the unions, we must allow them to make their organ-
ization effective, if it is to mean anything; and this, not by mere
argument, or persuasion, or entreaty, which would avail nothing
with certainty, if it were certain that nothing more could follow;
but by meeting threat with threat and compulsion with compul-
sion. When the employer says, "Come to my terms, or go with-
out your dinner," the union must be permitted to answer, "Come
to our terms, or shut up your shop."
Combinations of capital and combinations of labor are alike
inevitable concomitants of social growth, steps in the evolution
The forces which impel them are stronger than the
law. It seems sad that it should be so; that just as the white
banner of international peace is lifted at the Hague, the grim
spectre of industrial war should confront us at home. But so
it is.
The unions ar.e here, and here to stay. Society approves
them. The great tribunal of public opinion, the final supreme
court, has decided that they and their proceedings, even to pun-
ishment and compulsion of employers, are lawful and necessary,
li is for the law to admit that fact, put the unions into the cate-
gory of institutions to be recognized, controlled, and governed,
and provide suitable proceedings for that purpose.
Exactly the same thing is true of the great corporations. It
is useless to persevere in the course we have been following, to
make our laws more and more drastic, to try in that way to break
up the great combinations now existing, and prevent others, and
so bring business back to the conditions of forty years ago. We
must face the situation as it is ; recognize the great corporations
as institutions to be dealt with according to their greatness, their
power of evil, and the danger of their abuse of their powers. We
must define the wrongs which are to be feared from them, and
provide means for the adequate investigation and punishment
of those wrongs.
This will tax the wisdom of the legislature to its utmost and
put on the courts burdens which they have never borne before.
It will require judicial investigations into wages, prices, profits,
risks, and all the elements that enter into the conduct of busi-
ness. It will incorporate into the law and its administration
much that now belongs to the domain of economics. It will
compel disclosures by the corporations which they will be very
unwilling to make. It will make it necessary for them to do
business in daylight and have no secrets from the state. It will
make an end of fictitious stocks and bonds. While giving full
play to invention, enterprise, organization, and every form of
human effort, it will impose on all the one condition of universal
fair dealing.
A. LEO WEIL.
Member Pennsylvania Bar.
Parallels to the apprehended evils from the present era of
concentration may be found in the evils once predicted from all
forms of association evils long since proved to have existed in
imagination only, and finally so recognized by solemn legislative
enactment or formal judicial decision.
At first the Eoman law required no special state authorization
to form a corporation. Under the empire special permission from
the state became necessary, which the pagan emperors granted
reluctantly. ,, ^
Thus we find Pliny the Younger suggesting to the Emperor
Trajan the advisability of forming a company of firemen, adding :
"1 will take care none but those of that business shall be admitted
into it, and that the privileges granted them shall not be applied
to any other purpose. As this corporated body will be restricted
to so small a number of members, it will be easy to keep them
under regulations."
To this reasonable request the Emperor replied, declining to
grant the necessary permission, adding, "Whatever name we give
to them, and for whatever purposes they may be founded, they
will not fail to form themselves into factious assemblies, however
short their meetings may be." (Pliny's Epist., B. 10, Lets. 42
and 43.)
The English statute of 6 Geo. I. Cap. 18, declared that where
there was no act of incorporation, the practice of making sub-
scriptions for commercial undertakings, with the certificates of
subscribers transferable, was a common nuisance.
In a case in which an indictment was found under this statute
against a number of parties who had agreed to raise two hundred
shares of 210 each, by paying in monthly installments, in order
to build houses for one another, it was said that such clubbing
together for the purpose of carrying on trade was calculated to
put down individual industry and competition, which are most
advantageous to the public. (Pratt vs. Hutchinson, 15 East, pp.
516-517.)
Many similar decisions were rendered. Without reference to
the statute, but at common law, beginning with Lord Eldon, the
courts of England held that companies with large capital, arising
from numerous small contributions, were injurious to the public
and illegal ; though at a later period. Lord Brougham decided this
question the other way. For a considerable period, the formation
of partnership associations for purposes of trade was prohibited
under severe fines and penalties. Compare the state of the public
mind of that era with the notion to-day, which favors the partner-
ship association as against the corporation.
Were it not for its quaint and now obsolete terms, this old
statute of 6 Geo. I, so commemorative of popular error,
ght be mistaken for a resume of the speeches of some of our
modern prophets, who pretend to foresee the evils of industrial
consolidations.
78
"Whereas, it is notorious that several undertakings or projects
of different kinds have, at some time or times been publickly con-
trived and practised, or attempted to be practised, which mani-
festly tend to the common grievance, prejudice and inconvenience
of great numbers of your Majesty's subjects in their trade and
commerce, and other their affairs; and the persons who contrive
or attempt such dangerous and mischievous undertakings or proj-
ects, under false pretences of publick good, do presume, accord-
ing to their own devices and schemes, to open books for publick
subscriptions, and draw in many unwary persons to subscribe
therein towards raising great sums of money whereupon the sub-
scribers or claimants under them do pay small proportions
thereof, and such proportions in the whole do amount to very
large sums, * * * * And whereas in many cases the said
undertakers or subscribers have * * * presumed to act as
if they were corporate bodies, and have pretended to make their
shares of stocks transferable or assignable, without any legal
authority, either by act of parliament, or by any charter from the
crown for so doing; * * * and many other unwarrantable
practices (too many to enumerate) have been and daily are and
may hereafter be contrived, set on foot, or proceeded upon, to the
ruin and destruction of many of your Majesty's good subjects, if
a timely remedy be not provided ; and whereas it is become abso-
lutely necessary that all publick undertakings and attempts, tend-
ing to the common grievance, prejudice and inconvenience of
your Majesty's subjects in general, or great numbers of them, in
their trade, commerce or other lawful affairs, being effectually
suppressed and restrained for the future, by suitable and adequate,
punishments for that purpose to be ascertained and established."
This statute, with its solemn enumeration of grievances, which
the logic of time and events clearly demonstrated were not the
essentials of such associations, was expurgated from the English
system of laws, and in its place were substituted enactments giv-
ing the utmost freedom of organization, without limitation as to
capital or purpose. Modern jurists, political economists and stu-
dents of public affairs entertain very different views of the utility
of associated capital:
Judge Caton : "Corporations have become among the great-
est means of state and national prosperity." 19 111., 353.
Judge Gibson : "The combination of capital for purposes of
commerce, or to carry on any other branch of industry, although
it may in its consequences indirectly operate on third persons
* * * is a common means of the ordinary course of human
affairs which stimulates to competition and enables men to engage
in undertakings too weighty for one individual." Commonwealth
vs. Carlisle, 1 Brightly.
Another Court said : "Associations are so common an ele-
ment, not only to commerce, but to all affairs of life, that it would
be rather perilous on the part of the court to assert that they
impair competition, destroy emulation and diminish exertion.
There is scarcely an occupation in life, scarcely a branch of trade
from the very largest to the smallest, that does not feel the excit-
ing and invigorating influence of this wonderful instrumentality."
Jones vs. Fell, 5 Fla. 510.
Judge Field : "As a matter of fact, nearly all enterprises in
this state, requiring for their execution the expenditure of large
capital, are undertaken by corporations. They engage in com-
merce; they build and sail ships; they cover our navigable streams
with steamers; they construct houses; they bring the products of
earth and sea to market ; they light our streets and buildings ; they
open and work mines; they carry water into our cities; they build
railroads and cross mountains and deserts with them; they erect
churches, colleges, lyceums, and theaters; they set up manufac-
tories, and keep the spindle and shuttle in motion; they establish
banks for savings; they insure against accidents on land and sea;
they give policies on life; they make money exchanges with all
parts of the world; they publish newspapers' and books, and send
news by lightning across the continent and under the ocean. In-
deed, there is nothing that is lawful to be done to feed and clothe
our people, to beautify and adorn their dwellings, to relieve the
sick, to help the needy, to enrich and ennoble humanity, which
is not to a great extent done through the instrumentality of cor-
porations." Railroad Tax Cases, 13 Fed. Rep. 743.
u John Stuart Mill (Political Economy, Vol. 1, p. 189,) says:
When markets are large and a large opening for exportation,
2 systems of business are effective. Large establishments are
ituted for small ones. This change from small to large is
(eneficial. It may have some drawbacks, but when once
s system of large establishments is established, the change from
large to larger systems is an unqualified benefit."
Again, (p. 510):
/The progress of productive arts requiring that many sorts
rial occupations should be carried on bv lanre and larger
the productive power of industry must suffer by what-
Henry G. Carey says:
That the more perfect the power of association the greater
so
the power of production, and the larger the proportion of the
product which falls to the laborer's share."
Professor Sumner says :
"There is every indication that we are to see new develop-
ments of the power of aggregated capital to serve civilization and
that the new developments will be made right here in America.
Joint stock companies are yet in their infancy ; and incorporated
capital, instead of being a thing which can be overturned, is a
thing which is becoming more and more indispensable. * *
Aggregated capital will be more and more essential to the per-
formance of our social tasks. * * * This tendency is in the
public interest. * * * We are to see the development of the
country pushed forward at an unprecedented rate by an aggrega-
tion of capital, and a systematic application of it under the direc-
tion of competent men. This development will be for the benefit
of all."
While it is now generally conceded that corporations or asso-
ciated capital are a necessary part of our trade and industrial
system, yet it is sometimes said that these large corporations,
formed by the consolidation of a number of industrial enterprises,
with their great capitalization and their solidarity of manage-
ment, will prevent competition, create monopoly, be hurtful to
labor, and thereby prove injurious to the public. Again, it may
be observed, these prophets of evil are forgetting the lessons of
history, are ignoring the changed conditions under which we now
live, and have misused terms.
Eeplying to those who would prevent consolidations, com-
monly called "trusts," I maintain:
Legislative restrictions upon trade have always proved bane-
ful, and, in most cases, have only aggravated the evils they sought
to prevent.
Consolidations, understood as the amalgamation of a number
of industrial plants, do not prevent that kind of competition
which is beneficial to the public, and do not create monopolies.
Consolidation, instead of being an injury, is a benefit to labor.
Large capitalization is a relative term, and considered with
reference to the present trade conditions, the capital employed
is not larger than is necessary successfully to carry on such enter-
prises.
Consolidations are the outgrowth and the symptom of the ad-
vancing civilization of to-day, and the inevitable tendency of its
complex trade conditions.
Keverting again to English history, we find the ancient pro-
totype of the modern statute which proposes restraint upon trade.
81
In 1552 the statute of 5 and 6 Ed. VI, Cap. 14, enumerates
certain offenses against trade, under the titles of regrating, fore-
stalling and ingrossing, and shows that even prior to that time
such laws had existed, but were not enforced. Thus it begins :
"Albeit divers good statutes heretofore have been made
against f orestallers of merchandises and victuals, yet for that good
laws and statutes against regrators and ingrossers of the same
things have not been heretofore sufficiently made and provided,
and also for that it hath not been perfectly known what person
should be taken for a forestaller, regrator or ingrosser, the said
statutes have not taken good effect, according to the minds of
the makers thereof, etc/'
Briefly stated, a forestaller was denned as a person who bought
goods when they were on their way to market; a regrator was one
who bought in any market certain food products and victuals
that had been brought to market to sell, and sold the same again
in the same market or any other market within four miles there-
from; an ingrosser was one who obtained "by buying, contracting
or promise taking" any "grain, butter, cheese, fish or other dead
victuals whatsoever/' with intent to sell again.
This act visited severe penalties for any of these offenses, the
offender on a third conviction being set on the pillory, forfeiting
all his goods and remaining in prison during the king's pleasure.
These laws were thought necessary in the infancy of trade to pre-
serve competition. The statutes of that age abound in the most
minute regulations of trade, as, for example, "An act for stuffing
of feather beds, bolsters, mattresses and cushions," (5 and 6 Edw.
VI, Cap. 23), which begins, "For the avoiding of the great deceit
used and practiced in stuffing of feather beds, bolsters, pillows,
mattresses, cushions and quilts," etc.
Under the statute against forestalling, regrating and ingross-
ing, many prosecutions were had. The arguments of counsel and
the opinions of the courts cover almost the same ground now
gone over in the attacks upon consolidation. We have such judges
as Lord Eldon and Lord Kenyon pronouncing tirades from the
bench against these crimes crimes forsooth to buy goods on
the way to market; to buy goods in market to sell again; to buy
any grain or food stuffs to sell again. Thus in Rex vs. Rusby,
(Peake's Nisi Prius Cases, 189), decided in 1800, Lord Kenyon
aired his views, and in a scathing charge to the jury secured the
conviction of Rusby, who was guilty of the heinous crime of buy-
ing 250 bushels of oats, and selling the same at a profit of six
m, eL This in P art is what he charged the jury :
Ihis case presents itself to your notice on behalf of all ranks,
rich and poor, but more especially the latter. Though in a state
of society some must have greater comforts and luxuries than
others, yet all should have the necessaries of life; and if the poor
cannot exist, in vain may the rich look for happiness and pros-
perity. * * *
"The law has not been disputed; for though in an evil hour
all the statutes which had been existing above a century were at
one blow repealed, yet, thank God, the provisions of the common
law were not destroyed. * * *
"Even amongst the laws of the Saxons are to be found many
wise provisions against forestalling and offenses of this kind, and
those laws laid the foundation of our common law. That it re-
mains an offense nobody has controverted. * * * Specula-
tion has said that the fear of such an offense is ridiculous, and a
very learned man, a good writer, has said you might as well fear
witchcraft. I wish Dr. Adam Smith had lived to hear the evi-
dence of to-day, and then he would have seen whether such an
offense exists, and whether it is to be dreaded. If he had been told
that cattle and corn were brought to market, and then bought by
a man whose purse happened to be longer than his neighbor's,
so that the poor man who walks the streets and earns his daily
bread by his daily labor could get none but through his hands, and
at the price he chose to demand; that it had been raised three
pence, six pence, nine pence and more per quarter, on the same
day, would he have said "there was no danger from such an
offense?"
Just think of it. This crime was nothing more than what is
now the occupation of every jobber, broker, and wholesaler. He
bought 250 bushels of oats, which he afterwards sold at a profit
of 6 cents a bushel. This charge was given after the passage of
the Act of 12 Geo. III., c. 71, repealing the laws against regrat-
ing, ingrossing, forestalling, etc., but Lord Kenyon decided that
these acts were common taw offenses, and the courts generally of
that date, urged thereto by the clamor of the masses, still con-
tinued to entertain charges of this character. Men who were
engaged in buying grain to sell again, who bought in market to
sell again, who bought goods on their way to market to sell again,
were prosecuted, and sometimes convicted and punished. It was
the same cry, the demand for free competition, the protection of
the weak against the strong, the prevention of monopoly, that we
now hear. At last Parliament, by 7 & 8 Viet. cap. 29, in response
to the demand of a more enlightened public sentiment, struck
down at one blow about forty of these so-called regulations, after
reciting that they had proved an injury to trade, and especially to
those for whose protection they were designed, thus :
"Whereas, divers statutes have "been from time to time made
in the Parliaments of England, Scotland, Great Britain and
Ireland, respectively, prohibiting certain dealings in wares,
victuals, merchandise and various commodities, by the names
of badgering, forestalling, regrating and ingrossing, and sub-
jecting to divers punishments, penalties and forfeitures per-
sons so dealing : And whereas, it is expedient that such statutes,
as well as certain other statutes made in hindrance and in restraint
of trade, be repealed : And whereas, an act of the Parliament of
Great Britain was passed in the twelfth year of the reign of King
George the Third, entitled an Act for repealing several laws there-
in mentioned against badgers, ingrossers, forestallers and regra-
tors, and for indemnifying persons against prosecutions for
offen>es committed against the said acts, whereby, after reciting
that it had been found by experience that the restraint laid by
several statutes upon the dealing in corn, meal, flour, cattle, and
sundry other sorts of victuals, by preventing a free trade in the
said commodities, have a tendency to discourage the growth and
to enhance the price of the same, which statutes, if put in execu-
tion, would bring great distress upon the inhabitants of many
parts of this kingdom, and in particular upon those of the cities of
London and Westminster/" * * *
After this preamble follows the most sweeping repeal of some
forty or more statutes and the formal declaration that badgering,
ingrossing. forestalling, and regrating were not offenses, and no
prosecutions could be had therefor.
This is what Buckle (Vol. I., p. 277) says of the laws repealed
by the above statute, and of like amendments :
"Every European Government which has legislated respecting
trade has acted as if its main object were to suppress the trade and
ruin the traders. Instead of leaving the national industry to take
its own course, it has been troubled by an interminable series of
regulations, all intended for its good", and all inflicting serious
harm. To such a height has this been carried that the commer-
cial reforms which have distinguished England during the last
twenty years have solely consisted in undoing ihis mischievous
and intrusive legislation. It is no exaggeration to say that the
istory of the commercial legislation of Europe presents every
sible contnvan ce for hampering the energies of commerce In
every quarter and at every moment the hand of Government was
Bounties to raise up a losing trade and taxes to pull down a
emunerative one, this branch of industry forbidden and that
branch of industry encouraged. Laws to regulate wages, laws to
regulate prices, laws to regulate profits, interference with mar-
kets, interference with manufactories, interference with machin-
ery, interference even with shops."
There were those, and they were in the majority, who looked
to these regulations as their only protection, and who thought that
society would be overwhelmed if they were removed. As has
been shown, learned judges shared these views; yet experience
demonstrated that the progress of trade and the good of society
were hampered, not helped, by these attempts at regulation.
These laws and decisions were made at the time when trade was
primitive, when there was no middleman, when the producer sold
to the consumer direct. They were intended to prevent the en-
tree of the jobber, the Avholesaler and the broker upon the stage
of commerce, for whose entree the evolution of trade had given the
cue. They were futile. They could not prevent that trade pro-
gression which the march of civilization demanded. They could
not understand that nature's law of competition would assert its
supremacy in the more complex conditions of trade that accom-
panied the advent of the middleman. This confounding of the
prevalent form of competition with the principle itself has been
and is at the root of all the reactionary attempts to restrict trade
by law from that day to this.
It may with propriety be assumed that at some future date
the student of events will clearly see that the attempts of to-day
at the restriction of industrial combinations, which are also steps
in the evolution of trade, were as unnecessary and as ridiculous as
appear to us those laws against regrating, forestalling, and in-
grossing, those laws which sought to punish the middleman as a
criminal. Macaulay was truly prophetic when, writing of the
opposition once made to the introduction of fast stage coaches in
England, he said : "We smile at these things. It is not impos-
sible that our descendants when they read the opposition offered
by cupidity and prejudice to the improvements of the nineteenth
century, may smile in their turn." We have already had our
laugh, we are now furnishing means for the amusement of our own
descendants.
If consolidation of industrial plants prevented competition
and created monopolies, all thinking men would condemn them;
but if, as some believe, they only prevent that competition which
is injurious and stimulate that competition which is beneficial to
the public, then instead of curses they are blessings.
It is never justifiable to appeal to deep-seated prejudices by
simply using terms and phrases when the circumstances do not
85
warrant the application of such terms. Monopoly is offensive to
every liberty-loving people. Even the word arouses .antagonism
from every fiber of a freeman's nature. Why is this so? Mo-
nopoly is a relic of tyranny, and was one of the most odious exer-
cises of tyranny. Monopoly was thus denned by Lord Coke :
"An institution or allowance by the King, by his grant, com-
mission or otherwise, to person or persons, bodies political or cor-
porate, of or for the sole buying, selling, making, working or
using of anything whereby any person or persons, bodies politic
or corporate, are sought to be restrained of any freedom of liberty
they had before, or hindered in their lawful trade" (7 Bacon s
Abridgement, 22).
The Supreme Court of the United States defines monopoly
with reference to present conditions thus :
"The withdrawing of that which is a common right from the
community and vesting it in one or more individuals, to the
exclusion of all others" (Charles River Bridge Case, 11 Peters,
567).
These definitions and the history of monopolies in England
show how the antipathy to monopoly became so deep-seated in
the Anglo-Saxon mind; and how and why the mere application of
the term creates an aversion to whatsoever it is applied.
Prior to 1601, when they were successfully assailed in the
courts, and to 1624, when Parliament declared them void, there
were grants of monopoly by letters patent from the Crown,
whereby, for favoritism or valuable consideration, certain per-
sons were granted the exclusive right to buy and sell specified
articles of trade, or the exclusive right to perform certain classes
of labor. As may be inferred, the power to confer these valuable
rights was greatly abused, and those who received such grants
were not slow to misuse their privilege by extortionate demands.
Sir John Culpepper thus refers to the English monopolies :
"Like the frogs of Egypt they have gotten possession of our
dwellings, and we have scarce a room free from them. They sup
in our cup; they dip in our dish; they sit by our fires. We find
them in the dye fat, wash bowl and powdering tub. They share
with the butler in his box ; they will not bait us a pin. We may
not buy our clothes without their brokerage. These are the
leeches that have sucked the Commonwealth so hard that it is
almost hectical."
Monopolies cannot be created by association or agreement.
W e now have no letters patent giving exclusive right except under
our patent laws for new inventions and discoveries. The letters
- patent of old creating monopolies were of the same character as
those now granted to the discoverer of some new and useful in-
vention. It is therefore wholly unjustifiable to use the term mo-
nopoly as applied to the effects of industrial consolidation.
"Competition is the life of trade," is a saw of the counting
house which, like many others, contains a minimum of truth with
a maximum of error. It would be more truthful to say "Com-
petition, as generally practiced, if the life of trade, is the death
of the trader." True competition does not mean the cut-throat
methods of overreaching that once prevailed, where rival trades-
men were mortal enemies; nor does it mean that the better
equipped and better managed establishment, with its increasing
trade and business, must sleep by the roadside of commerce until
the slow-going and non-progre'ssive competitor catches up.
Competition may be constructive or destructive. The true and
only kind of competition that is desirable is the constructive,
which wins by decreasing cost or improving product.
It was of the destructive kind of competition that the court
spoke in Kellogg vs. Larkjn, 3 Pinney, 150 :
"If it be true, also, that competition is the life of trade, it
may follow such premises that he who relaxes competition com-
mits an act injurious to trade; and not only so, but he commits
an overt act of treason against the commonwealth. But I ap-
prehend that it is not true that competition is the life of trade.
On the contrary, that maxim is one of the least reliable of the
host we may pick up in every market place. It is in fact the
shibboleth of mere gambling speculation, and is hardly entitled
to take rank as an axiom in the jurisprudence of this country. I
believe universal observation will attest that in the last quarter of
a century competition in trade has caused more individual distress
than the want of competition.
"Indeed, by reducing prices below or raising them above
value (as the nature of the trade permitted) competition had
done more to monopolize trade, or to secure exclusive advantages
in it, than has been done by contract. Eivalry in trade will
destroy itself, and rival tradesmen seek to remove each other,
rarely resorting to contract unless they find it the cheapest mode
of putting an end to the strife."
In the case of Mogul Steamship Co. vs. McGreggor (57 L.
E. Ex. Cases, 541), Lord Coleridge, upon August 11, 1888, deliv-
ering an opinion, said : "It must be remembered that all trade
is, and must be, in a sense, selfish. Trade not being infinite, nay,
the trade of a particular place or district being possibly very
limited, what one man gains another man loses. In the hand-to-
hand war of commerce, as in the conflicts of public life, whether
87
at the bar, in Parliament, in medicine, in engineering men fight
th contrary, is not without its Sir Philip Sydney but these are
counsels of perfection which it would be silly indeed to make the
measure of the rough business of the world, as pursued by ordi-
nary men of business."
Justice Gray, in Leslie vs. Lorrillard (110 N. Y. 519) says:
"I do not think that competition is invariably a public bene-
faction; for it may be carried on to such a degree as to become
a general evil."
That competition only is desirable which stimulates to cheap
producing, and selling at a reasonable profit, supplying the most
for the money. This competition need not be direct, it may be
indirect; nay, the fear of competition may be as efficacious, if not
more so, than the competition itself. To-day the whole world is
one market place; space lias been annihilated, and distance
destroyed. Communication throughout the world is practically
instantaneous. The manufacturer of one place or country is a
competitor of every other manufacturer of the same goods in
every other place or country. The capital of America competes
with the capital of every country on the globe, and so the capital
of every country on the globe competes with the capital of
America.
No consolidation, however large the proportion of any particu-
lar industry it may have absorbed, dares to raise prices beyond
the point where an inducement is made to other capital to engage
in the same business nay, more than this, I maintain that no
consolidation can continue its control of any line of industry un-
less it can produce and supply the trade with its product at a
price less than that of the individual competitor ; this because of
the smaller area of business of the individual competitor, and the
element of personal equation. Direct - competition from those
engaged in the same industry not only can, but does, confront
every large aggregation of capital in every line of business in
which consolidations have been formed. And experience has
shown that the formation of consolidations has been followed in
every instance by new capital embarking in the same line of
industry in competition with the consolidation. Large numbers
engaged in the same industry, some competent, some otherwise,
have invariably produced seasons of very high and very low
prices, because reasonable regulation of such trade was imprac-
ticable, and capital, even when necessary, was deterred from em-
barking in enterprises subject to such hazards. The organization
of a consolidation is the signal that wiser counsels will prevail,
and forthwith capital seeks the opportunity for profitable invest-
ment.
The evil, therefore, of high prices, or rather unreasonable
profits, is reduced to a minimum, because the direct competition
of those in the business exists, and judging from experience
always will exist, while capital, ever eager for profitable invest-
ment, stands like a watchdog, guarding the public against exces-
sive profits by other capitalists.
Every well-managed consolidation, by the natural laws of
trade, must result in reducing the cost of production and distri-
bution. With the improperly' managed consolidation we have
nothing to do. No argument for or against consolidation can be
predicated thereon. You cannot make men wise or competent by
legislation. You cannot expect counsels of perfection from im-
perfect mortals. We can only reason from essential features of
consolidation, not from incidental mistakes made by incompetent
management. That such large enterprises reduce the cost of
production, is an economic fact too well established now to need
further authentication. The saving, incident to the handling by
one company of ore, in and from the mine to the finished steel
structure on its site, as compared with a dozen intermediaries,
each applying more or less of skill, and each claiming more or
less of profit, is so patent as to require statement only. Improve-
ments in processes, there being no obstacle to the adoption of
the latest and best ; the economies from standardization of wares ;
continuous operation on certain goods, and the consequent op-
portunity for introducing special machinery; savings in freight:
and facilities and capital for purchasing in any quantity to pro-
vide for any contingency, are advantages only available to large
enterprises with abundant capital and competent management.
The cost of production being reduced, the cost to consumer is
reduced, if actual competition, or the fear of competition, com-
monly called "potential competition," prevents the consolida-
tion from demanding unreasonable returns. This proposition
must be conceded, unless the laws of trade are to be reversed,
experience is to go for naught, and history is to be denied.
It will be urged, however, that the cheapening of cost will
be at the expense of the laborer, the salesman and the small man-
ufacturer. As to the salesman and the small manufacturer, it
may be said no great economic change can take place without
some temporary hardship, and the benefit of the public is a higher
consideration than the temporary inconvenience of a compara-
tive few. But there is another answer which involves no conces-
sion. The statistics show that of those engaged in business or
trade, a large percentage fail about ninety per cent. This goes
to prove that a large number of those who are thus supplanted
by the consolidation are incompetent to engage in business, and
if they were left alone would fail. Many such, under the pro-
tecting wings of the consolidation, with the benefit of the better
brains at the helm, earn in the aggregate much more than they
would have accumulated, if they had continued as sole proprie-
tors, without the benefit of the better brain and management of-
the experienced and selected few.
The laborer and salesman are placed in a more favorable posi-
tion by the consolidation. Under the system of individual com-
petition, with its eras of depression and overproduction, its shut-
downs and its curtailment of output, there was no continuity of
employment. At one time every available man was engaged,
capacities of plants enlarged, and production increased until be-
yond the demand : then came the fall in prices, the bankruptcy of
plants, the shut-downs ; and laborers, salesmen, clerks and other
employes 'were thrown out of employment, sometimes dependent
upon charity, as in our large cities a few years since. These eras
of overproduction were not infrequent, This is changed by con-
solidation. The supply and demand are kept approximate, over-
production is jealously avoided, and there results continuous em-
ployment.
Another consideration for the laboring man, is the fact that
in the mad race of competition, where individual seeks to over-
reach individual, each striving to reduce his cost below that of
his competitor, many find it necessary to begin their reductions
with labor, because of their inability to take advantage of other
economies, such as improved machinerv large purchases of ma-
terial, etc.. which have been introduced by their more fortunate
competitors, and thus begins the reduction of wages which spreads
from factory to factory. There is generally abundance of labor
the different industries, frequently a surplus, so that laborers
'ompete with each other in seeking 'employment, and among so
many employers some are not loath to take advantage of this ; and
the bane of labor organizations or unions. But with the
11 ated consolidation, earnincr a reasonable profit, the la-
r will be safe, he will be organized for self-protection, and
will have fewer and better men with whom to deal. He will,
5iore, by reason of the better regulation of supply and de-
contmuously employed, and his greatest curse, inter-
90
mittent employment, with seasons of idleness, will be removed.
Thus, while a fewer number of men may be employed, the aggre-
gate days of employment, or the aggregate amount of labor em-
ployed, will be greater. There are those, however, who contend
and not without good authority, that the consolidation, by reduc-
ing the price, will ultimately increase the consumption, and there-
by in time will actually employ an even greater number of men.
On the whole, with or without consolidation, no more labor
will be employed than is necessary to supply the goods for which
there is demand. Under the one system, the supply is not so
well regulated to the demand, as under the other; hence recur
seasons of shut-down and idleness. The consolidation prevents
this; hence it must be of advantage to the laborer. The history of
the Standard Oil Company is an excellent illustration of this
principle. In no other industry employing so large a number of
men has the working man had so continuous employment or
better wages for the kind of work performed.
The officers of the great labor organizations of this country,
in their papers read before this convention, have almost to a unit
borne witness to the truth of the above assertions, and they all
speak from experience when they favor industrial combinations.
These views are entertained by some of the best thinkers and
writers on political economy. Gunton says:
"If it is true that the concentration of capital tends to dimin-
ish the cost of production and intensify competition, it follows
that prices will fall or wages will rise, or both, in proportion as
large enterprises supplant small ones. And this is what all indus-
trial history shows has taken place. Take for example the cotton
industry in this country. In 1831 there were 801 cotton manu-
facturing establishments with an average capital of $50,702 each.
* * * The ratio of consumption of cotton cloth to popnln-
tion was 5.90 pounds to 1, and the price of cotton cloth 17 cents
per yard. In 1880 the number of establishments had fallen to
756. The average amount of capital invested in establishments
had risen from $50,702 to $275,403; * * * the ratio of con-
sumption of cotton cloth to the population was 13.90 pounds to
1 ; and the price of cotton cloth was 7 cents per yard, and wages
were 80 per cent higher. It will thus be seen that, comparing
1880 with 1831, the capital invested per spindle was over one-
third less, the number of spindles operated by each laborer nearly
three times as large, the product per spindle one-fourth greater,
the product per dollar invested twice as large, the product per
laborer employed nearly four times as great, the price of cotton
cloth 60 per cent less, wages 80 per cent higher, and the con-
sumption of cotton cloth per capita of the population over 100
per cent greater. These are the results of the process of con-
solidation into large capitals, extending over half a century.
What is true of this industry is equally true of all industries m
proportion as the concentration of capital has increased.
Those who cry loudest for legislation point to certain evils,
~ charged as incident to consolidations, and demand prevention by
law. For example, the watering of stock, the practice of reducing
prices for the express purpose of crushing a rival, and then raising
prices to an unreasonable amount, the circulation of false or mis-
leading reports by the officers of such associations, for the pur-
pose of stock speculations, and the corrupting of legislatures and
municipal bodies.
These evils are not essential incidents to consolidations, they
apply equally to all corporations. If it be thought that these
practices can be stopped by legislation, then such wise and tem-
perate legislation as will best prevent such practices might well
be passed; but will legislation accomplish this? I am not one
of those who think that you can legislate morality into a com-
munity. Laws receive their impulses from the people. The im-
pulses move upward from the people to the law, and not down-
ward from the law to the people. Like a pyramid, the people
are the base, the law the apex ; the pyramid will not stand inverted,
nor will the apex stand without its base. For these immoral and
dishonest practices we must look behind the statute books, behind
the courts, behind the doors of the counting-house we must look
into the consciences of men. The corporation is only a cloak cov-
ering the men on whom it rests. But in these times, concealed
by this covering, sometimes called a legal entity, corporate offi-
cers, as well as the community, have established a code of morals
different from that by which individuals are governed in their
personal transactions. Men will do through the corporation, or
against the corporation, what they would shrink from doing in a
personal transaction. This false moral idea is not limited to the
man in the corporation; the man outside of the corporation is
equally guilty. Claims against corporations, or demands upon
them, are made that would never be made upon an individual.
This is due to a depraved and diseased moral sentiment of the
community. It is a false standard of morality. The corporation
? no thing apart from the stockholders. It 'is a society of men.
An aggregation of men. The officers who manage its affairs, the
shareholders who own its stock, are the same men who sit by you
the club or in the church. Why shall they be held to one code
t moral responsibility in their personal conduct and to another
92
code in their conduct as officers or shareholders of a corporation?
We see the same men, and the same acts, but when done by the
corporation, through its officer, there seems to be a kind of moral
strabismus in the eye of the community, which looks over the evil
doer to the thing done, and sees only the impersonal agent, the
corporation, through which the evil was done. We are confronted
by the same conditions in politics. It is the men of the com-
munity who are the corporation, the men of the community
who manage the corporation. But because of the diseased moral
sense of the community, those guilty of wrong doing as officers,
or as stockholders of corporations, are not visited with the con-
demnation of their associates. The moralist and the ethical
teacher must deal with this problem. Visit upon the offender
the reprobation of the community for misdeeds against a cor-
poration, as against an individual; for misdeeds as the officer or
director of a corporation, just as for his acts as an individual, and
if the moral sense of the community is high, just so high and no
higher will rise the conduct of those dealing with or for corpora-
tions.
These same suggestions apply with even greater force to the
charge that these large aggregations of capital tend to debauch
politics by bribing legislatures and municipal governments. This
charge presupposes for each corporation that succeeds in bribing,
a large number of persons so corrupt that they will accept bribes.
It assumes that legislatures and municipal bodies can be bribed.
If this be true, and alas, there is not wanting much evidence that
gives credibility to the imputation, the remedy surely would not
be to suppress the corporation, any more than to suppress the
legislature. The true remedy is to suppress the bribe taker, as
well as the bribe giver. This can only be done by improving the
moral tone of the community, because, after all, the legislatures,
the municipal councils, aye, the corporations of a community,
rise no higher and sink no lower in their moral tone than the gen-
eral moral tone of their respective communities. This may seem
an unsavory truth in this day of recriminations, but it is still a
truth.
The capital employed in the enterprises of to-day may seem
large when compared with the amount thus employed at one time,
but it is no larger in proportion than are the transactions of this
age compared with those of former ages. Once all trade was cir-
cumscribed, confined within small territorial areas, due to lack of
facilities for transportation and communication. The market
places of cities and towns in the past were the sole marts some-
times of whole counties, or even larger districts. To-day what is
the situation? The price of a loaf of bread in Chicago is affected
by a rumor of war in Asia, and the world's exchange goes up or
down in accordance with the result of negotiations for a loan in
Japan. Everything of importance occurring in the most remote
portions of the world affects trade for good or evil in every other
portion. Rumors of war or peace, the discovery of mineral de-
posits, a new and useful invention in any part of the world, reacts
upon every other part. The whole world is every man's market.
Transactions involving sums equal to a king's ransom are now of
almost daily occurrence, and millions are now exchanged where
hundreds once sufficed. Contracts for the supply of material
involving tens of millions of dollars are not infrequent. The
amount of capital employed in any enterprise signifies nothing
except the magnitude of our dealings. These enormous amounts
are not limited to companies formed by consolidation; they are
likewise employed in business enterprise increased from small be-
ginnings, by natural accretions, to keep step with the industrial
progress and demands of the time.
The unification of the world into a single market place has
come to pass through no human design, but as the natural result
of improved facilities in transportation and communication. A
man to-day in any part of the world may be in daily touch with
his business, however remote ; and with the markets in every other
portion of the globe. These changed conditions have caused like
changes in methods of business. Trade and commerce never lag
behind the train of progress and improvement; they keep apace,
sometimes they are in the van. Those who would prevent these
.vast aggregations of capital, would turn back the hands on the
chal^of civilization. They would seek to prevent the natural,
inevitable tendency which has been superinduced by the exigen-
cies of trade, and made imperative by the complex and compli-
ed commerce of the world. Consolidations in industrial enter-
s, large aggregations of capital, are not sudden creations,
they are growths, forced upon the world by the law of progress,
ney are here by no man's fiat; they can be driven awav by no
human agency. They are natural-inevitable necessary.
Consolidation is the. protest of capital asrainst extinction. Con-
ons were formed in self-defense. They ."rew up by force
competition, to avoid destruction by competition, 'if the
and weaker had not combined to battle with the larger
tiger, they were doomed to annihilation. As the indi-
nterpnse whether partnership or corporate, erew and
ospered and added to its strength and power, appropriating
re and more of a given trade, the trade of smaller concerns wal
94-
thereby contracted, and if consolidation or combination had been
denied, they would have been eliminated by the more powerful
rival. By combination they at one step placed themselves in posi-
tion to compete and to hold their own. To many concerns it was
a choice between consolidation and insolvency. To many a pro-
prietor it was a choice between losing all, going out of business,
or remaining in business as a stockholder in the larger company,
and saving his accumulations. Through consolidations and the
consequent large stock issues, the public are given opportunity
to become stockholders, and thus share in the. profits and indus-
tries which formerly were closed to general investment. The suc-
cessful manufacturer enlarged and increased his plant, but the
ownership generally remained a family affair. Many of the multi-
millionaires of .this country thus Accumulated their wealth.
There is no reason why skilled laborers receiving good wages, as
well as others connected with the business, should not become
sharers in the profits they help to tarn, by acquiring an interest
in the business in this way.
I come from Pittsburgh, a city where sit enthroned old King
Coal and new King Steel. Consolidations have been effected in
that section in almost every line of industry. Smoke is issuing
from every stack, fires are burning in every furnace. Labor was
never so well paid nor so much employed. Trade was never so
good, times so prosperous, nor the outlook so favorable. Have
not consolidations and these vast aggregations of capital some-
thing to do with this? How otherwise could we have taken such
stupendous contracts for the supply of iron and steel in Europe,
Russia, China, Japan, Australia, Africa in fact all over the
world? What could the ordinary industrial concern do with a
six million dollar order for a railway in Russia? The public never
was so well served as now, never supplied with better goods nor a
greater variety, never supplied so promptly and so efficiently.
Would those who decry consolidation have this growing, pros-
perous, industrial nation, with an inventive genius the greatest
in the world, and an adaptability never before approached, lie
down in the ruin of its industries and hand over its trade to other
nations nations that are now madly striving for the same? Herr
Krupp is not so far behind, nor other German manufacturers.
England, with her gigantic industries (many the fruits of com-
bination and consolidation, which she has never discouraged since
she learned the errors of her ways), has not yet surrendered the
marts of the world to her American competitor.
America has only recently been taught the lesson of the power
for good of these great industrial plants. She is making good use
95
of this knowledge now in securing her portion of the world's trade.
These great aggregations of capital, created by combination and
consolidation, have grown up among us, not without cause; they
are the effect of the natural evolution of trade and commerce.
They are steps, steps only, in the industrial progress of the pres-
ent civilization. To what they will ultimately lead, we may specu-
late, but we cannot know. Natural laws stronger, greater, high-
er than those of man's creation will control them for good or
ill. We touch them at our peril. We may help, we may hinder,
the working of these higher influences. He would indeed be a
wise prophet who could now foretell whither we are tending. No
mortal eye can at one glance foresee the complex markets of the
world. No human mind can at any instant comprehend the trade
conditions of the globe. Such sight and such comprehension are
imperative if legislation touching the mainsprings of trade is to
be intelligently framed. We are in the presence of stupendous
forces, set in motion by unseen power. As in the past, so in the
future, the operation of natural laws will lead to that result which
is best. I am one of those who have not lost confidence in natural
law, and am content to let the God of evolution work out this
great problem of the age. But in the light of history we may
enquire, "Will trade, like man, play his part upon the world's
stage, 'his acts being seven ages'?" Or has he more? There was
an infancy of trade we know, a time when exchange was made in
kind. So, too, we may recall another time, still an infancy,
though then 'twas thought that trade had grown mature when
to buy, to sell again, was deemed a crime. How now we laugh at
those toys of laws. Yet then, men were imprisoned for their in-
fraction. Since then, how great has grown this child of trade,
how strong, how large! And yet who knows but 'tis a "whining
school-boy" still, and the generations yet to come will have their
laugh on us, if we, too, err by assuming trade to be mature. Trade
mature? Who dares assert civilization has passed the zenith, and
ihat the shadows now point from west to east? Concurrent and
xtensive with the growth of civilization will be the growth
trade. When you can say civilization grows no more, then,
oo, you may say the same of trade, but not till then.
The Committee on Organization and Program was named as
follows :
DELAWARE. Charles F. Richard.
J.U Adams. DISTRICT OF CoLUMBiA.-Joseph
-Jefferson Davis. Nimmo. Jr.
SIA. Charles D.Willard. FLORIDA. John Franklin Forbes,
ienry V. Johnson. IDAHO. Judge Claggett.
%
ILLINOIS. Lorin C. Collins. NEW JERSEY. Edward Quinton
INDIANA. John L. Griffiths. Keasbey.
IOWA. T. D. Healy. NEW MEXICO. Frank Springer.
KANSAS. John E. Hessin. NEW YORK. Stephen P. Corliss.
KENTUCKY. W. B. Fleming. NORTH DAKOTA. A. W. Edwards.
LOUISIANA. William Wirt Howe. OHIO. Charles Foster.
MAINE. A. E. Rogers. OREGON. E. Hofer.
MARYLAND. Maj. John I. Yellott. PENNSYLVANIA. H. W. Palmer.
MASSACHUSETTS. John S. Clark. SOUTH CAROLINA. A. C. Kauf-
MICHIGAN. George W. McBride. man.
MINNESOTA. W. W. Folwell. SOUTH DAKOTA. Freeman
MISSISSIPPI. J. W. Cutrer. Knowles.
MISSOURI. F. C. Farr. TENNESSEE. John W. Gaines.
MONTANA. H. H. Swain. TEXAS. A. B. Davidson.
NEBRASKA. R. D. Sutherland. UTAH. George W. Bartch.
NEVADA. Francis G. Newlands. WEST VIRGINIA. John W. Harris.
NEW HAMPSHIRE. Henry W. WISCONSIN. A. M. Jones.
Blair. WYOMING. C. P. Arnold.
NATIONAL ASSOCIATION OF MANUFACTURERS. Theodore C. Search,
President.
NORTHWESTERN TRAVELING MEN'S ASSOCIATION. George J. Reed.
AMERICAN FEDERATION OF LABOR. Samuel Gompers, President.
BROTHERHOOD OF RAILROAD TRAINMEN. P. H. Morrissey, Grand Master.
UNITED GARMENT WORKERS OF AMERICA. Henry White, General Sec.
SINGLE TAX LEAGUE OF THE UNITED STATES. F. H. Monroe.
ORDER OF RAILWAY CONDUCTORS. E. E. Clark, Grand Chief Conductor.
BROTHERHOOD OF LOCOMOTIVE FIREMEN. W. S. Carter.
NATIONAL GRANGE PATRONS OF HUSBANDRY. H. E. Huxley.
ILLINOIS COMMERCIAL MEN'S ASSOCIATION. George H. Holden.
NEW ENGLAND FREE TRADE LEAGUE. Byron W. Holt.
AMERICAN ACADEMY OF POLITICAL AND SOCIAL SCIENCE.- Edmund J.
James.
NATIONAL ALLIANCE THEATRICAL STAGE EMPLOYES. Lee M. Hart, Gen-
eral Secretary and Treasurer.
NATIONAL BUSINESS MEN'S LEAGUE. John W. Ela.
AMERICAN ANTI-TRUST LEAGUE. M. L. Lockwood, President.
KNIGHTS OF LABOR. I. D. Chamberlain.
UNITED STATES EXPORT ASSOCIATION. Francis B. Thurber. President.
COMMERCIAL TRAVELERS' NATIONAL LEAGUE. P. E. Dowe, President.
NATIONAL GRAIN GROWERS' ASSOCIATION. S. H. Greeley.
NATIONAL FARMERS' ALLIANCE AND INDUSTRIAL UNION OF AMERICA.
J. C. Hanley.
NATIONAL TAX LEAGUE. Lawson Purdy.
NATIONAL SOCIALISTS' LEAGUE. A. M. Simons.
BRICKLAYERS' AND MASONS' UNION OF AMERICA. M. R. Grady.
MILLERS' NATIONAL ASSOCIATION. F. H. Magdeburg.
ASSOCIATION OF WESTERN MANUFACTURERS. George Brickner.
AMERICAN SOCIAL SCIENCE ASSOCIATION. Wm. A. Giles.
FARMERS' NATIONAL CONGRESS. John M. Stahl, Secretary.
INTERNATIONAL TYPOGRAPHICAL UNION. Samuel B. Donnelly, President.
TRAVELING MEN'S PROTECTIVE ASSOCIATION. M. W. Phalen, President.
EX-OFFICIO. Franklin H. Head, President Civic Federation of Chicago.
Ralph M. Easley, Secretary, Civic Federation of Chicago.
The conference took a recess until 8 o'clock.
97
EVENING SESSION, SEPTEMBEE 13.
Chairman Head called the session to order promptly at
8 o'clock, and introduced Governor George W. Atkinson of West
Virginia, who said:
G. W. ATKINSON.
Governor of West Virginia.
This gathering, as I understand it, is to consider the relations
of our citizens to one another as citizens, and to consider also the
best methods to he used to protect the masses from the encroach-
ments of combines and trusts, for it seems that this is a period
favorable to the organization of such combines all over the civil-
ized world.
I believe in progression. In this respect I am an evolutionist.
I believe that the world ought to grow, and that men ought to
grow with it. Some sorts of combines are, I think, economic
necessities which grow out of our complex civilization as a nation.
The great manufacturing establishments of the world, covering
all branches of industry, had very small beginnings ; and we, in a
large measure, owe the progress we have made to men of means
who combined or united into what we call "corporations" to make
this advancement possible. But there is a vast difference be-
tween an ordinary corporation and a trust. It seems to me that
every'citizen who possesses any sort of common sense will favor
corporations, because individual citizens, as a rule, cannot in and
of themselves alone furnish sufficient capital to develop the re-
sources of any of the states of our republic. It requires vast
sums of money to handle great undertakings. One man alone
cannot supply the necessary capital to build up great industries,
which have for their object the development of a state or a nation :
but several men of means, by combining, can raise the necessary
amount of capital to accomplish the desired purpose. This
necessity brought corporations into existence. What one man can-
not do, for lack of means, several men can accomplish by uniting
the capital which all of them can command. In this way corpo-
rations are formed. In this manner railroads are constructed,
nnes are opened, mills and factories are built, industries are
stabhshed, men are employed, and the natural resources of a
ntry are developed, which necessarily employ labor and thus
g wealth into a country. Hence I say that every citizen of a
country who possesses ordinary common sense should be favorable
to corporations. Nevertheless, we have in our midst thousands
and tens of thousands of our people who seem to hate them and
fight them on every hand, notwithstanding the fact that they
secure from such concerns reasonable compensation for their toil,
and by means of which they obtain a proper support for them-
selves and those dependent upon them. With this class of peo-
ple, my fellow citizens, I have no sort of sympathy. I assert here
to-day that a corporation properly conducted is entitled to' as
much sympathy, support and respect as an individual, because a
corporation in law is an individual. I wish therefore to be writ-
ten down, my countrymen, as a friend and backer of corpora-
tions, because no state can be developed without them, and there
can be no growth and development if they are inhibited by law
or are not supported properly by the people. Without corpora-
tions to-day we would be without railroads, coal and coke opera-
tions, silver and gold producers, banks and other acknowledged
necessities for the public weal. Therefore, Mr. Chairman, when
I hear men in politics and elsewhere whining the demagogue cry,
"Down with corporations," I am ready to join the crowd of enter-
prising people who will cry from the hustings and the housetops,
"Down with that class of malcontents and demagogues!" I am
not an optimist per se, nor am I a pessimist. I have no sympathy
for any one who puts in his time whining against capital. We
unfortunately have, however, too many of this class of croakers in
our midst. What we need is more capital in legitimate business
undertakings. We must have men everywhere who will invest
their money in building up and opening up the industries of all of
our states. We have in West Virginia more coal and coke and oil
and gas and timber than the United States can consume in hun-
dreds of years. What we now most need is capital to help us on
in our work of development. We are ready and willing to wel-
come to our domain men of enterprise and means from all sections
of the Union, and from abroad as well, to come among us and aid
us in developing the resources which a wise and beneficent Provi-
dence has bestowed upon us, and which are open to all comers.
West Virginia, my friends, is the first oil and gas and timber
state in the Union. She is second in coke, and third in coal.
She has more coal area than any other state, and it is only a matter
of limited time for her to be first in coal and coke production, as
she is now first in oil and gas and timber, because the coal and
coke business is after all only a question of the survival of the
fittest. With more veins of coal than any ether state, and all or
mostly all of a better quality than any of our competitors, espe-
cially for gas and steam and heat and coke, we are bound to hold
99
our own, and in the end come out on top of any and all competi-
tors. Hence I again say, Mr. President, that West Virginians
generally are friendly to corporations, and we will and do wel-
come men of means to come among us, and thus help them and us
not only "to keep the wolf from the door," but at the same time
to aid us to lay up a surplus for "rainy days" which will sooner or
later come to one and all. We welcome, therefore, corporations
and capital, because they help us as West Virginians to build for
both the present and the future.
Now, I take it, Mr. President, that all present understand how
I feel toward capitalists and toward corporations which always
represent capital and capitalists. The next point to which I
desire briefly to allude is the "labor problem." I am now and
always have been a stanch friend of the toiling masses. I stand
for the workingman because he alone produces wealth. He takes
the iron ore,' the coal, the oil, the gas, the precious metals, the
lead, the zinc, etc., out of the bowels of the earth, and by his skill
transforms them from the natural to the finished product. In
this way he produces wealth. In the same manner he brings out
of mother earth the necessary articles for the sustenance of man-
kind. He alone, therefore, is a wealth producer. Why, then,
should he not have our honest, earnest support? I say unhesi-
tatingly that he has my best wishes.
Labor and capital are interdependent. One cannot get on
without the other. The laboring men have the same right to
organize for their advancement and protection as have the cap-
italists. The same privileges must be extended to one class as to
the other. So long as the laboring man does his duty and keeps
within the limits of the law, he will have my sympathy and sup-
port. But I have never yet favored a strike or a lockout so long
as it was possible to prevent it by just and friendly arbitration;
and I have never yet known, and I say it boldly, a strike or a lock-
out, in all my experience and observations, that did not result
m injury to both labor and capital. Therefore, Mr. Chairman,
L favor arbitration to settle all disputed problems between capital
on the one hand and labor on the other.
While I stand here as a representative of the common people,
that they should be properly treated, yet I confess
;nat there are other trusts in this country than money trusts.
? men have their organizations, as I have hitherto stated
ght to have, and are entitled to have. But somehow, how-
er, a portion of these organizations have not taken properly into
:ount the strife and loss of time to themselves and their em-
ccasioned by strikes which they have seen fit to bring
100
upon themselves. There are, therefore, not only capital trusts but
there are sometimes labor trusts also. I wish to place myself
on record against both, and especially so when the demands of
cither or both are not in accord with the well established rules
of political economy and common sense and common honesty
between man and man, whether rich or poor, black or white.
Laboring men have no more right to combine for the purpose of
sustaining that which is unjust and unreasonable than capital-
ists. Hence I wish to declare here and now that arbitration alone
can properly adjust controversies of this sort, and the man who
opposes this kind of adjustment is wholly out of joint with the
spirit of the times in which he lives. Capital and labor should
deal fairly with each other, and if they cannot at all times agree,
let the controversy be arbitrated by a just, fair, unbiased and
honorable tribunal. No conservative, honest man, in my judg-
ment, can or will oppose such adjustment.
This brings me, Mr. President, to a brief consideration of
trusts, which is the main question before this Federation. In
all of my private and public acts in the past, my "musket" has
always been pointed against trusts, and if I know myself to-day,
it is still pointing the same way. It seems that our country has,
within the past few years, gone trust crazy. I cannot understand
why, but it appears to be a fact. Nevertheless, this lunacy fad,
if I may call it such, is not confined to this country alone. It
is just now reaping a harvest everywhere and in all lands. Nor
is it confined to any one political party. I find about as many
Democrats in trusts in the United States as Eepublicans, and I
find at least two of the mammoth trusts of this country are, in
a sense, Democratic trusts. Therefore, I conclude, Mr. Chair-
man, that we cannot choke them out by drawing political lines
upon them. They have grown up as the result of existing condi-
tions, and they cannot be stamped out by any and all political
parties simply resolving against them. To sweep the trust issue
into politics, and resolve one way or the other, as is the custom
now-a-days in political conventions so to do, it seems to me, is
"wasting fragrance on the desert air." We must come nearer
home for a remedy than that. We must hit at its taproot by
national and state legislation, by making it a penal offense against
good government for men of great wealth to combine for the sole
purpose of stifling and choking middle-men and small dealers,
as trusts have generally done in the past.
Or, better still, if the trusts would, take their employees into
their combines and their confidence, and will, after paying a rea-
sonable dividend on the actual amount of capital stock invested,
101
and then agree to distribute a reasonable share of the profits
among the skilled artisans whom they employ as a per cent or
profit upon their wages, the trusts would then be placed upon an
honest, popular and reasonable foundation, and no one could
complain or justly oppose them. I can see no reason why such
an experiment may not be made by employers, nor can I see why
it would not succeed. To do this would bring about harmony
to a large degree between labor and capital, and would measura-
bly though not entirely take the fangs out of the trust and
the combine. This is one of the ways, and it seems to me to be the
logical way, to settle this ever-existing controversy, and settle it
right, because it would then be a just, and, I may say, enlightened
co-operation, and you all know that co-operation is the funda-
mental principle of a trust. It is, in short, the very heart of it.
The trouble, however, with the most of the trusts as they are
now conducted is that the "co-operation" is all one-sided all
in favor of the stockholders, while the skilled laborers and the
consumers are wholly ignored. This seems to be the funda-
mental principle the foundation, so to speak, on which the en-
tire trust movement rests. Why, then, cannot its scope be wid-
ened so as to take in or embrace all the classes whose interests
are involved? So long as the trust now' stands, and so long as it
is thus conducted, that long it will be antagonized by the masses,
and it therefore cannot be enduring, nor can it result as a per-
manent, profitable investment for the stockholders, or can it in
any way benefit the mechanics or the people in general.
Mr. President, I do not wish to be understood as opposing
modern methods of progress. I believe in conserving in every
possible manner the waste of time and energy of the great mass
of our people. The day of wooden plows and stage coaches and
horseback mails have gone by forever. To keep abreast of the
times in which we live, we must use all modern discoveries and
appliances. We must of necessity "keep in the push" or other-
wise perish. All wise people will strive to reduce every possible
waste of energy. The blacksmith shop and the wooden plow were
good enough in their day. They answered the purpose then,
but they are out of date now. Old methods have been steadily
iiscarded, and economical appliances, operated by steam and
electricity, have been substituted therefor. The same is true
i almost every business avocation peculiar to our people. The
trust seems, on its face, to be a step forward in the ever-shifting
irama of growth and progress. It claims as its main purpose
to save waste in production and distribution. Every student of
U economy will admit, in a measure, the force of this par-
102
ticular claim, because the greatest enemy to human progress is
waste. While it may be true that a number of factories in a
particular industry, which have been competing with one another
in a particular line of production, agree to unite for a common
purpose, consenting to not fight one another, and purposing to
furnish a particular article of manufacture to the consumer at a
specific price, of itself is not necessarily wrong. Indeed, on its
face it appears to be right; but it may be wrong forever wrong
and usually is wrong, as I see it, for two especial reasons : First :
This combine can and will (if they are looking out for their own
interests alone) increase the price of their product to the con-
sumer, and at the same time cut the wages of their employees;
and, second, every small manufacturer engaged in that particular
industry will either have to quit business or join "the combine."
But the combine will doubtless say in reply that the small manu-
facturer can himself join the trust, or keep on as he is then doing,
if he likes. How, I ask, can he continue his business success-
fully, if all of his competitors in the same line of production have
combined against him? They can and will for the purpose of
"freezing him out" cut prices until he has "to squeal and throw
up the sponge," and then the combine has its own way and can
fix its own prices, and it usually does so, and all of you who hear
me know it and know it well. In cases of this sort, the small
dealer succumbs, and the combine or trust fixes its own prices and
the people are compelled to submit.
Nevertheless, Mr. Chairman and gentlemen, I confess I am
one of the common people of this country who is not hysterical
over this trust controversy. I am inclined to the opinion that it
can and will be regulated by wise and proper legislation, and by
public sentiment, which in the end always settles matters of this
sort. All political economists agree that the prevention of waste
(unnecessary waste) by all nations is the secret of their growth
and success. This proposition is unquestionably true, and I will
not therefore undertake to controvert it. A wise man will save
every cent, every dime, every lump of coal, every particle of
manure, everything that can be utilized to better his condition
and help him on in life. But it seems to me that no intelligent
man will favor any measure which will place him at the mercy
of a few of his fellow-citizens who will have it in their power
to say what he shall do, or what he shall pay for that which neces-
sity requires him to purchase.
I am aware of the fact, Mr. President, that the backers of
trusts set up three distinct claims or arguments in their defense,
viz : First, that they pay the highest rates of wages to their em-
103
ployees; second, that they furnish the best articles to the con-
sumer; and, third, that they furnish them lower or cheaper than
they can otherwise be produced. While I admit that there is
something in these claims, yet they are true only in a restricted
sense. The first of these claims is, I think, absolutely true.
Trusts pay big wages because they employ none but high grade
men and women, which they can afford to do. The second propo-
sition is perhaps true in most cases, but by no means in all. The
third claim is only true in a few instances. If I had the time
to-day I could definitely mention them to this Federation. But
in the generality of cases, prices to consumers increase instead of
diminish where trusts are enforced. Therefore the few, and not
the many, are the direct beneficiaries of these trust combines.
Consequently, my countrymen, when one pauses and carefully
considers all the facts involved; when he thoughtfully weighs
both sides of the issue before him; when he seriously reflects, as
it is the duty of every good citizen so to do; when he sees the
vast multitude of his fellow countrymen who have fitted them-
selves by education and experience as "middle-men" in the vari-
ous avocations of life, necessarily thrown out of employment be-
cause of trusts ; and when he goes farther and thinks of the thou-
sands and tens of thousands of his fellow-countrymen of limited
means, yet at the same time industrious, sober and enterprising,
who cannot, because of their limited resources, cope with the
trusts and the combines, and are necessarily forced to quit busi-
ness, then the enormity of the wrong (not to say crime) of chok-
ing them out of an honest effort to support themselves and fam-
ilies, can be fully understood and fully appreciated.
If the advocates of and participants in the trusts could satisfy
the masses upon the following propositions, they would then have
but limited opposition in the years to come, viz. : First, Will you
and can you, in all cases, as you claim, agree to furnish a better
and cheaper article to consumers of all the necessaries of life cov-
ered by your trusts and combines? Second, What do you propose
to do with the tens of thousands of middle-men now employed,
who of necessity must lose their present positions? And, third,
what will become of the "small dealers" scattered over our coun-
try from Maine to Florida, and from the surges of the Atlantic
to the Sunset Sea whose waves make music in the golden sands
of California? What are you going to do with this large class
of our fellow citizens who are now prosperous and happy in their
present occupations? These are momentous problems, and in-
volve momentous results.
I may be wrong, Mr. President, in my conclusions; but it
104
HORATIO W. SEYMOUR
FRANCIS G. NEWLANDS
CYRUS G. LUCE
.1. STERLING MORTON
MARTIN A. KNAPP
ROBERT S. TAYLOR
seems to me, as an unprejudiced, unbiased American citizen,
whose only purpose is to do what he can to advance the interests
of the great majority of all our people, that if the trust idea is to
be carried out in this country, there will be no use for middle-men
among us; and the small dealers and small manufacturers and
small operators in any and all lines of business, who are now earn-
ing honest livings and supports for themselves and those de-
pendent upon them, will be things absolutely of the past. Like
Othello, their "occupations will be gone/' And what of the other
and the greatest of all the considerations before us as non-partisan
American citizens, viz. : Will the trusts, can the trusts, dare the
trusts here agree to furnish to the great living, helpless, and in
many instances hapless mass of our people, a better and a cheaper
article which all of them must of necessity use, than they are now
required to pay for the same ? If the trust can do this, I will call
off my opposition, feeble as it is, and will join them and bid them
Godspeed in their work. Otherwise, I am against them, and I
desire that they will here and now class me as an enemy. It is not
my purpose or desire, my fellow citizens, to block any avenue
to the progress and development of my country; but it is my
purpose and desire to do anything and everything that I can to
prevent capital from overslaughing labor, and to do my utmost at
all times and under all circumstances to aid the workingman to
earn an honest livelihood for himself and those dependent upon
him in the ever-existing scuffle between man and man to live and
let live, which has been going on from Adam down to McKinley.
John W. Gaines of Tennessee announced that the committee
on organization and program nominated as permanent officers
of the conference:
Chairman, William Wirt Howe of Louisiana; First Vice-
Chairman, Dudley G. Wooten of Texas; Second Vice-Chairman,
H. V. Johnson of Colorado ; Third Vice-Chairman, S. P. Corliss
of ISTew York; Secretary, Ralph M. Easley of Chicago.
The committee recommended the adoption of the following
rules :
The conference shall hold three daily sessions, from 10 a. m.
to 1 p. m., from 3 p. m. to 5 p. m., from 8 p. m. until such time
as adjournment may be had. That all papers or addresses shall
be limited to twenty minutes; that Jefferson's Manual and
105
KobertY Rules of Order and general parliamentary law shall
be the rules of this body. That no proxies be allowed.
It was recommended that the vice-chairmen preside over the
conference on the succeeding days in their regular order.
The committee further recommended the appointment of a
committee whose duty should be to prepare a program for each
session and provide rules governing special conditions, and
recommended as such committee :
Henry W. Blair, New Hampshire; L. D. Sutherland,
Nebraska; J. W. Gaines, Tennessee; J. C. Hanley, Minnesota;
A. B. Davidson, Texas, and Chairman Howe and Secretary Easley,
ex-officio.
On motion of Cockran, New York, seconded by Garland,
Pennsylvania, the committee report was adopted without a dis-
senting vote.
Temporary Chairman Head introduced William Wirt Howe
as his successor, and in accepting the gavel Mr. Howe briefly
thanked the delegates for the honor conferred upon him, and
promised to preside with impartiality. He introduced Attorney-
General E. C. Crow of Missouri:
E. C. CROW.
Attorney-General of Missouri.
All now admit that trusts must, if they exist, be regulated in
order to protect the individual interests from the combined inter-
est of the trusts; but will regulations successfully protect the
public from the evil influence of the trust organization?
That trusts when operating illegally can be restrained and dis-
solved by the process of the state courts, has been demonstrated
in Missouri by the decision of the highest court in the state. But
the loose and easy process of creating a legal corporate entity ren-
ders it practicable to form trust corporations by the score daily,
while to demolish or restrain a trust often requires from one to
three years of an expensive and hard fought legal battle by the
state. These reasons urge us to look for a remedy that will pre-
vent the formation of trusts, on the principle that it is more
practicable to prevent an evil than to remedy it after it exists.
The individual was the primary basis of all business. It early
became evident, however, that associations cf individuals, combin-
106
ing their capital and efforts, would be advantageous in a business
way, and this gave rise to partnerships. Copartnerships thus
took the place of individual effort and capital, and made possible
larger enterprises. Under the laws of this country the individual
members of a partnership are compelled to respond with their
individual fortunes for any liability of the partnership incurred
in the prosecution of the partnership after the assets of the firm
have been exhausted. This financial responsibility is a natural
limitation on partnership enterprises, because of the desire of
every man to limit his liabilities and protect himself from bank-
ruptcy. An instrument of business that would enable men more
widely to extend their business enterprises, with larger
opportunities for profit, and less personal liability, was
something eagerly sought, and it has been found in the
modern private business corporation. In the private trading cor-
poration, with fullpaid capital stock, no individual liability of
shareholder exists for liabilities of the corporation, and no matter
how great the loss a corporation sustains, or how entirely bank-
rupt it becomes, the individual fortune of the fullpaid stock-
holder is fully protected. Thus it will be seen at once the mod-
ern private business corporation makes possible the wildest OL
speculations by the corporate entity, with the absolute guarantee
to the shareholders of non-liability beyond the amount of the full
paid stock.
In a partnership enterprise the business may employ only a
small portion of the capital of the individual, and but little of
his personal time or effort, yet he stakes his financial all in the
business his good name, his possessions, his prospective acquire-
ments, all stand sponsor for every liability of the partnership.
On the other hand, a corporation risks nothing but the capital
which it employs. Its field is as wide as civilization, and while
it is not exactly immortal, yet death coming to its members does
not dissolve the corporation. It is an intangible and an impalp-
able creation of the law, with unlimited powers and limited liabili-
ties. It may have conveyed to it all the property, plants, business
and rights of several corporations for the purpose of uniting all
the different competing concerns under one management and
thereby reduce expenses. This legal status which marks the
broad distinction between partnerships and the liabilities thereof,
and corporations and the liabilities thereof, should be clearly
borne in mind in dealing with the modern monopoly or trust.
For the financial reasons above set out, the most perfect and com-
plete modern trust takes the shape of a corporation, to which is
conveyed the property and the business of the various individuals
107
and corporations that are to form the trust. A majority of stock
in the corporation is most frequently controlled by two or three
persons, thus giving the vast powers and business interests of per-
haps an hundred firms and corporations in a single line of busi-
ness into the complete control of two or three individuals, who
by directing the destiny of the corporate entity whose stock they
own absolutely dominate the single line of business.
The chief reason why the modern trust takes the corporate
form is the financial one, to-wit : Eelief from individual liability
of the stock owners of the trust beyond the value of the stock
owned by them. A corporate trust monopoly stands to win all
the profits that may result from combined capital, crushing and
destroying competition, while eacli stockholder is free from the
chance of sharing with his personal fortune any of the loss that
may come by business failure of the trust. On the other hand,
each member of a partnership or association of persons not incor-
porated who organize or attempt to organize a trust, stands with
his personal fortune to share individually the losses of the com-
bine if losses exist.
In dealing with the question of private business corporations
it should be clearly borne in mind that a private corporation is
purely a creature of law. It is supposed to be created because of
a public policy that demands combinations of citizens and capital
to be clothed with corporate form to subserve the public good, and
in the subservance of the public good can be found the only
justification for the creation of private corporations. The usual
argument put forward to justify the organization of private cor-
porations is that in this way may be combined the efforts and
capital of many individuals who carry forward enterprises of
public utility which are beyond the ability of natural persons,
whether acting as individuals or as a partnership. If this institu-
tion were strictly applied it would abolish the private business
trading corporation, and would restrict corporate organizations
to those of a public or auasi public nature only. But the laws of
all the states have, as I believe, unwisely encouraged the forma-
tion or organization of corporations to invade every field of busi-
3s enterprise, thus placing the individual at a disadvantage in
gle efforts to carry on any line of business as against the
combination of individuals in the guise of a corporation, which
las special powers, privileges and advantages given it by law
ich the natural citizen can not have, and instead of the public
necessity being applied as the true test for the right of corporate
iization, we have now substituted simply the desire for pri-
and the elusion of personal responsibility, and these are
108
the sole motives that actuate in the organization of the business
corporation of to-day. To these loose incorporation laws and the
irresponsibility connected with the owning of shares of stock in
private business corporations I attribute the great growth of the
modern corporate trust. The struggle in all the commercial world
has ever been, and ever will be, to secure the greatest opportunity
for profit with the least amount of liability to loss. The legal status
of the owner of the stock in a private business corporation pre-
sents exactly this opportunity. The present public policy of the
states is against the organization and existence of trusts, as shown
by the anti-trust laws enacted recently; but the policy of the cor-
porate laws of the various states has been to allow loose control of
corporations. The result is that when the people start to con-
trol trust corporations they are met with a system of loose corpo-
ration laws, builded up by years of legislation when little was
thought of the effect of the corporate power on the business and
property of citizens, and hence it is discovered that our corporate
laws must be remodeled.
The corporation being the creature of the state and possessing
only the power given it by the state, it should never be allowed to
so act or conduct its business as to interfere with the interests of
the public. There should be no particular inducement for the
people, through their state government, to give men a portion of
the power of the state through a corporate charter if the public
interest is not to be subserved. On the other hand, if the public
interest is to be injured there exists the strongest of reasons for
the withholding of a corporate charter surrendering to the cor-
porators a part of the sovereignty of the people. Formerly the
interests of common carriers and other similar Dublic and quasi
public employments were not nearly so important as now. To-
day the railroad employees of America number upward of a
million of men. Those employed in other business of the same
or similar public character aggregate a very large number. These
public or quasi public employments touch and directly affect and
shape to a greater or less extent the daily and hourly life and
interests of the entire population of our country.
How directly do the steam and street railways, the telegraph
and the telephone, the express and steamship companies, the
waterworks, gas, light, turnpike, bridge, elevator, pipe line, bank
and trust companies affect the interest, prosperity and property
of every citizen? A clear and full appreciation of the complete
protection of the right to contract, and of the vested rights of
property is absolutely essential to be kept in mind in order to have
a fair view of the trust question and its effect on our people and
109
the remedies that may be proposed for any evil that may result
from monopolies. The courts and the legislatures assert the
ri^ht to regulate, restrain and dissolve trusts and monopolies to
control trade, because trusts and monopolies are injurious to the
public interests. The opponents of the anti-trust laws argue that
such control and restraint interferes with the right of freedom to
contract and the perfect right one should possess to dispose of his
own property and manage his own business as he pleases. Ihe
argument is also advanced by opponents of anti-trust legislation
that the logical and natural result of the interference of the state
with the full freedom of the right to contract and the right of
disposition of property will be the sure and speedy enactment of
laws to correct the inequality of wealth which exists among men,
and to legally establish the balance by taking, through legal proc-
esses, from those who have too much in order to give to those who
have not enough, and that this course of legislation will soon be
followed by laws making land and capital, which are the requisites
of labor and the source of all wealth and culture, the common
property of society upon the principle that the public welfare de-
mands that land and capital be so managed as to confer the great-
est benefit on the greatest number.
In this way the opponents of anti-trust legislation say we will
be led speedily into socialism. The argument is made that the
right to sell at the seller's own price only involves the right to
contract, and is as much property as land or money. But this
argument overlooks the fa'ct that while the seller may have a right
to freely dispose of his property, yet the buyer has a right, or
should have, to buy in an open market. It overlooks the further
fact that no man has a natural right or title to the possession of
land or property, but that- the right is given him by law. It also
overlooks the fact that in all ages of the world and under all forms
of government the will of the individual has been subordinated to
the will of society. This argument loses sight of the fact that
the right to contract is a relative, and not an absolute right.
Thus looking at the condition of affairs on this question we
see presented on one side the spectacle of the masses of the peo-
ple demanding that legal control of monopolies be immediate and
drastic, and that special privileges be taken from combined
wealth, clothed with corporate form, and equal opportunities in
the business world be everywhere substituted; while on the other
side the organized capital of the country stands seeking shelter
and protection under the sacred constitutional rights of property
and freedom in making contracts and carrying on business, and
loudly proclaiming that interference by legislation with their
no
private business, rights and privileges means the opening of the
door to the abolition of the private ownership of property and the
entrance upon an era of socialism which must soon wreck our
government. There is a genuine note of warning on either side
in this controversy. That the monopoly corporation, which is
but a creature of the state, must yield to whatever extent the
public demands is evident, because corporations can never be
above the law, and as creatures of it must always be subject to
the law. But, as has been well said, in our regard for private right
we must not perpetuate public wrongs. "The commonwealth is
greater than the corporation it creates. The Constitution has
made trade free in the United. States. It must not be so inter-
preted as to make monopoly supreme throughout a land dedi-
cated to freedom." The mere fact of the combination is not itself
so objectionable in public opinion, but the fact that under our
law the few and not all have been enabled to enjoy the benefits
of combination makes combines especially obnoxious. The ben-
efits of combination must be secured for all or removed from
all. Equality before the law, equal privileges for all and special
benefits to none, are cardinal principles of American liberty that
will never be surrendered. As someone puts it, "The struggle
now on in the business world is one between equal opportunity
and special privilege." The people stand for equal opportunity.
Trusts and monopolies and their defenders stand for special priv-
ileges to the few, and unequal opportunities to the many. If a
free vote and a fair count are given the majority will win, and
equal opportunity for all and special privileges to none will exist.
It has been sought to establish the fact that the tariff is the
cause of the trust, and that the removal of the tariff will remove
the trust. This is not exactlv correct. The tariff tends to make
more easy combinations to create monopolies in highly protected
articles, virtually closing out foreign competition, by reason of
the excessive import duties imposed, thus leaving to a combine
of American dealers in highly protected articles the sole control
of the American market. The tariff, when sufficiently high, sim-
ply tends to remove foreign competition. As has been well said,
"The tariff is but a wet nurse for certain kinds of trusts and mo-
nopolies"; but monopolies and trusts to control trade are of an-
cient origin, those of Queen Elizabeth's time being very similar
in their character and operation to our own corporation trusts.
Queen Elizabeth's monopolies held crown patents or licenses to
control certain lines of trade. The modern corporation monop-
oly holds charter contract of the state creating it. The monop-
olies created by kings and queens were granted a portion of the
111
royal right to rob the public in the guise of a legal grant. The
combined corporate trust of to-day has given it by the loose cor-
poration laws, a portion of the sovereignty of the state, to enable
it to legally destroy competition and control trade. The aboli-
tion of the tariff would not affect a world-wide trust, one embrac-
ing all lands and all nations, and with capital sufficient to con-
trol the product in any particular line of business. I am forced
to conclude, therefore, that the only effect of the tariff on the
trust question is to make more easy the formation of a trust_ in
America on highly protected articles, because it bars world-wide
competition, and" restricts business rivalry to American pro-
ducers.
Of course, as to articles of commerce that are not on the tariff
list, it could not be pretended that the tariff affects a combination
or assists it. The state can control and restrain trusts in existence,
but it involves a constant legal battle to do so. I do not believe
you could induce men worth $1,000,000 or $2,000,000 to embark
in great industrial enterprises where the liabilities assumed in
carrying on the business would amount to a hundred or more
million of dollars if the failure of the enterprise would subject
their personal fortunes to liability for the pa} r ment of debts in-
curred in the prosecution of the business. We all know how care-
fully the very rich as a rule guard against personal liability. But
if the trust organizers could only carry on their business through
a co-partnership, the members of the trust would have the same
liabilities and only equal opportunities with the individual com-
petitor. Equality of opportunity in business instead of special
privilege would exist. The action of the trust and its extension
of business could only be carried on then by consent of all the
members of the trust, if it was a co-partnership. Trusts either
buy a rival or crush him, thus entailing, in the latter instance,
great financial loss and frequently ruin. State statutes give a
right of action for damages against trusts injuring competitors
in efforts to control markets. If the trust is a corporation the
action can only be against the corporate entity for damages; while
if the trust was a partnership, then the right of action"would be
against not only the partnership, but also against each individual
member thereof. That many such suits would be brought against
partnership? and the members thereof operating a trust, goes
without saying, and this fact would deter millionaires from be-
coming members of trade combinations. Trading corporations
place partnerships and individual merchants and business men
it a disadvantage in many ways. The co-partnership method, with
liabilities and responsibilities, collectively and individually,
112
makes men cautious, and keeps down inflation of values and wild
speculation. Mercantile partnerships develop individuality in-
tegrity and character in the commercial world. Commercial or
trading corporations destroy individuality in business affairs, and
by reason of non-liability, generate fictitious values and create a
false condition of financial affairs.
In the old days, when great mercantile and manufacturing
enterprises were carried on by partnerships, a young man was
taken in as a clerk, and by industry, honesty and ability, could
work his way up until gradually, as the heads of the firm retired,
the younger man who had been growing up with the business was
taken into the firm as a junior partner and eventually was given
to him the entire charge of the business. But how is it now?
What chance is there for a young man, by his individual
worth, to rise from a clerkship in one of the great commercial
trading corporations? If the head of the firm dies, the stock in
the firm simply passes to his heirs and executors, and the business
is carried on just as before, but no head clerks are promoted by
reason of the death of the head of the firm. The impalpable,
bloodless, intangible corporation is not affected by the physical
disability or death of its shareholders. The incentive for the
young man to develop individuality and character in mercantile
life is largely removed. The young man, under the corporate
regime, is simply a part of a great machine, and he is used until
he is no longer valuable, and then replaced by some one of younger
years. The corporation in ordinary business dwarfs individuality
and creates inequality and lessens competition. The partnership
in business develops individuality and creates equality and com-
petition. I, therefore, am firmly of the opinion that the state
should enact laws providing that no corporation should be organ-
ized for any but public and quasi public purposes, and name dis-
tinctly what shall be considered public and quasi public purposes.
Of course, in the great commercial centers, strong opposition will
exist to this. The argument will be made that corporate control
of business is so absolute and easy that trading corporations are
a necessity. It is true that the control of a trading corporation
is easy, because it depends on the mere matter of dollars to buy
a majority of the stock, and not on the will or the brains of the
individual shareholder. One man may buy enough of the shares
of stock to control a corporation, although there may be a hun-
dred stockholders. If the transition back to co-partnerships be
simply an inconvenience, and business corporations be desirable
only for convenience, then let us have at once laws enacted that
declare the members of a corporation responsible to the same ex-
113
tent as the members of a co-partnership for the debts, acts and
liabilities of a corporation. This will leave the corporation
existing. It will meet the argument that corporations are so con-
venient, because of being so readily controlled, and that therefore
they are a necessity of modern commercial life. These laws will
tend to equalize opportunities in the business world, and where
opportunity is equal the natural law of supply and demand, guided
by the ever-present power of competition, will regulate in a
healthful and steady manner the business interests of the country.
I believe either of these remedies will solve the trust question
by preventing to a great extent the organization of private trading
corporations. Monopolies and trusts can only exist where con-
solidation and combination are easy and possible. As long as a
mere matter of dollars sufficient to purchase a majority of shares
of a corporation renders it possible to form a combine, thus long
combines and trusts will exist. But partnerships are based on
consent of the members, and the purchase of the interests of one
member of a firm, or of all but one, will, unless all consent to the
change, dissolve the co-partnership. Under the corporate system
the investment of money alone will create a combination by the
purchase of the shares of stock of the corporation desired to be
absorbed, regardless of the will of the objecting members. Under
the partnership system, mutual assent of all partners, those who
buy and those who sell, as well as all interested, must be obtained
before a. combine is possible. Protection, equality, and justice
reign in business transactions under the regime of partnerships;
but under corporate control, inequality, tyranny, injustice, and
above all, the mere power of the dollar, reign supreme.
The mere caution of men risking their all in one business
venture will prevent the formation of great trusts where indi-
dual liability exists. If the trading private corporation is
I to continue as it now exists, trusts will continue to be
>rmed, and the protest of the people over their oppressive opera-
a will take the form of laws that will necessarily, under the
;e of regulating, at last go to the extreme of attempting to fix
by law and when this fails, then the natural recourse of
he people will be the abolition of private ownership of property,
. will usher in an era of socialistic governmental experi-
the end bringing disaster .0 our people and republic.
I recognize that large masses of capital can be had and used
fL f 11 ? y , When Capital is secure " Ca P ital sn ouW be ziven
st opportunity possible consistent with the public good,
C<lplt<ll C3.H U^Uflllv i"flVp PQT -P " 4- l- TJ. . v T
oritisnaoioao n~ -1 i j i "sell. It must be employed
Capital and labor must use each other. The trust
114
is a profitable field for capital, and hence capital seeks the trust.
The trust is becoming the dictator of trade. Its powers are not
limited by charter or public opinion. It enters all branches of
industry. It reduces the price of raw material it buys, and raises
the price of the product it sells. Its movements are secret, silent,
unerring and all-powerful. Its vast profits will ever tempt wealth
and enterprise, and the aim of capital to constantly seek profits
will be ever a menace to the security of the trust investor. The
struggle to obtain the special benefits for the few by the trust
managers and the battle for equal opportunity for all in business
is the point of interest the state should bend its energies to adjust
at once, for herein lies the danger to our land.
I believe, therefore, that the coming assembly of governors
and attorney-generals of the various states should take steps look-
ing to the calling together of the legislatures of the various states,
if necessary, for the purpose of enacting legislation along the lines
I have suggested herein. If practicable, I believe that these vari-
ous states should at once enact laws.
Following Mr. Crow's remarks, papers were presented by
P. E.' Dowe, president of Commercial Travelers' National League,
New York; F. B. Thurber, of New York, president IT. S. Export
Association; Joseph Mmmo, Jr., of Washington, D. C., president
National Society <5f Statisticians, and Stephen P. Corliss, repre-
senting the traveling men.
P. E. Dowe addressed the conference on the subject of "The
Trusts and the Commercial Travelers":
P. E. DOWE.
President Commercial Travelers' National League. Statistician of the American Anti-
Trust League.
I have listened time and again to my fellows, in discussion as
to the definition of the word "trusts," and there appears to be a
varied opinion as to its significance. The unabridged Webster's
dictionary I make use of at my home fails to define the word, in
the sense of commercial combinations, so a short discussion of
the accepted meaning of the word does not seem out of place at
this time.
I found the following definition in Maitland's Dictionary of
English Slang and Americanisms: "Trust, a combination of
manufacturers or dealers for the purpose of limiting production
and advancing prices, or one of railroads, gas companies and other
115
corporations for their own benefit and to the detriment of the
public. See Combine."
"Combine (American), a word coined to express the same
meaning as 'trust' and supposed not to be quite so distasteful to
the opponents of monopolies."
The following I copy from the New York Journal of Com-
merce, Commercial Year-Bool:: Mr. Byron Holt's definition of
the word "Trust":
"As popularly used the word 'Trust' is now applied to any
consolidation, combine, pool, or agreement of two or more natu-
rally competing concerns, which establishes a partial or complete
monopoly, in certain territory, with power to fix prices or rates
in any. industry. Viewed from the standpoint of the consumer,
the informal agreement and the iron-clad combine look alike
if the one has the same effect as the other upon prices."
Trusts are organized for speculative reasons, primarily, in
spite of the contentions of some unpractical writers upon social
and economic conditions, who, good souls they are, dwell upon
ethics or argue for the brotherhood condition of mankind, in
anticipation of an approaching millennium.
If these men, inexperienced in the ways of the world, could
be brought to a realization of the fact that their arguments are
misapplied by promoters and officials of the commercial conspira-
cies known as trusts, are offered by Shylocks, with knife and
scales clamoring for the pound of flesh, to excuse the attacks upon
the commercial integrity and equality of this country, and to
cover their hatred of the citizens who seek by the enterprise
characteristic of American individualism, to throw off the galling
yokes of serfdom to the monopolistic class, they would wish that
the ink had dried upon their pens before the production of such
dangerous weapons in the hands of unscrupulous speculators.
While trusts are for speculative purposes principally, they
have other sinister designs; organized first for the money in the
deals, secondly for a more marked line of differentiation between
the few very rich and the many very poor, and thirdly for the
virtual enslavement of labor; not for industrial economies and
to reduce the prices of the commodities to the consumer ; not for
the good of the people, but against their welfare ; and all claims
by those interested in trusts or by their subservient tools to the
contrary are veritable lies.
Another unpractical class who knowingly or unwittingly assist
in the gigantic swindle of the age, surrounding with alluring and
elicately worded fallacies, the miscalled scientific economies;
^thed, so to speak, with the covering of the gentle sheep, but
116
containing the ravenous wolf. I mean that proportion of the
college professors who give in their lectures upon political econ-
omy the kind of arguments they are expected to propound, and
for which they are paid. The sons of some wealthy fathers must
be educated to enable them to take their places as the coming
plutocrats, and must be taught the most approved methods for
the subjugation of the common people. The majority of these
sires sprung from lowly origin, but now aspire to an exclusive set,
and are more than willing to enter into any moyement, con-
spiracy or otherwise, to prevent other American citizens (neither
better nor worse off than were once these so-called self-made men)
from attaining the same degree of success or a partial attain-
ment. These men, most of whom are composed of the coarser
kind of human clay, will open their hearts and purses to assist
into political power the creatures who can be molded as easily
as a handful of putty, to the wishes of snobs, who aspire to be
of the upper class, the codfish aristocrats, by the grace of a rapid
accumulation of wealth.
Still another class, that must bear a share of the responsibility
for aiming to create a misconception of the trust question, is that
proportion of the newspaper writers, managers, and proprietors,
who have allowed themselves from political connections or from
subsidizing processes applied by the direct or indirect influence
of trust magnates, or for both reasons, to become the catspaws
of the "inflationists for revenue only." The press owes some
duty to the public, to the people, the plain people, who constitute
the bone and sinew of the nation. Upon the press a great respon-
sibility rests. ^The people desire from it the truth, the whole
truth, and nothing but the truth.
There are many reliable news sheets and honest newspaper
men, for which thank God; but the man who aims to purposely
deceive the readers of the paper with which he is connected, by
offering unhealthy doctrines and false argument, may not receive
a just punishment for the crime (for so it is in a sense) while on
this mundane sphere; but when he appears before the final tri-
bunal will obtain the condemnation so richly deserved for betray-
ing another kind of "trust" than those being considered here,
i. e., the people's trust.
I have been told by a 'number of newspaper men that my
previous public utterances respecting trusts and their effects were
of especial interest, owing to the incidental statistics submitted,
and as I shall make use of some figures to-day, it is but fair that
an explanation be offered as to where and how they were obtained.
I first became interested in the subject of trusts after reading Mr.
117
Lloyd's book, "Wealth Against the Commonwealth/' a few years
since, and began immediately thereafter the collection of news-
paper clippings and books bearing upon the subject. It was not
until I had been elected the president of the Commercial Trav-
elers' National League in 1897, however, that it dawned upon
my faculties that the commercial men were to be made the first
victims of the situation; yet at that time I had but an imperfect
conception of the great magnitude of the trust movement, and
must confess that it was not until the last half of the year 1898
that I fully realized the danger and extent of the centralization
of capital, and the monopolizing of commodities.
Keports began to reach me of first-class salesmen being dis-
pensed with for no reason other than the fact that trusts, "Con-
ceived of greed, born of dishonesty, and cradled in the lap of
injustice," had assumed the octopus form, and taken within far-
reaching tentacles, all or nearly all the concerns in specific lines
of trade, and were sucking the life from fair and honest competi-
tion. Trust manipulation for the purpose of controlling a par-
ticular line, and fixing the prices and quality of its commodities,
meant that the traveling salesmen must go, aye "go" anywhere,
to Heaven or the other place, for aught the trust magnates care.
Entering upon a systematic research and a close study of the
situation, during which time I heard from more than six
thousand commercial travelers, either in writing or verbally, or
through reports of friends who were assisting in the work, I was
enabled to submit in evidence before the industrial commission
in Washington in June last, important data as to the number of
traveling salesmen dispensed with directly or indirectly through
the organization of trusts, and to-day I have no reason for chang-
ing my figures. I also stated the number of salesmen reduced
in salary, from the effect of trusts; and gave figures furnished
me by traveling men, either formerly, or at the time of giving
information, employed in the lines of their greatest experience,
as to the advances in the prices of trust commodities. I have with
me a few copies of my testimony before the industrial commission
and having new material to offer to-day, will not rehash that
evidence, but will be glad to furnish the pamphlets containing
the old material to the delegates to the Civic Federation desiring
a copy.
There have been thirty-five thousand commercial travelers
rown out of employment; mostly traveling salesmen, but in
3ity salesmen who come under the title of commercial trav-
for the man who picks up his gripsack and drums city trade,
ss customers to his headquarters to inspect his samples,
118
is a commercial salesman, or a commercial traveler, by a slight
elasticity in the use of the name. A city salesman is eligible to
membership in any of the commercial travelers' associations.
The majority of city commercial salesmen make out-of-town trips
occasionally, sometimes short distance, sometimes long distance
journeys. I -neglected to note in previous arguments this sub-
classification ; it is unimportant, however, as the city men are but
a small proportion of the whole number affected.
I stated in Washington in June last that twentv-five thousand
were reduced in salaries. Could add to-day a thousand to these
figures. I was in error when I anticipated, on the 16th of June,
that thousands more of the commercial travelers would be dis-
pensed with on July 1st; for, from reasons best known to the
trust officials, expected wholesale discharges did not take place.
I have heard from less than one hundred discharged on that date,
but have been notified of many cases of reduced salary. Seduc-
tion in salaries was not exclusively with trusts ; many of the "out-
siders," owing to the pressure of unfair competition and loss of
trade, were obliged to make reductions.
The salesmen who lost positions, owing to the trusts, were
all good men; being of energetic and progressive character, pro-
verbial of the American, could not be discovered as tramping the
streets wearing signs of distress. Nearly every one of them had
some money saved; some found positions as travelers for other
houses; some went into other pursuits; some had farms, and I
know of more than forty instances where former drummers are
doing farm work; and some are still looking for positions.
Commercial travelers are opposed to trusts, both from policy
and principle, and consider them detrimental and demoralizing
detrimental as menacing the possession and enjoyment by the
people of those rights to life, liberty, and the pursuit of happi-
ness, and equal privileges and possibilities in the application of
individual enterprise and experience ; demoralizing as presenting
un-American conditions ; imitation of English business methods,
as offering evidences of rascality and corruption. In this con-
nection I will assert that if the statements in Lloyd's "Wealth
Against the Commonwealth" will cause the blood of honest men
to boil within their veins with indignation that such conditions
could exist in this so-called free and enlightened republic, with a
full appreciation by the people of the rottenness of the latter-day
growth of trusts, a thousand times more corrupt and grasping
than the regime of which Mr. Lloyd writes, they would sweep
from political life the subservient tools of the trust power. The
people ask to be shown the way to peacefully crush the growing
119
monopolistic power or to cut its claws; and they will surely apply
the one moving force greater than the power of money the bal-
lotin a "landslide" for the candidates in whom they have confi-
dence.
Improvement, progression, inventive genius, single enterprise,
American manhood and vim are conspired against' by the trust
magnates.
I had prepared another paper to present to-day, but upon
receipt of the question blanks issued by the Civic Federation to
the secretaries of commercial travelers' organizations, labor
bodies, trusts/wholesale merchants, and others, I decided to sub-
stitute this 'paper.
There are thirty-two leading associations for commercial trav-
elers in the United States, two of which have local posts, about
two hundred and fifty all told; there are also a few commercial
men's social clubs, scattered throughout the country; in even
numbers three hundred and twenty-five associations, great and
small, of commercial travelers.
I could have written the secretaries of these three hundred
and twenty-five associations at a great saving of expense in the
investigation of the subject of "Trusts and Their Effects Upon
. Commercial Travelers" ; the secretary of each organization could
have given me some personal information, and acquainted me
with some points obtained from friends, but unless he had com-
municated with tlie members of his association, his replies to a
series of relevant questions would of necessity be more or less
guesswork.
At my suggestion the American Anti-Trust League has begun
a work of statistical investigation; they propose to show by
authentic data that while the cost of living has increased within
the last two years at an average of between 12 and 16 per cent,
wages have been advanced less than 3 per cent; and that wages
are lower to-day than in 1895. The statements regarding wages
are upon information supplied by some well-known officials of
labor organizations, who are thoroughly posted about the union,
scale.
The American Anti-Trust League will publish some new fig-
ures regarding trade balances, and comparisons of previous years,
showing the proportion of export and domestic business, and
demonstrating the effect the trust prices have had in swelling
the figures.
I have here a list showing advances in the prices, due to the
direct or indirect influence of trusts, of about 150 commodities;
? advances ranging from 5 to 500 per cent. The list was
120
obtained by representatives of the Anti-Trust League applying
to manufacturers and dealers for information, and making daily
reports. Nearly 500 establishments were visited. The list is
sworn to. (See appendix.)
As I have been limited to a twenty minutes' discussion, I can-
not run over the list, but have had it printed in sufficient quan-
tity to supply one copy for each of the gentlemen of this confer-
ence. Will call attention to a few items: Ordinary shovels
doubled in wholesale price, and snow shovels advanced 145 per
cent; iron, 85 to 130 per cent; coal, 50 cents a ton wholesale; gas-
oline, 4 cents a gallon; shoes for the worldngmen, 15 to 50 cents
per pair, etc.
I submit the following letter:
"Lansing, Mich., July 8, 1899.
"P. E. Dowe, Esq., President Commercial Travelers' National
League, New York.
"Dear Sir: In reply to yours of the 5th, will say, that a
detailed report of the investigation of hotels will not be published
for some time.
"The facts are, however, that over 90 per cent of 100 hotels
interviewed claim a falling off of traveling men of 10 to 50 per
cent during the past year, which in most instances they attribute
to the effects of trusts and combinations.
"The reports otherwise show their business to be on the in-
crease, and satisfactory, only complaining of the falling off of
commercial men, which in most instances is made up by an
increase of tourists and the traveling public.
"Yours most respectfully,
"(Signed.) J. L. Cox,
"Commissioner of Labor."
The amount of the common and preferred stocks, of all the
listed trusts and inclusive of their bonded indebtedness, is the
vast total of $8,000,000,000 in round figures. This statement is
made upon most reliable authorities.
Upon information furnished by a- well-known newspaper sta-
tistician, have stated upon previous occasions that the intrinsic
valuation in the aggregate of all the trusts is about $2,000,000,-
000, a four-to-one ratio for stock-jobbing manipulation; but, now
think that this is an overestimate.
Previous to 1895 nearly 600 trusts were projected, and to
include a great variety of commodities; several of these trade
combinations failed to materialize, some disintegrated; but the
processes for the centralization of capital and power continued,
121
combination and recombination going on until in March last
there were between 350 and 360 combines, yet their capitaliza-
tion was billions more than the capitalization of the 600 trusts
of 1894 and before. To-day my list shows 425 trusts.
The number of business concerns absorbed by the gradual and
systematic efforts to obtain control of the markets and highways ;
5,565, say 5,600 in round numbers; exclusive of the grape grow-
ers, lake vessels and dredges, milk dealers, and farmers' milk comr
bines; also insurance, telephone and telegraph, railroads and
street railways, electric light, gas, ice, water and steamship trusts.
I have no means at my command of ascertaining with cer-
tainty the amount of capital of each concern absorbed in the
processes of combination and recombination. Dun's and Brad-
street's Commercial Agencies could secure this information by
setting investigating forces at work. I will Lssume, for argument,
that the capital will average for each concern not more than
$200,000, or for 5,565 concerns, $1,113,000,000, about an eight-
to-one ratio of valuation for speculative purposes.
The letter from Mr. Cox suggested the idea of similar lines of
investigation in other states, and I communicated with several
hundred hotels scattered over the country. The replies demon-
strated a falling off of commercial trade, of an average of 18 per
cent; and this did not tally with my figures; showing either an
underestimate of the number of traveling salesmen affected by
the trusts, or the accepted figures as to the total number of com-
mercial travelers to be an over-approximation; I requested the
Anti-Trust League to seek information from every hotel in the
United- States, to which they agreed.
I have received the statement of the printer that communica-
tions were addressed to 5,000 hotels last week; more will go out
this week.
What if the trusts win? "The whole machinery of inde-
cndence, as we have known it heretofore in this country, is
itirely gone, and man, whatever his prospects might have been,
lohitely at the mercy of the trust. It must feed him, clothe
mm shelter him, and educate him, as will serve its interests."
regomg is quoted from a letter of an attorney-general
1 now read a letter from a United States senator, one of
brilliant men of the clay, and noted the world over for his
iterhng honesty and utter fearlessness:
"My Dear Mr. Dowe : The cause at stake the restriction of
wnbinations-I have very much at heart. We ought to
urge it calmly and reasonablv
122
"Extreme demands and vituperate advocacy are what the
monopolists desire to have us resort to. There is no need of this.
We may freely admit the benefits from large capital and extensive
plants engaged in productive industries; and we do not object to
them up to a reasonable point.
"But we are sure that beyond such a point, when combinations
become so large that competition ceases, low prices to the con-
sumer also end; economies are no longer practiced; it is easier
to pay huge salaries and raise the prices of the product than it
is to adopt economies and reduce prices; and so up go the prices,
and the people suffer. Individual enterprise is destroyed ; energy
and ambition on the part of the 'firms of small means/ as Mr.
Depew describes them, die out; the struggling young men of
small capital become merely the low-salaried employees of mil-
lionaires; and the nation becomes divided into two classes only,
the few very rich and the many very poor. It will be a great
misfortune to our free America if our present high rising pros-
perity is to be signalized by the inauguration of a system of great
trusts in all production and the helpless subjugation of all the
business men, the manufacturers and other producers, and the
wage-earners, by the rich capitalists and speculators who organize
and control the trusts.
"If the people are sufficiently determined, the march of trust
organization can be arrested at a safe stage. By state and na-
tional legislation all evils can be prevented. I have not had time
to examine the Texas anti-trust law as expounded in the North
American Review by Governor Sayers, who is one of the ablest,
most upright, and most courageous of our public men of to-day;
but I am sure that suitable laws to be passed by the state legisla-
tures and by Congress can be framed. Such laws are what we
want, not mere resolutions of political conventions, to be aban-
doned and the cause destroyed by unfaithful legislators. Elect
true men, and the work is done. Unfortunately, the selection
and election of such men are difficult labors. The worst feature
of the trust organizations is their interference with political gov-
ernment. Their managers care not for the declaratory resolu-
tions if they can select the candidates for office. So they appear
everywhere in politics. No young man can rise in his political
party, become a local party leader, or aspire to public office until
he has given the trusts to understand that he will not seriously
exert himself to harm them.
"The resolutions of political conventions, therefore, should
not be the whole subject of your efforts to limit trusts. The reso-
123
lutions you will easily secure. It is the members of the legisla-
ture and the Congressional nominees you need to look after.
"(Signed.) Win. E. Chandler."
The remedy for the plague of trusts, now epidemic, I have
not discussed, excepting as contained in the suggestions of Sen-
ator Chandler; the purpose of my paper being to demonstrate
that trusts are considered as an abominable curse by the people.
I speak for the commercial travelers especially, but for the people
generally in opposition to trade combines; for the commercial
men have felt the pulse of the people, as could no other class.
Eemedy for the evil is expected by the people from national
and state lawmakers; discussion as to the best medicine, so to
speak, is left to others, better qualified from professional training,
to prescribe.
As plain, every-day business men, the commercial travelers
submit the facts as they find them ; and that class specifically I
have the honor to serve as a spokesman here.
Mr. F. B. Thurber addressed the conference on the subject of
"The Right to Combine" :
F. B. THURBER.
President United States Export Association.
If this conference does nothing else than what it has done
in giving wide publicity to the brief utterances of two representa-
tive men, in their letters acknowledging the invitation to this con-
ference, it has justified its being held.
The Rev. Lyman Abbott, of New York, said : "I think what
we most need on the subject of industrial, commercial labor and
transportation combinations is just what your letter indicates
this meeting will endeavor to secure light, not heat. What we
need to understand, and what only experience can teach us, is
e relation between competition and combination the one the
entniugal, the other the centripetal force of society. He who
leves only m combination will logically be led to socialism;
who believes only in competition will logically be led to nihil-
Tl'i, JNei g? er of these results can Possibly furnish the solution
e problems which now confront us. We must learn how to
the advantages of combination without destroying the
dual; to maintain brotherhood in practical forms without
nking, obscuring or belittling personality "
enry White, of the United Garment Workers of America,
124
said: "Your conference is called at an opportune time. The
reorganization of industry, which is so rapidly taking place in
many of the important industrial pursuits, presents a problem
which cannot be given too much attention by the friends of indus-
trial reform. It is of more consequence just now to understand
the nature of this development than to declaim against it. That
is the reason why I sympathize so strongly with the calling of
this conference."
The right to combine has been recognized from time imme-
morial, subject to a due regard to the rights of others. The
progress of the world has for centuries been largely promoted by
combinations of labor, skill and capital, but it remained for the
nineteenth century under the influence of steam, electricity and
machinery to become, par excellence) the era of combinations.
These forces could only be utilized to their fullest extent through
combining the capital of individuals, and the advantages of such
combinations are so numerous that they have revolutionized the
industrial, commercial and political worlds. Bovee said: "In
former times, war was a business, but in modern times business
is war/' It is certain that these forces enormously enhanced the
force or war of competition, and this in turn has led to attempts
through further combinations to regulate and control competi-
tion. The editor of U. S. Consular Reports for August, 1897, in
discussing industrial centralization in Europe, said:
"Our period is distinguished by its tendency to centralization,
not only in the state, but likewise in industry and commerce.
Large firms are competing with small shops to such an extent
that the latter are disappearing one after another. The factory
has displaced the workshops. Everything is being done on a
large scale; everything is becoming colossal.
"That is not all. We see now even the great factories, not
finding themselves sufficiently strong alone, and fearing their
reciprocal competition, renouncing their own autonomy and com-
bining among themselves ; and this tendency is everywhere mani-
fest. The French charge d'affaires at Berlin* calls attention to
this centralization in Germany; the French consul at Glasgow
mentions the same phenomenon at Glasgow.
"These facts are significant. They certainly indicate one of
the tendencies perhaps, it might be said, one of the necessities
of our epoch. It is certain that production is passing through a
serious crisis. Competition has occasioned a considerable decline
in prices, and in order to retain markets, certain industries have
been obliged to work under unprofitable conditions. To avoid
final ruin, they have agreed either to limit the production to
125
maintain prices, or to conclude complete consolidation. Hence
the cartels, the syndicates for production, the associations.
"We r either approve nor blame this new procedure; we simply
record it, remarking that sometimes certain laws are developed,
whatever may be their consequences."
The economic results have been so sudden and startling that
it has occasioned alarm in the public mind, and this has been
seized upon by sensational journals and political parties compet-
ing for public favor, to unduly exaggerate the evils attending
the evolution, while the good has been overlooked.' The best
horse will shy at an umbrella if it is opened in his face too sud-
denly, but if allowed to smell of it and see that it is not dan-
gerous, his alarm subsides; and I prophesy that when all sides
of this question have been carefully studied, popular alarm at the
organization of industry, commonly known under the misnomer
of "trusts" will subside, but in a country with universal suffrage
the only way to put down error is to argue it down. Sensational
misrepresentations must be met with facts or grave injuries to our
industries and institutions will result.
The state of alarm in the public mind is indicated by the fol-
lowing resolutions recently adopted by the Wholesale Grocers'
Association of New Orleans regarding "Trusts" :
"Whereas, it is the sense of this association that trusts and
combinations controlling the output and prices on commodities
are a menace to our national safety and existence. We assert
as a fact that it' is the intention and purpose of such combinations
and aggregations of capital under the name of trusts, by capital
and concentration to control and manipulate alike the values
of raw material and manufactured products, thereby enabling
themselves to dictate to the producer, the wholesale and retail
dealers as well as the consumer, the prices they shall pay for all
manufactured commodities. We further assert that the unop-
posed continuance and enlargement of trusts in our midst means,
as certainly as any mathematical fact, the absolute destruction
of our commercial'existence. Be it therefore
"Resolved, By the Wholesale Grocers' Association of New
Orleans, that viewed from a political standpoint, we believe it is
to the best interests of all true American citizens to use every
endeavor to cause the most extreme legislation against the opera-
tion of trusts that can be had consistent with our state and na-
tional constitutions."
And further illustrations are found in the action of our nation-
il and state legislatures in enacting special statutes to limit this
supposed evil. Congress prohibited pooling agreements between
126
railroads, and passed the Sherman anti-trust law, which declares
every contract in restraint of trade illegal, and under this act
the Supreme Court of the United States in the Trans-Missouri
Freight Association case took the extreme view (by the narrow
majority of five to four judges, however) that even a necessary
agreement between carriers for establishing and maintaining rea-
sonable and uniform rates of freight was a contract in restraint
of trade. The legislature of the great commercial state of New
York in 1896 enacted a law which provides:
"No stock corporation shall combine with any other corpora-
tion or person for the creation of a monopoly or the unlawful
restraint of trade or the prevention of competition in any neces-
sary of life. No foreign stock corporation formed by the consoli-
dation of two or more corporations or by the combination of the
business of two or more persons, firms or corporations for the
purpose of restricting or preventing competition in the supply
or price of any article or commodity of common use, or for the
purpose of establishing, regulating, or controlling the supply or
price thereof shall be authorized to do business in this state."
This law was the outcome of an investigation by the judiciary
committee of the New York senate, which was remarkable for
the bias shown against incorporated capital and the disregard of
economic facts developed by the evidence. The report, among
other things, denied the right of a manufacturing corporation
to choose agents for the sale of its goods and fix the prices and
terms upon which they should be sold.
From time immemorial it has been a common custom in trade
for manufacturers to select agents to sell their goods and to fix
the price and terms on which they shall be sold; also for agents
to agree that in consideration of these and a certain commission
or rebate they will only sell the goods of one manufacturer.
The legislature of the state of Texas at its last session enacted
an anti-trust law which prohibits any person, partnership, firm,
or incorporated body from entering into any agreement to regu-
late or fix the price of any article or thing whatsoever, or the
premium to be paid for insuring property, or to fix or limit the
amount or quality of any commodity. The act pronounces the
refusal or failure to put on the market for sale by any corpora-
tion, firm or individual the product of any party a conspiracy
to defraud, so as the refusal of any corporation, copartnership,
firm, individual or association which may gather items of news
or press dispatches for sale to newspapers to sell the same to more
than one newspaper within a certain radius of territory. This
act prohibits any person from selling at less than the cost of
127
manufacture, or giving away manufactured products for the pur-
pose of driving out competition. The act provides that if two
or more persons or corporations who are engaged in buying or
seUing any article of commerce, manufacture, merchandise,
mechanism, commodity, or any article or thing whatever shaH
enter into any pool, trust, agreement, combination, confedera-
tion, association or understanding to control or limit trade in any
such article or thing or to limit competition in such trade by
refusing to buy from or sell to any other person or corporation
any such article or thing for the reason that such other person
or corporation is not a member of or a party to such pool, trust,
agreement, combination, confederation, association or under-
standing, or shall boycott or threaten any person or corporation
for buying from or selling to any other person or corporation who
is not a member of or party to such agreement shall be deemed
guilty of committing a violation of the act and of a conspiracy
to defraud, the penalty for which is a forfeiture by the offender
of not less than $200 or more than $5,000 for every offense, and
each day of such violation is made a separate offense.
The governor of Texas, Hon. Jos. D. Sayers, in commenting
upon this law recently said:
"It has been asserted by some, who claim themselves qualified
to speak upon the subject, that trusts, as operated in the United
States, are not harmful, and that they are but the outgrowth of
an evolution in industrial life that is natural, healthful and neces-
sary. On the other hand it is insisted, and I think rightfully,
that they are, in a great measure, if not entirely, due to vicious
legislation, to the policy of the Federal Government in the mat-
ter of currency and taxation, and to that of the states in the cre-
ation of corporations. A high protective tariff, which excludes
foreign competition, and a single gold standard which limits the
volume of currency and enhances the value of that in circulation,
supplemented by the easy formation of corporations under state
authority, are the potent instrumentalities upon which the trust
depends for its existence. If, under the trust-reign, the indus-
tries of the country be passing into the hands of the few, if the
products of other lands be so heavily taxed as to be, in a great
measure, denied entrance into our ports, and our people be there-
by compelled to buy and use only those manufactured at home,
the cost of production and distribution is being reduced to the
minimum, if the output is being so regulated as not to exceed
a given quantity, and its selling price determined by the trust
exclusively, if the small dealers are being put under duress as to
those from whom and as to what they may buy, and as to how
128
they may sell, if individual effort be no longer able to compete
successfully with corporate power and corporate advantage, if
young and weak industries are being strangled to death and the
establishment of new and independent enterprises prevented, it
cannot be doubted that for this untoward and unhealthy condi-
tion of industrial and commercial life legislation is, in a large
degree, responsible. If the trusts shall be permitted to organize
and to operate as for the last several years, the result is certain
that a more disastrous" panic than has ever been known will sooner
or later occur. Much of the stock issued by these organizations
is entirely fictitious, and does not represent real capital. Money-
lenders will some day refuse to recognize it as safe security, and
then the storm will burst forth in all its fury. Under such cir-
cumstances, what is the duty of the government? To it do trusts
and corporations, either directly or indirectly, owe their being,
and upon it therefore rests the obligation to see to it that they,
its creatures, shall not harm the people.
"It is reported that the attorney-general of the United States
has said that the Federal Government is helpless to wage a suc-
cessful warfare against the gigantic evils which proceed from the
trust-power, and that relief can only be had through the state
governments. Congress can, if it but will, render the most
effective and substantial assistance. Let it reverse the present
policy as to the currency and the tariff, putting the two metals
upon entire equality, and providing for a fairer and more
general distribution of the currency, and lowering the duties on
imports so that the productions of other countries may compete
with those controlled by the trusts. This much Congress can and
should do. In the meantime let the states perform their duty.
"I have lately assumed to suggest a conference of the gov-
ernors and attorney-generals of all the states and territories, with-
out exception, to consider the subject, and, if possible, to devise
and unite upon such legislation as would overthrow the trust-
power and prevent its revival. In this matter, I have acted upon
my own responsibility, and with the sole view to correct, if pos-
sible, a great and growing evil one that threatens much harm
to the country. I have had, and I will have, no purpose in view
other than that distinctly specified, and I trust that, should the
conference be held, no other question will be considered except
that of trusts, and the best method to be adopted by the states to
insure their complete destruction within the shortest period pos-
sible.
"The trust should be regarded as a public enemy and should
129
be treated as such. Arrogant, unscrupulous and merciless in the
exercise of its power, it should be fought unto the very death."
These quotations illustrate the state of mind that a consid-
erable body of well-meaning citizens is in at the present time,
and although such utterances appear somewhat hysterical to the
student of this question and opposed to the facts, it is both a
condition and a theory which should meet careful consideration
by thoughtful men. The "ifs" mentioned by the governor of
Texas are assumed to be facts, but they de not exist.
I have been a careful student of these organizations of indus-
try from the beginning. I may say that when I began it was
with a strong prejudice against them. I believed that they would
tend to oppress the public with high prices, and also that their
political influence was to be feared, but a careful study of their
effect ranging over a period of years has materially modified my
opinion. The first prominent illustration of the so-called "trust"
principle was the consolidation of lines of railroad into vast sys-
tems, with the result of better service, and, as a whole, lower
rates. The people of the United States now get their transporta-
tion at about one-half those of other principal countries. The
next was the Standard Oil Company, under whose operations the
price of oil has declined more than other commodities not under
trust control. Another is the American Sugar Kenning Com-
pany, under whose operation prices have averaged 50 per cent
lower in ten years succeeding its formation than they did during
the preceding ten years. I used to think that combinations of
capital would abrogate competition, but experience has shown
that instead of abrogating competition, it has elevated that force
:o a higher plane. If a combination of capital in any line tem-
R?T / eXacts a liberal profit > immediately capital flows into
-t channel, another combination is formed, and competition
isues on a scale and operates with an intensity far beyond any-
:hat is possible on a smaller scale, resulting in breaking
n of the combination and the decline of profits to a mini-
num. A striking illustration of this is found in the susar and
ffee industries to-day. Arbuckle Bros, had attained 'a com-
g position as roasters and sellers of coffee, and thev also
S3 it did not refine, sugars. Because the American Sugar
Company would not sell them cheaper than other buv-
igar they decided to go into the sugar-refining business,
whereupon leading spirits in the American Sugar Kefining Com^
Sec t? g f J 6 rgin in the coffee ^ ess waf good,
has bl Tf^ the ? aStlng and Sellin S of coff ee. The Result
that this contest of giants has reduced the profits in
both industries to a minimum if not to a positive loss, making
it hard for smaller manufacturers and dealers to live, but saving
millions of dollars for consumers that would have otherwise in-
ured to manufacturers and dealers.
The only trusts which have succeeded for any length of time
have been those which have been conducted on a far-sighted basis
of moderate margins of profit, relying upon a large turn-over and
the economies resulting from the command of large capital in-
telligently administered. The truth of this is illustrated by in-
numerable failures in trust organizations to control prices, recent
illustrations of which are the strawboard trust, the starch trust,
the first wire nail trust, and the old steel trust. There are trusts,
so called, in nearly every branch of business, and there is good
and bad in all, but the good so far predominates that such aggre-
gations of capital should be encouraged, accompanied by safe-
guards against abuses. The only additional safeguards needed
are for stockholders and investors, whose interests are often sac-
rificed through lack of publicity. The average investor is the
chief sufferer. So far as the interest of consumers is concerned,
it is amply protected now ; first by competition, as I have shown,
and second by the common law which, if invoked, will nullify
any contract in unreasonable restraint of trade, and any unrea-
sonable combination is subject to indictment for conspiracy.
Special "trust" statutes are not necessary, although many have
been enacted.
As to the right to combine, it is so closely related to the right
to contract that it affords a most interesting question. Commerce
is nothing but a body of contracts. Every purchase and sale,
from a peanut to a gold mine, and every transaction in the move-
ment of merchandise; every agreement between employer and
employee involves a contract either verbal, written or implied.
No right is more sacred, and none has been more carefully
guarded in our fundamental law. The Constitution of the
United States, Art. 1, Sec. 10, says : "No state shall pass any law
impairing the obligation of contracts." Art. 14, Sec. 1, says : "No
state shall make or enforce any law which shall abridge the privi-
leges or immunities of citizens of the United States, nor shall
any state deprive any person of life, liberty or property without
due process of law, nor deny to any person within its jurisdiction
the equal protection of the law."
It seems to me that the tendency of legislative and judicial
bodies in this country just now to sweepingly condemn contracts
which in any manner restrict or regulate trade is unwise and
against public policy. If capital is denied the right to combine,
131
labor must be put under the same disability. Such statutes as
those I have quoted are really statutes in restraint of trade rather
than in the interest of the freedom of trade, and are opposed to
the greatest good for the greatest number.
The opinion of the minority (four against five) of the Su-
preme Court of the United States in the Trans-Missouri Traffic
Agreement case, as expressed by Judge Brewer, says :
"If there is one thing which more than another public policy
requires it is that men of full age and competent understanding
shall have the utmost liberty of contracting, and their contracts,
when entered into freely and voluntarily, shall be held sacred and
shall be enforced by courts of justice.
"The remedy intended to be accomplished by the act of Con-
gress was to shield against the danger of contract or combination
by the few against the interest of the many and to the detriment
of freedom. The construction now given, I think, strikes down
the interest of the many to the advantage and benefit of the few.
It has been held in a case involving a combination among work-
men, that such combinations are embraced in the act of Congress
in question, and this view was not doubted by this Court (In re
Debs, 64 Fed. Rep., 724, 745-755; 158 U. S. 564.) The inter-
pretation of the statute, therefore, which holds that reasonable
agreements are within its purview, makes it embrace every
peaceable organization or combination of the laborer to benefit
his condition either by obtaining an increase of wages or diminu-
tion of the hours of labor. Combinations among labor for this
purpose were treated as illegal under the construction of the law
which included reasonable contracts within the doctrine of the
invalidity of contracts or combinations in restraint of trade, and
they were only held not to be embraced within that doctrine
either by statutory exemption therefrom or by the progress which
made reason the controlling factor on the subject. It follows
that the construction which reads the rule of reason out of the
statute embraces within its inhibition every contract or combina-
tion by which workingmen seek to peaceably better their condi-
tion. It is, therefore, as I see it, absolutely true to say that the
construction now adopted which works out such results not only
frustrates the plain purpose intended to be accomplished by
Congress, but also makes the statute tend to an end never con-
templated, and against the accomplishment of which its provi-
sions were enacted."
To the average mind it looks as if the opinion of the minority
right and that our American courts and legislatures have
leaning over backward in their efforts to walk straight."
182
In Europe the rule seems to be different, as is evidenced by the
celebrated Mogul Steamship case decided by the highest court
in England, a clear statement of which is given in a recent
pamphlet by William L. Eoyal, Esq., of the Virginia bar:
"Several lines of steamships traded to China all the year.
The trade was unprofitable except in what is called 'tea season/
when it was very profitable. The losses of the year were made
up and a profit gained by the freights on tea in 'tea season.'
Another line of steamers traded to Australia all the year until
'tea season' came on, when its steamers were diverted to Hankow
to get a part of the profitable tea trade. The lines which traded
to China all the year entered, thereupon, into an agreement, called
here 'trusts' or 'pools' or 'monopolies' or 'boycotts' or 'contracts
in restraint of trade,' or whatever else of the same sort can be
suggested. They agreed together to divide out freights amongst
themselves, and they published a notice to all merchants in China
that if they would ship everything all the year by one of the
conference lines they would be allowed a rebate upon all freights
at the end of the year of 5 per cent, and whenever one of the
steamers of the Australian line came to Hankow the conference
had a steamer there to underbid it on freights ; so that whatever
the Australian got caused a loss. Thereupon the Australian line
applied to the English courts for protection, upon the ground
that this combination of many against one was contrary to the
principles of our law. It is plain that the case brought up for
discussion all the questions relating to pools and trusts now agi-
tating the American mind, and these questions received a treat-
ment in England worthy of their magnitude and scope.
"The case was tried first by Lord Chief Justice Coleridge and
Lord Justice Fry. It was then tried by Lord Coleridge alone, and
upon appeal from his decision, by Lord Justices Bowen and Fry,
and Esher, master of the rolls, and upon appeal from them to the
House of Lords, it was heard before the Lord Chancellor, Hals-
bury, Lord Watson, Lord Macnaughten, Lord Bramwell, Lord
Morris, Lord Field, and Lord Hannen. Each decision was in
favor of the conference, and every one of these twelve eminent
judges except Esher, M.E., held that the agreement was a per-
fectly good and valid one, according to the principle of our com-
mon law.
"The guiding principle in the case was held to be the one
stated. If the parties contemplated their own improvement only,
it was immaterial that they contemplated injury to the Aus-
tralian, or that injury to him would be the result of their acts;
but if they were actuated by malice toward the Australian, then
133
the agreement would have been a vicious one, condemned by the
principles of our law. This was held to be the test in all such
cases." ,
The idea is very admirably brought out in the opinion that
was delivered in the House of Lords by Lord Field, who said:
"It follows, therefore, from this authority, and is undoubted
law, not only that it is not every act causing damage to another
in his trade, nor even every intentional act of such damage, which
is actionable, but also that acts done by a trader, in the lawful
way of his business, although by the necessary results of effective
competition interfering injuriously with the trade of another,
are not the subject of any action.
"Of course it is otherwise, as pointed out by Lord Holt, if the
acts complained of, although done in the way and under the
guise of competition or other lawful right, are in themselves
violent or purely malicious, or have for their ultimate object
injury to another from illwill to him, and not the pursuit of law-
ful rights."
The Mogul steamship case finds a parallel in a recent case
described in the Berlin Tageblatt, as follows:
"The highest court of the German Empire sitting at Leipsic,
has rendered an important decision, which we summarize below,
concerning combines or trusts. The decision will be of great
interest to the other nations, and particularly to the United
States, where trusts have come to exercise such a prominent part
in commercial and industrial affairs. The court mentioned has
declared emphatically that trusts and similar combines are en-
tirely legal. The grounds upon which this decision was based
were as follows : When in certain industrial pursuits the prices
of products are sinking so low as to make business impossible or
as to endanger the successful carrying on thereof, the crisis which
necessarily follows is not only disastrous to the individual con-
cern, but also to internal affairs generally. For this reason it is
for the interest of the entire state that inadequate low prices
shall not prevail too long in any industrial branch. Eealizing
this principle, the legislative bodies have repeatedly, and only
recently, undertaken to bring about an increase in the prices of
certain products by the establishment of protective duties. For
this reason it cannot be deemed certainly, or generally speaking
obnoxious to the interests of the community when the manu-
facturers of certain articles form what is called a 'trust' with the
object in view of preventing ruinous competition, and for the
purpose of mitigating the downward tendency in the prices of
134
their particular manufactures. On the contrary, such combina-
tions can be looked upon, not only as warranted by the instinct
of self-preservation, but as a measure for the interest
of the whole community as well. Especially is this true
in cases where prices are so low that the manufacturers of the
articles are on the verge of financial disaster. For this reason
the building of syndicates or trusts has been designated by a
number of authorities as a means which, when properly managed,
would prove extremely expedient to prevent detrimental and
unwarranted over-production."
Many good people have imagined a bogey monster that doesn't
exist. They have accepted as facts the fancies of sensational
journalism. The natural advances in price when demand exceeds
supply have been debited, and the declines when supply exceeds
demand have not been credited, to say nothiag of economies in
production and distribution which have made the present age the
consumers' millennium.
Never before would a day's labor buy so much of the comforts
and luxuries of life, but education of the. masses to the wants
of intelligence has progressed even faster and the rewards to the
inventors and the captains of industry and finance, who have
made this evolution possible, are envied. It is overlooked that
corporations are really co-operations; that the number of part-
ners as stockholders in any industry is increased, that anyone
can become a partner, and that instead of being concentrators of
wealth, they are distributers of wealth. It has been assumed that
labor would be oppressed by the organization of capital, but ex-
perience has shown that organized labor has met organized capi-
tal, and that the largest organizations of capital have furnished
the steadiest employment and have paid larger wages than indi-
vidual employers. The grievances of individuals injured in this
evolution of industries have been magnified and the general good
minimized. The lesson of the stage driver thrown out of work
by the locomotive, or the workman by the machine, is forgotten
when the traveling salesman who loses his job through the econ-
omies of industrial organization appeals to public sympathy. That
wider markets are necessary and that large capital intelligently
administered is necessary to find them is not appreciated. That
"the rule of reason," as expressed by the minority of the Supreme
Court of the United States in the Trans-Missouri case, is in dan-
ger of being expunged from our statutes.
Within the limits of a paper like this it is of course impossible
to do more than speak suggestively and tauch upon but few of the
135
many points involved, but I have faith that with further study of
this subject by the American people that the facts will become
plainer and they will appreciate that
" Through the ages one increasing purpose runs,
And the thoughts of men are widened by the process of the suns. "
i *
STEPHEN P. COKLISS.
New York Traveling Men's Association.
The gathering in Chicago under the auspices of the Civic
Federation to discuss the all-absorbing subject of "Trusts" will
doubtless present nearly as many different opinions as there are
delegates assembled. And while it will not be possible to formu-
late any controlling decision upon the subject, there will be ideas,
opinions and suggestions presented which will prove to be of
value in determining, per chance, a solution of the trust prob-
lem, through regulation, rather than at an attempt of absolute
prohibition. The evolution in business life that has led to a
legitimate combination of a number of concerns in the same in-
dustry cannot be considered as the growth of a day nor the rea-
sons leading to its fulfillment ignored. The possibility of their
creation is attributed to various causes. A number of students
of the question declare that the tariff, prohibitory in many of its
classifications, is the foundation upon which the so-called trusts
are enabled to successfully build.
Others contend that competition is the chief factor, the pri-
mary reason for the formation of so many industries under one
general head. The former methods of conducting business made
necessary large expenditures of money in administration and
distribution by the smaller corporations, firms and individuals
seeking a market for their productions. In the new order of
affairs there is a large saving of these expenses. It is undoubtedly
true that this transition will cause a number of persons to lose
their positions, yet the proposition or movement must be consid-
ered from the standpoint of its effect upon the community rather
than the individual. The legitimate results that should accrue
from the federation of a number of manufacturers for instance,
under a general management, are an improvement in their meth-
ods of business in every way, reducing waste to a minimum, pro-
ducing a better article than before for the same or less money,
no attempt being made to control production or output, not
capitalizing in excess of their business needs. If this plan is fol-
lowed, it cannot prove much of a menace to our business econ-
THOMAS J. MORGAN
H. W. PALMER
JOHN B. CONNER
JAMES R. WEAVER
CHAS. D. WILLARD
MORRIS M. COHN
omy. A large part of the friction that has existed between cap-
ital and labor, causing strikes, lockouts and riots, was the result,
in part, of overproduction. The product was unloaded at a loss,
the owners tried to recompense themselves by cutting the wages
of their workmen. This evil ought now to be remedied. While
it is unquestionably true that capital is more strongly entrenched
than ever before, the same can be said of the labor unions, these
are having greater influence than heretofore, because they are
choosing more intelligent and conservative leaders, who with
advanced ideas recognize the law of mutual responsibility. The
new combines, honestly capitalized and honestly conducted,
ought to be in a great degree fruitful of peace and harmony in
the industrial life of our country.
A recent writer has stated : "That the conquests of the future
are to be won by the industrial armies." It is a fact that we
lead the world in labor-saving machinery and in intelligent work-
men to operate it. The swift evolution in our manner of doing
things in the manufacturing and mercantile economy of our land
will place us far ahead of the rest of the world in this direction,
as the wildest imagination can dream of. In these advanced
movements it is not fair to impugn the motives of those engaged
nor to declare everything as evil because it upsets or changes
former methods or old directing forces. It is a matter to be
closely studied, for the true thing in the new era has come to stay,
and the question of the hour is, how shall the changes necessarily
a result of the new environment best be made that they conserve
and harmonize conflicting interests? Undoubtedly these at first
will loom up mountain-like in their proportions, but will silently
disappear with experience in the new life and its practical
demonstration of the undeniable fact that if it shall endure the
employer, employee, and consumer must be harmonious elements
of its existence.
Opponents of this transformation in our industrial life natur-
ally say that the large body of consumers will be the sufferers, that
as the combinations will control products they will raise prices,
and that wages will be at their mercy; facts at present and proba-
bilities of the future, however, do not indicate this line of con-
duct. Those favoring industrial concentration argue that it
ought to strengthen our industries and be a safeguard against
financial difficulties, when compactly organized, properly con-
ducted and honestly financed; that holding in check reckless
competition will curtail unwise credits and overproduction, that
it will be easier to regulate the supply to the demand, that self-
interest will best be subserved by disposing of products at fair
137
prices, that when this consolidating of our producing and dis-
tributing forces becomes an economic fact, instead of dwarfing
individuality, it should present greater incentives and rewards
for the exercise of intelligence, energy and enterprise of the indi-
vidual.
So far we have been considering the phase of combinations,
corporations, etc., based upon principles of integrity in concep-
tion and honesty of purpose in administration. But, there are
aspects and conditions prevailing in other corporations, large and
small, diametrically the opposite to the line of conduct set forth
by those that may be considered in any way a benefit to our peo-
ple as a whole. These so-called trusts are of every conceivable
kind, capitalized at large sums far beyond any possible demands
of production, issue great blocks of preferred and common stock,
knowing that a dividend can never be paid upon it, but with
tempting promises and smooth persuasion availing themselves of
the speculative craze so rampant, to dispose of the stocks to a
gullible people. Promoters and schemers are in the main respon-
sible for this sort of a combine, relying upon the sale of stock
for their pay for creating the concerns. Several of the states
of our union issue charters to all corporations applying for them,
without discrimination, accept the fees, require no guarantee of
good faith to the public; so many gigantic unscrupulous cor-
porations are started upon a career that can have but one ending,
and that is failure. Along its track are the wrecks financially of
ignorant, innocent investors, who were led to believe in the sound-
ness of the corporation because the state sanctioned its birth,
and its directors, men of reputation. Of course the illegitimate
trust, corporation, combination or whatever it may be called,
ought to be an exceptional thing, still there should be such safe-
guards thrown about and such guarantees exacted, that the crea-
tion of any will be a misdemeanor. So many industrial combina-
tions are so largely capitalized and present sucli a bonded indebt-
edness that they will no doubt create suspicion in the minds of the
employed as to the possibility of their becoming paying institu-
tions; the sequel to suspicion is unrest, dissatisfaction, revolt; this
must be avoided by regulation if possible, by control if necessary.
So much regarding the abuse of trusts." As to the remedies:
First of all the subject should be kept divorced from politics. It
is not at all necessary that there shall be a plank in the platforms
of both parties declaiming against trusts, for the party holding
the last convention will simply exceed the force of language used
by the other in denunciation of them. It seems to me that the
state, issuing a charter to a corporation authorizing directly or
138
indirectly the sale of bonds and stocks, should have a commission
or the secretary of state, in his capacity as such, should have
charge of corporate affairs, and determine upon a thorough ex-
amination, those worthy of charters, as well as a surveillance over
combinations, corporations, etc., organized in any other state
that seek a market for their bonds and stocks within the limits
of the state of which said commission is a part. That all com-
binations, corporations or trusts shall pay to the state of which
they are a part, a tax upon their plant or franchise, the value of
which shall be determined by its earning power. As to national
supervision of the question, there may be laws now upon the
statute books giving Congress all necessary control, if not, I
suggest that a commission shall be created by Congress who shall
protect investors from the evils sure to accrue from over-capitali-
zation, they also to have power to pass upon the quality of the
securities behind any issue of bonds and stocks thrown upon the
market bv said combinations, corporations and trusts. Pub-
licity is a safeguard that will in no way injure the concentration
of capital and effort honestly directed. A paper published in
New York recently said:
"There is a bill now before Congress intended to cover the
whole subject of trusts; it is very simple and quickly read. It
does not say one word about the tariff, the labor question, silver,
railroads, or anything else which is commonly supposed to be the
cause of trusts. It does not even say that corporations must or-
ganize under this national law. In fact it is admitted that many
corporations will continue to exist under state laws. But this
much is said : Where a corporation starts out to do a large busi-
ness, control a large industry, and drive a large number of people
out of their accustomed avocations, something must be returned
to the community in lieu of it, and this something is absolutely
safe securities. " These securities, moreover, must be so safe-
guarded that the great mass of the community can take hold of
them. When this is accomplished the trust question is settled."
The great interest excited in this country through the report
of the American consul at Limoges, Mr. Walter T. Griffin, on
what is known in England as the Smith Combination Scheme,
caused the Civic Federation's Conference Committee on Arrange-
ments to invite, through Consul Marshal Halstead, of Birming-
ham, Mr. E. J. Smith, of that city, the acknowledged father of the
plan, to address the conference. Mr. Smith could not attend but
sent the following paper which thoroughly describes his system.
Also, through Mr. Halstead, Mr. A. W. Still, editor of the Bir-
mingham Gazette, who opposes Mr. Smith's plan, was invited to
attend. He sent the paper which follows that of Mr. Smith.
E. J. SMITH.
Birmingham, England.
I have received through Mr. Halstead, our American Con-
sul in Birmingham, your kind invitation to address the con-
ference of your Federation in September. I have delayed my
reply because, had I replied at once, I could only have declined,
and I have waited to discover if it were possible. I find it impos-
sible, and now hasten to express my thanks and to say that noth-
ing would have given me greater pleasure than to meet you, had I
been ahle to do so, but the press of business in England forbids
that I should leave it for so long just now. I can only hope that
a visit to your country is a pleasure simply deferred.
I have heen given to understand that you would like to dis-
cuss at your conference the trade movement with which my
name is identified, and that you would like something from me
to help .you. If you care to read to your members this letter, it
may provide some apology for my absence.
I gather from the list of questions you have sent me that
your attention is fixed upon the "Trade Trusts" formed so natur-
ally in your country, and sometimes in mine. I hesitate to ex-
press any opinion concerning things with which I am not fully
conversant, and can therefore say nothing about your "Trusts."
They may be formed upon principles which avoid the evils gen-
erally belonging to the "trust" system. Those evils are over-
capitalization, which must be a curse wherever it exists; the de-
sire to establish monopolies, which must help to destroy, not
build up, the commerce of any country and the happiness of
its people; and selfishness, which leaves out of consideration the
element of labor, which has its rights as well as capital. If
you have any trusts which do not contain these evils, you have
some "better way" which I do not understand.
I must take it for granted that all these attempts to im-
prove the position of certain people in business have been made
because there was some evil to cure. I know what it is in my
>wn country. It is the desire to make haste to be rich. It is a
desire which destroys the best impulses of humanity; it leads
to overproduction, insane competition, the lowering of wages,
and bankruptcy. So far as I have been able to study the "trust"
system, it makes greater haste to be rich, and it does not pro-
vide the remedy for the evils I have just mentioned.
I believe in trying to find a remedy for the sin of undue com-
petition. I believe in putting every trade in a position which
will enable it to demand and obtain from the consumer a fair
price which carries with it a fair profit, and which enables it to
pay a fair wage to the real producer. Having done this, 1 would
make it compulsory that the fair profit should be obtained and
the fair wages paid.
And I would do all this without strife. I believe in trade
unionism, but if it is good for one side it is good for the other.
The judgment of workmen is no more to be trusted than is
that of employers. But there is no division of interest between
them. In each case it is a matter of money, because with money
you can buy the necessities or the luxuries of life. Neither side
can make money without the help of the other. Anything which
goes against the interest of the employer is fatal to the interest
of the employed. I believe, therefore, in so binding them to-
gether that their interests must always be treated as one.
But this interest can only be made secure by honest dealing.
Therefore the consumer, upon whom everything depends, can
be charged only a fair price.
These are the objects aimed at in what is called "The New
Trades Combination Movement." Whether or not the method^
adopted are calculated to secure them is, I presume, the question
you wish to discuss.
I do not intend to weary you with details which you can read
for yourselves in the printed matter which has been before the
public for years, and which you can now obtain in book form.
These details are so far important that without them the scheme
cannot be successfully carried out, but they are too elaborate
to describe here. I will content myself with giving you the
main principles of the plan whereby it has been found possible
to obtain fair profits and pay fair wages, prevent strikes and lock-
outs from happening, and to do all this by^ charging only a fair
price to the consumer, and all without any attempt to establish
a monopoly.
I have not had the advantage of studying your system of
trading, and therefore cannot speak with authority upon some
points which are of great importance in England. It is, how-
ever, exceedingly likely that one evil which the system is in-
tended to cure is as real with you as with us. I allude to the
pernicious practice of selling manufactured articles without first
141
ascertaining the real cost of production. After years of exam-
ination I have come to the conclusion that not more than one-
third of our manufacturers carefully and properly take out their
costs. From this arises the foolish and unnecessary, and even
morally criminal, underselling, which has made some remedy a
great necessity. The first part of the plan is, therefore, to in-
sist upon the cost of production heing ascertained by the joint
wisdom and practical knowledge of the whole of the members of
any trade sitting in conference. Should anyone suppose that
this is impossible or even difficult. I can only reply that, notwith-
standing the greatest prejudice, suspicion, and rivalry, it has
been done successfully over and over again, and that it forms
the very foundation of the system under which many trades here
both make and sell. The removal of ignorance, the restraint
of recklessness, and the mutual help which can only come from
mutual confidence, in no way interferes with the proper and law-
ful competition and enterprise of individuals without which
manufacturing would become stereotyped and stagnant. Of this
we have had ample evidence.
Of course it is supposed that an association has been formed,
and that rules and regulations providing for every necessity
have been drawn up and adopted. These include provisions for
the detection of underselling, or the violation of the conditions
under which the association works, the imposing of penalties
when such breaches of trust are proved, and the establishment
of a monetary guarantee which can be called upon if found neces-
sary. This latter is accomplished by a somewhat original method
which avoids the inconvenience of having to take necessary capital
out of a business to lie idle in a bank. The regulations also pro-
vide for the fair claims of each class of customer, the fixing of
cash discounts, and the charges for carriage.
So far it can be truthfully said that there is very little in
the system which could be called new, excepting the joint cost-
taking. The arrangements are probably more complete than will
be found in other associations, because so many trades have as-
sisted in making themjio, but they are not original.
The feature of the plan which is probably new is that which
follows all I have mentioned, namely, a thorough arrangement
and alliance between employers and employed. This neither
stereotypes wages nor restricts the higher claims of those who
by force of superior ability of any kind ought to be able to com-
mand better positions than others. It does not interfere with
e wages already paid in the separate factories, and it does not
tempt to bring about uniformity of wages. Tt does not hand
over employers to the mercy of a trades union, or take away
from them in any way the right and the power to manage their
business in their own way. It does not aim at the destruction
of trades unionism it enunciates the principle in the surest
way by making employers trades unionists themselves. Having
formed a union on the one hand and an association on the other,
it brings both together for one practical purpose and one com-
mon good. It prevents disputes from becoming quarrels, puts
an end to strikes by removing the causes of them, compels the
obtaining of fair profits, and secures to the workmen payment
for their services which insures their good- will and hearty co-
operation. This is done by the carrying out of the following
agreement between the two forces, whose interests are presum-
ably one :
1. ISTo employer to engage a workman who is not a member
of the workmen's union.
2. No workman to accept a situation with any employer who
does not sell at such prices as include the minimum profit fixed
during the cost taking process, or which may be fixed from time
to time by the employers' association and approved by the joint
board.
3. No workman to be permitted to leave his situation and no
employer to be permitted to discharge a workman on account of
any dispute as to wages, or the hours and conditions of labor.
4. A wages and conciliation board to be formed of half from
each side, to whom all such disputes may be referred, and whose
decision, or the decision of its arbitrator, must be accepted on
both sides or the alliance ended.
5. The regulations as to the supply of work people of a satis-
factory kind to be a mutual matter, with a view of making it
neither superfluous nor inadequate.
6. Defaulting members, or outside competitors, if any, to
be fought, if fighting is considered necessary, by both sides unit-
edly, and the cost evenly divided.
7. A guarantee to be given by the employers that the wages
paid in each factory at the 'time of the signing of the alliance
shall never be reduced while the alliance continues, unless it may
be considered necessary by the whole of the board.
8. A bonus on existing wages to be paid by each employer
from the date when the board has decided that it is sufficiently
strong to enforce the selling prices upon which the minimum
profit has been fixed that is, when a sufficient number of em-
ployers. and employed have been hrnng-ht into the bargain; the
148
employers' association to be the first to bring a recommendation
to the board to this effect. The percentage of the bonus to de-
pend upon the proportion of the wages to the proportion of the
cost of material which make up the selling prices.
10. No further bonus to be paid on any advance in selling
prices which only covers any advance in the cost of materials,
but this to be proved to the satisfaction of the board, which may
appoint some independent person to investigate.
11. The first bonus paid to work people to be a fixture, but
all other bonuses to be subject to a sliding scale depending
upon the increase or decrease of real profit obtained. Should sell-
ing prices be lowered simply in proportion to the lower cost of
materials, the bonus shall not be affected.
12. Any increase or decrease in selling prices to be approved
by the board, or its arbitrator, before being put into operation.
These are the conditions upon which the two parties to the
agreement consent to bury the hatchet and work together for
mutual good. There is no necessity to point out how strong such
amalgamation must be. It can accomplish all that it is intended
to do. The principal charge against it is that it may do too
much. The power so obtained, it is urged, may be abused, and
so the consumer may have to pay an unfair price for the goods
he has to buy.
This is a large question, and one which it is impossible to
reply to thoroughly here. I have tried to do it elsewhere, and
I start with saying that it is absolutely impossible that such a
thing should happen. It may happen with trusts, syndicates,
monopolies of every kind, but this system is neither. The safe-
guards against monopoly, and therefore against unjust charges,
are:
1. There is no restriction attempted against newcomers into
any trade; therefore if large profits are obtained, overproduc-
tion will make smaller profits absolutely essential.
. The work people have to consent before any advance can
he declared. They will consent readily enough whik they arc
illy employed, but as the bonus does not compensate them for
short time, they will not consent if there is danger of driving
Avay any trade. This is not theory only. From every wages
board and I am chairman of many the desire to keep selling
prices, and therefore wages, at a reasonable level, is most strongly
expressed by the work people. In one alliance the work people
reiused to receive any further bonus or to consent to anv higher
profits.
114
But the test of any theory mtist be its experiences. I chal-
lenge anyone to show that in any trade whatever, working under
the alliance methods, any attempt even to make unjust profits
has been made, yet the principles have been in operation for
eight years.
It is right that the consumer should be protected against un-
just charges, but does anyone in his senses believe that these
charges can ever last for long? Even successful monopolies arc
generally short-lived. There is no method yet discovered by
which a few people can for long absolutely control the manufac-
ture of any necessary article. They may do so for a time, and even
make wealth, but the end must come generally speaking, it
comes even before the wealth is made. In the combination
system I advocate, it must be remembered that the profits are
carefully ascertained, printed, and circulated amongst the mem-
bers. They cannot be concealed, and the temptation to over-
production cannot be restrained should these profits be too high.
And if they are not too high, the consumer has no case. He
has never troubled himself when profits have been too low; he
has no sympathy with the bankrupt whose goods he has been
able to buy below cost, nor with his creditors ; he may have called
the manufacturer a fool with good reason but he has had no
pity. So long as only just profits are imposed upon him, I have
no pity for the consumer.
But the consumer benefits very naturally indirectly by a
fair profit being obtained. It comes back to him in many ways,
which I have tried to prove in an article on this subject. He
suffers in the same proportion from bankruptcies and starvation
wages. But if he does not care to pay a fair price for his goods,
he can make for himself. He has no right to expect other people
to work for his benefit without sufficient compensation.
I do not think I need say more to help you in the dis-
cussion of this question. It would take many articles to describe
the method fully. I have given you its main principles. I wish
only to add one more suggestion: America, by its tariffs, does
much to keep its trade, and to keep out other people, but it does
not prevent them from paying the tariff and selling in America
very often without profit. Whenever this is done your profits
must also suffer, and when we compete with you outside your
country and ours, the competition is abused. I am looking for-
ward to the day when the two countries will be drawn together
by a bond stronger than that of sentiment only. If we are a
nation of shopkeepers, you must be very near to it. Combina-
145
tiuu means unity of purpose and a desire and determination to
get what belongs to us. I advocate nothing beyond this, but I
think I can see a chance of combination between the respective
trades in the two countries, securing to each advantages which
would be impossible to either without it.
A. W. STILL.
Editor Gazette, Birmingham, England.
Even if I did not most highly esteem the honor of being
permitted to contribute to the deliberations of this great repre-
sentative conference, I should have deemed it my duty to prompt-
ly accept your invitation to submit a critical comment upon what
has been known in Birmingham as the "Smithsonian System"
of Trades Combination. It has been my lot to watch the evo-
lution of this system and its author from the outset, and, in
the course of professional duty, I have had to study its effects
upon the commercial and industrial welfare of the Midland
counties of England, and to express adverse opinion freely no
doubt, at times, in language more vigorous than polite. You
may be told that this antagonism is captious, ignorant and per-
sonal; but I will content myself with assuring you that it is, and
always has been, wholly disinterested and sincere. Let me dismiss
all personal aspects of the question as promptly as possible by
pointing out that they cannot affect your consideration of the
"Smithsonian System" except to this extent: that you must bear
in mind when listening to the eloquence of my friend Mr. E. J.
Smith, that he is not the disinterested advocate of a novel prin-
ciple in the science of political economy, but the defender of a
plan which he charges large fees for adapting to the particular
conditions of any trade that may invite his assistance. He draw*
1,350 per annum as chairman of the Bedstead Association,
per annum from each of one or two other associations over
which he presides, and, less than twelve months ago, he demanded
3,500 for establishing an association in the Staffordshire pot-
tery trade. I am credited with having materially assisted in pre-
venting the success of the last-named enterprise, and, consid-
nng the large fee involved, no one need blame Mr. Smith for
reatmg me as a most irritating and vexatious person,
sa ?i Ut ? 6 laborer is wo rthy of his hire, and the fact that Mr.
ith charges for his services is not, per se, a discredit to him
an argument against his system. If the system is good, no
b he has ever received can be regarded as excessive. If,
146
as I believe, the system is bad, it is perfectly in accordance with
one's experience of human nature to find that the person least
ready to acknowledge its defects is the man whose pocket is most
favorably affected by its propagation.
To one other point which is slightly off the main line of criti-
cism, I must request your attention at the outset of my remarks.
Every department of British commerce and industry is subject,
more or less, to the influences of our free trade policy. As mere
purchasers all our people have the advantage of abnormally low
prices, and our working classes can live in comparative comfort
upon wages which would scarcely ward off starvation if high pro-
tective tariffs barred the admission of plentiful supplies of cheap
food, cheap clothing, and all other necessaries and luxuries. But,
on the other hand, as producers and sellers, our people, under
this system of free trade, are compelled to accept, even in our
home markets, the prices fixed in open competition with rivals
in every quarter of the world. Our farmers have to fight against
the most favored wheat growers in the old world and the new;
and their tiny stockyards are pitted against the huge cattle runs
of the "Far West," and the virgin grazing lands of Australasia.
Our manufacturers and artisans must adapt profits and wages
to the prices at which the underpaid workers of Germany and
Belgium can flood our shops with their wares; and the surplus
output of highly specialized and perfectly equipped American
factories may be dumped upon our shores to cut out or cut down
the home producer who pays high taxes because the state has little
or no income from customs duties.
I do not speak either as a protectionist or as a free trader.
What I have said is merely a colorless description of the status
quo. But it will be perfectly clear to you that a country which
"buys in the cheapest markets" must produce at the lowest possi-
ble cost if it is to hold its own against external rivalry. It must
take the fullest possible advantage of the cheap labor which cheap
living creates, and it cannot afford the luxury of sentimental the-
ories. The protective policy of other nations gives their capital
and labor a solid advantage in home markets. British capital
and labor have to compete as keenly in London. Edinburgh and
Dublin, as in New York, Paris and Berlin. The Smithsonian
system of trades combination is doomed to failure as a British
institution, because it eliminates the free competition which re-
sults in "bottom prices," and substitutes inflated and wholly arti-
ficial rates of profit and of wages. In a protectionist country the
system might flourish in any trade which relied wholly or mainly
upon the home markets, but even under such specially favorable
147
conditions it would develop peculiarities against which it is neces-
sary that hoth capital and labor should be carefully forewarned.
The Bedstead Trade Alliance presents the best illustration
of Mr. E. J. Smith's System. Probably mcst of you are familiar
with Consular Report No. 444, issued by the Bureau of Foreign
Commerce, Department of State, Washington, dated June 6,
1899, and signed by Mr. Walter T. Griffin. On reading this re-
port I was somewhat surprised to find that it consisted in the
main of extracts from the voluminous writings of Mr. Smith, and
that Mr. Griffin had adopted the rosk st views of the system, and
endowed them with all the weight of his authority, without giv-
ing to American readers the slightest hint that there is another
side to the picture. For example, I notice that he quotes a
speech made by the Right Hon. Joseph Chamberlain, five years
ago, when the whole thing was in an experimental stage. Mr.
E. J. Smith was, and is, one of Mr. Chamberlain's most ardent
political supporters, and it was a graceful and costless recom-
pense for his services when the Right Hon. gentleman advertised
him as the founder of "a great social experiment." But I should
have expected Mr. Griffin to point out that the results have not
been so truly marvelous as Mr. Chamberlain anticipated. The
Right Hon. gentleman mentioned a great trade in Bradford which
had adopted Mr. Smith's principles. About the date when Mr.
Griffin was making his inquiries for Consular Report No. 444,
Smith's system was being ingloriously discarded by the wool
dyers of Bradford, after having caused unlimited friction and
vexation among all sections of the woolen trade. I am some-
what reluctant to characterize as nonsense the statement on page
3 of Mr. Griffin's report, that at the time the Bedstead Associa-
tion was formed, "No manufacturer was making any money,
wages were at the starvation point," etc., etc. But really no
milder term than "nonsense" can be applied to a sweeping and
wholly inaccurate statement which seems to be founded entirely
upon the irresponsible chatter in which my good friend Mr.
Smith occasionally indulges when he beams behind the smoke
wreaths of a fragrant Havana.
I will endeavor to give you a somewhat more candid history
of the formation of the Bedstead Association. In the early '90s,
ish i trade was passing through a period of extreme depres-
Ine causes were no doubt numerous, but low prices, which
nany eminent authorities traced to the appreciation of gold, and
I in silver values, was doubtless the main factor in cramp-
ng commercial and industrial enterprise. The bedstead trade
share in the depression, and while the old established
148
and wealthy firms were doing fairly well, taking full advantage
of the plentiful supply of cheap labor and material, men with
little or no capital behind them were hard pressed, and were
recklessly underselling each other in the desperate competition
for business. As in every other trade during the same period,
the weakest went under, while the stronger survived. Mr. E. J.
Smith is a self-made man, and it is certainly with no disrespectful
thought that I mention the fact, well known to me, that he and his
partners were very hard pressed during that crisis in their trade,
lie set himself the task of forming an association to prevent ruin-
ous underselling, and soon induced a few of the smaller firms to
join him in the movement. But as his plans developed, he was
fortunate in gaining the support of Mr. W. J. Davis, a very able
labor leader in whom the workpeople placed absolute confidence.
At this early stage the Bedstead Association consisted of a com-
paratively weak minority of the manufacturers, but Messrs. Smith
and Davis were able to form a workman's association, which
included in its membership practically the whole of the opera-
tives in the trade. The inducement held out to these workmen
was an immediate advance of wages in the form of a 10 per cent
bonus, and the assurance of further increases, in the form of
additional bonuses upon each advance made in selling prices by
the manufacturers. No great expenditure of eloquence was
necessary to secure the cheerful support of the workpeople to
such a policy as this. They were hearty and unanimous, and
when they agreed to work only for firms which were members of
Mr. Smith's manufacturers' association, 'he founder of the move-
ment was in the happy position of being able to compel the out-
standing firms to join him. The alternative to doing so was the
withdrawal of their work people, the stoppage of their business,
and the transfer of prosperity to their associated rivals.
In point of fact, the bedstead manufacturers, who desired
to retain liberty of action, treated Mr. Smith as a person of no
consequence, until they suddenly discovered that he had woven
a net which they could neither break nor crawl through, and they
had to submit to being caught in it with the best grace possible.
In order to understand the undoubtedly remarkable success
which attended his efforts, it is necessary to bear in mind that
Birmingham was the home of the bedstead trade, that ten years
ago it had practically no foreign rivalry to contend against, and
that even in America it did a huge trade, and was able, owing to
the low cost of production, to compete pretty fairly with the
home makers, in spite of protective duties. Conditions such as
these gave wholly exceptional advantages to Mr. Smith's move-
149
ment. Broadly speaking, he was organizing a monopoly, and had
little or nothing to fear until his operations created the inevitable
competition. During the first year or two of its existence every
member of the association was delighted. Large profits were
made, high wages were drawn, and though the drastic espionage
organized by Mr. Smith might provoke an occasional adjective,
there was no serious disposition to fight against the master and
guiding hand of the skillful originator of the scheme.
There was a rift within the lute when Mr. Smith, now the
handsomely salaried chairman of the Bedstead Association, began
to sell his advice to the manufacturers of bedstead components.
Tube and mount manufacturers and workpeople were organized
on the "Smithsonian" principle, and of course raised their prices
to the bedstead makers, who soon found that the profits Smith
gave with one hand were being taken away by Smith with the
other. He comforted them with further advances, but the process
has been continuous, and at the present time selling prices and
wages in the bedstead trade are nearly double what they were
when the association was formed seven years ago. Outside com-
petition has been the inevitable conseauence, and for several years
past the Bedstead Association has had to expend enormous sums
in fighting this kind of rivalry. But still more enervating is the
constantly increasing tendency to hoodwink the association by
granting secret rebates on association prices. This has been a
thorny subject of debate and recrimination, the more so as it is
practically impossible to prove the extent to which the system
prevails; but experienced business men will form a pretty shrewd
estimate of the "palm oil'' possibilities in a business where free-
dom of competition is barred. I need only mention that a few
months before Mr. Griffin presented his report, Mr. John Port,
of Manchester, who owns, I believe, the largest bedstead works
out of Birmingham, resigned his membership of the association
because he found it impossible to book orders at list prices, owing
to the extent to which other and less scrupulously honest firms
were giving secret rebates. It surprises me that Mr. Griffin makes
no allusion to a circumstance of so much importance.
The principle of a Smithsonian alliance is that members of the
manufacturers' association shall employ none but members of
e workmen's association, and that workmen shall only serve
tssociation firms. Mr. E. J. Smith has frankly admitted that the
nerstone of his system is coercion, and he maintains that with-
out coercion it would be futile and inoperative. His candor on
important point is exceedingly helpful. It enables me to go
the all-important question of whether the advantages
150
gained, either by employers or workmen, compensate for the loss
of freedom which both classes suffer when they adopt his system.
I will take as illustration the case of Mr. John Port, of Manches-
ter, who, as I have already said, withdrew from the association
early this year. Like every other member of the association, Mr.
Port was one of the fighting fund guarantors, that is to say, he
had made himself responsible to the association bankers for a
certain amount, which, on his resignation, was used for coercing
him. This coercion took the form of calling out all his workmen,
the strike pay and allowance to pickets being drawn from the
fighting fund. At the same time the association made every pos-
sible effort to prevent firms which have dealings with the bed-
stead trade supplying Mr. Port with materials, and powerful in-
fluences were brought to bear to prevent him selling any of his
goods to the wholesale or retail houses. Practically the strike
is still going on, but the coercive tactics of the association failed.
Several independent firms of bedstead makers supplied Mr. Port
with goods to meet the requirements of his customers, the cus-
tomers stood by him, and in the course of a few weeks he was able
to fill up most of the vacant places in his factory with free work-
men drawn from other trades. When the success of Mr. Port's
revolt was assured, Mr. William Eobinson, of Northbrook street,
Birmingham, retired, and again the policy of calling out all the
alliance workmen was adopted, but this rebel has also succeeded
in defying Mr. E. J. Smith and his system. An even more im-
portant defection was that of Messrs. Perry and Sons, of Bilston.
near Birmingham. The Right Hon. Sir Henry Fowler, M.P.,
is a director of this firm, which withdrew because its heads were
convinced that the coercive policy practiced under Mr. Smith's
direction amounts to illegal conspiracy at common law. Sir
Henry Fowler is a distinguished lawyer, and no doubt his fellow
directors had the benefit of his advice. Messrs. Perry's work-
people signed an agreement and severed their connection with the
workmen's section of the alliance.
The condition of several other combinations with which Mr.
Smith is connected, such as the coffin furniture, the fender and
fire brasses, and the jet and rockingham, is far from flourishing,
and defections are frequent. T have already alluded to the col-
lapse of the Bradford Wool Dyers' Association, to Mr. Smith's
failure jn the pottery trade, and may add that the Welsh tinplate
trade, after listening to hi? eloquence, declined to adopt his plan?.
The blue brick manufacturers, and the bar iron makers, who have
had ample opportunities of seeing his system in operation, have
a.lso refused to ha.vp anything to dn with it. La,st year the ordi-
151
nary working expenses of the Bedstead Association exceeded 7,-
000. This year special fighting levies amounting to over 12,000
have been made in addition to the ordinary expense levies. A
great many of the members are in arrears with these levies, and
the number of outside firms has increased, while the authority
of the association officials is fatally injured by their failure to
successfully coerce Messrs. John Port, Wm. Robinson, Perry and'
Sons, and some London and Glasgow outside firms, against whom
a policy of selling at less than cost price was adopted a year ago.
You will see from this hurried summary of the present posi-
tion of Smithsonian combinations that Mr. Walter T. Griffin has
not said all that may be necessary to an intelligent appreciation
of the position in Consular Report No. 444. I do not suppose
that Mr. Smith will supplement the deficiencies, and I have no
right to ask that you should place implicit faith in the statements
I have made, though they are a mere summary of unchallenged
news items which have appeared in the British press during the
past twelve months. But you will permit me to suggest that
before accepting Mr. E. J. Smith's system as a solution of the
complex problem of how best to reconcile the interests of capital
and labor, your great conference should direct a careful and inde-
pendent inquiry to be made by capable and independent indus-
trial experts, to whom I shall be most willing to give all the assist-
ance that lies in my power.
In addressing an audience of employers on this subject, I
should have to point out that those capitalists who adopt the
"Smithsonian" system, imperil not only their freedom, but their
trade. They lose their freedom and independence, because what
Mr. Smith is pleased to call "scientific cost taking" compels a
manufacturer to disclose every detail of his > business to trade
rivals, and the system of espionage, which Mr. Smith draws a
salary of 1,350 a year for supervising in the bedstead trade, is
so close that the most private papers and books relating to one's
business must be opened to the association agent on demand.
For every fault of omission or commission, a fine may be imposed,
and woe to the man who happens to be out of favor with the gov-
erning and favored clique which invariably grows up under such
an organization. The records of the limited companies engaged
in the bedstead trade show that the profits do not exceed on the
average 7 per cent. And the volume of trade, even at this small
fit, is restricted, because the high prices created by'pamper-
the workmen have encouraged the establishment of bedstead
nanufaetones in Germany, in France, in Belgium, in Holland,
even m decadent and degenerate Spain, while on the Ameri-
152
can continent they have placed the British trader at a hopeless
disadvantage. If any member of a Smithsonian combination
finds that it's, control does, not favor his welfare, he can only gain
his liberty by making a large pecuniary sacrifice, with the galling
certainty that his own money as well as that of fellow traders will
be freely spent in a resolute, endeavor to ruin him; and ruined
he certainly will be. if. his purse is not abnormally long, his perse-
verance great, and his enemies comparatively weak. The suc-
cessful revolt of Messrs. Port, Robinson, and Perry & Sons, marks
the decay of the Bedstead Alliance, but in its palmy days it ruined
several men who fought for liberty and gloried in sending one,
at least, to, a premature grave. I do not hesitate to say that,
though the system may be a crutch to limping incapacity, it is a
fetter to any man of vigor, enterprise, and ability. But even the
ablest may be drawn into a sacrifice of their freedom without fully
realizing what they do, and when the chains are welded a Hercules
may be required to break them.
Those, who noted carefully the description I have given of
Mr. Smith's first essay in combination forming may have re-
marked that he triumphed rather as an organizer of labor than
of capital. He paid well for the support of the workingmen, and
having induced them to, act as his coereionists, "the persuasion"
of the employers followed in due course. It would be wholly
unreasonable to blame the workmen for taking the course they
did. Moat of them live from hand to mouth, and trouble very
little about principles of political economy. Besides, it has always
been quite clear that next to the founder himself, they gained
the lion's share of advantage from Mr. Smith's system. Their
wages were raised at once, and have been rising steadily ever since,
though frequently the gain has been rather nominal than real, in
consequence of the scarcity of employment. It is perfectly true
that since the alliance was formed, workingmen have experienced
far greater difficulty in becoming employers, but this is not a con-
sideration that carries much weight with the majority, who are
apt to say, and not, I think, without some reason, that the worst
masters are the smallest. On the other hand, the alliance rules
provided that the bulk of strike pay should be found by the em-
ployers, a novel and agreeable experience to trade unionists: and
when called out for coercive purposes the men were assured of an
allowance equal to their wages, and had merely to do a little
picket duty in return. Seven years' experience has somewhat
dimmed the brightness of the prospect held out, yet I think the
fact is undeniable that a majority of the workmen consider that
they acted wisely in giving their support to Mr. Smith.
153
But in spite of this I would venture to appeal to the intelli-
gence of any well organized body of workingmen, either in my
own country or in America, for a vote against the principle of
alliance with which Mr. E. J. Smith's name is associated. Seven
years' experience has not been without its lessons to those who are
willing to learn. It is now the opinion of a good many workmen
that they degrade themselves by consenting to act as mere tools of
coercion for an employers' organization against masters with
whom, personally, they have no quarrel. Some of Mr. John Port's
workpeople had been in his service for thirty years, and when he
retired from the Bedstead Association it was a pathetic thing to
see these old hands parting with a kindly employer who was quite
willing to continue paying the association rate of wages, though
he could no longer submit to the association rules and restraints.
But the more serious aspect of the matter from a trade union
point of view is that the slightest failure of the coercive system
is quite as fatal to the "Workman's Union as to the Employers'
Association. Take the case of the three firms which have recently
broken away from the Bedstead Association. Every trade union-
ist has been drawn away from these firms by order of Mr. E. J.
Smith and his committee. But the firms have not closed their
doors. They have simply drawn in skilled workmen thrown idle
through depression in the cycle trade and similar industries, and
are rapidly converting them into efficient bedstead hands. The
men these firms formerly employed are thrown upon the alliance,
which must either pay them for doing nothing or give them a
share of the work available in alliance factories. Every outsider
who starts a bedstead business (and the number is already con-
siderable), and every defaulter from the association must train
men to the business, and in due course these men become the
rivals of union workmen. To admit them to the union would be
fatal weakness; to leave them outside makes opposition to the
liance more easy. The tendency, therefore, is to develop two
ival sections of workpeople, alliance and non-alliance, between
whom, I suspect, there will be hatred, malice, and all uncharitable-
ness, even when Mr. E. J. Smith has ceased to be a force in the
industrial affairs of Mid-England. I doubt very much whether
be possible to make workpeople risk these schisms in the
s of labor, or sacrifice their independence for such advan-
s as the Smithsonian system has to offer. They will prefer
upon independent, organizations, capable of dictating their
terms, and free to accent service under any employer by
whom these terms are granted. The very limited 'success of this
combination system is due far more to peculiar and strictly local
conditions than to any special virtues of its own.
It seems hardly necessary to point out, after what has already
been said, that as a means of preventing trade disputes the Smith-
sonian system is a dismal failure. Strikes are as frequent as be-
fore, and capital not only pays excessive wages to prevent them,
but has to support the workpeople while they are in' progress. If
one grants that "ruinous underselling" has been checked, it is at
once possible to retort that this is only done while outside com-
petition and rivalry are undeveloped, and that within the last
twelve months the Bedstead Association has sacrificed thousands
of pounds in an attempt to crush opposition by selling under cost
price. Though fashion on the continent of Europe has set strong-
ly in favor of metallic bedsteads since the alliance was formed,
there is no responsive increase in this branch of Birmingham
trade, and within the year it was officially reported that half the
workpeople were on short time. These are hard facts, which no
amount of grandiloquent palaver can dissipate, and they are not
what one would look for in the records of a "triumphant solution"
of the industrial problem. It is also a hard fact that one Birming-
ham firm has transferred a considerable section of its plant to
Spain, and that another is building a factory at Antwerp in
both cases with the object of escaping from alliance discipline.
The cardinal defect of Mr. Smith's system is that, unlike a
trust, or an actual combination of works and capital, it effect?
no saving in any direction whatever. Not one solitary feature
of it is economic. There is no saving in designing, in advertis-
ing, in order collecting, or in transport. No inducements what-
ever are offered to the workpeople to cheapen the cost of produc-
tion by exceptional skill or industry. The employers are simply
bound to pay workpeople 50 per-cent more than they would be con-
tent with if no alliance existed ; they have to subscribe to the sal-
ary of a chairman who does not allow them to call their souls their
own; they have to give bank guarantees which will be drawn upon
for their destruction if they claim liberty of action; they are fined
like naughty boys if they make a mistake, or happen to be caught
in giving a rebate which they know perfectly well is allowed
sub-rosa by nine-tenths of their rivals in trade. They may at any
time be called upon to subscribe their quota to the coercion of an
honorable fellow trader. They may see splendid openings for
enterprise, but if they move a hair's breadth from the beaten
track, the lynx-eyed scientific cost-taker and his emergency com-
mittee of rival traders will be smelling round in a most inquiring
frame of mind. The whole system savors of the ridiculous, and
155
I have marveled many times that my fellow-townsmen could tol-
erate the irksome espionage; or submit to the dictation of its
designer, but they know how assiduously and how skillfully he
has purchased the favor of the operatives section, and only the
wealthiest and the most resolute will try a fall with him. In a
word, the Alpha and Omega of the Smithsonian system is Mr.
E. J. Smith, and I am one of his most dispassionate admirers.
Remove him, and the system would collapse like a castle of cards.
I cannot hope to have carried conviction to all your minds by
the somewhat disjointed comments in this brief and hastily pre-
pared paper, and must be content if it has given pause to some
who were carried away by the curiously one-sided and inadequate
view of Mr. E. J. Smith's system, which has obtained official cur-
rency in the United States. The subject is worthy of far more
careful and exhaustive examination than I have been able to pre-
pare in the time at my disposal, but I may, at least, take comfort
in the thought that you cannot scorn this criticism without con-
ferring a benefit upon the commerce of my country!
Joseph ISTimmo, Jr. "The Limitation of Competition and
Combination as Illustrated in the Eegulation of Railroads":
JOSEPH NIMMO, JE.
President National Statistical Association.
In its essential features the important question of public pol-
icy which we are here to discuss is almost as old as the history
of human government. It is the ever recurring question as to the
manner in which and the extent to which combination and ag-
gregated capital may beneficially and without detriment to the
public interests, operate in restraint of competition. The dis-
cussion of a question so comprehensive and so radical inevitably
touches upon the elementary.
The only universal laws of which we have knowledge are the
laws of the Creator. No statute of His conflicts with another.
Divine law is, in and of itself, the manifestation of an omniscient,
omnipotent, and omnipresent Ruler. Absolute perfection char-
acterizes His law. The laws of human society, on the other hand,
are marked by the infirmities which attach to a world ruled by
man and his passions. Humanum est errare. Human laws con-
flict with each other in innumerable ways, and hence are subject
to restraints and limitations. The science of government and of
human law is essentially a science of limitations. Every funda-
16C
mental principle of government, every established rule of public
policy and every wholesome statutory enactment must in prac-
tical administration be taken in connection with its qualifying
conditions and limitations. Besides, inventions, newly discov-
ered forces, and ever changing conditions necessitate changes in
those rules of action which preserve the harmonious course of
human interaction. This status of unstable equilibrium and of
limitation and restraint is inevitable from the fact that in all our
social and industrial pursuits we are actuated by two opposing
motives. Individuality leads men to struggle with their fellows
for the acquisition of everything worth having and holding, for
we live in a world in which we are all debating. On the other
hand, an equally virile human, trait, the social instinct, leads
men to associate themselves together in co-operative enterprise.
Since the world began man's faith in his fellow-man was never
before so pronounced as it is to-day. This is manifested in in-
numerable forma of social and industrial association. Out of
these opposing forces has sprung the habit of competition and
the habit of combination. The struggle between these conflicting
dispositions has begotten two maxims, namely, "Competition is
the life of trade/ 3 and "In union there ia strength." Neither of
these maxims affords a safe guide in the affairs of life. In many
instances competition kills trade by constriction. There are also
combinations for good and combinations for evil. Many com-
binations perish of their own weight and lack of vitality. Be-
sides, the life of trade is a subjective element, It has its origin
and force in human intelligence, ambition and acquisitiveness.
Combination and Competition are only modes of interaction.
They are mutually regulative of each other. Together they
operate as the balance wheel of self-government. The question
before us is, therefore, one of differentiation, selection, and adap-
tation.
If, then, governmental institutions, laws, and rules of public,
policy, and even shrewdly devised maxims conflict and are all
subject to limitations and restraints, is humanity adrift in its
social, commercial, and industrial interaction? The answer is
clear and sufficient to every reflecting mind. The peace and well
being of human society proceed from laws, policies and institu-
tions which experience has proved to be for the common good
of all. Out of the lessons taught by centuries and even millenni-
ums of experiment and struggle, there have been evolved those
customs and usages, those beneficent principles of government,
those rules of public policy, those wholesome systems of law, those
wise judicial discriminatiops and those habits to which in their
157
entirety we apply the generic term civilization. The world bows
to the edicts of its own experiential knowledge. Said Patrick
Henry in his immortal oration for liberty : "I have but one lamp
by which my feet are guided, and that is the lamp of experience.
I know of no way of judging the future but by the past/' The-
ories built upon accepted laws of human experience are to a degree
useful, but the idea of natural or universal law, other than moral
law, is a solecism in the affairs of men.
In the excitement attending every epochal period and every
popular movement for the correction of real or fancied evils rem-
edies essentially revolutionary and destructive in character are
apt to be proposed. Such will inevitably be the case now as
attempts are being made to settle that great question the con-
sideration of which has called together from all parts of the
United States this convocation of men of learning and of large
practical experience.
The fundamental error which usually confronts such efforts
arises from the propensity toward doctrinarianism. It is one of
Kenan's profound sayings that the nation which devotes itself to
social problems is a lost nation. That is undoubtedly true in so
far as relates to attempts to formulate universal law. The science
of law as evolved by the lessons of experience is the finest soci-
ology.
The specific question presented for our consideration is that
of "Trusts," as the word by a process of misuse has come to have
significance in the public mind. The real issue relates to the
manner in which and the extent to which the recent movement
toward the restraint of competition through combination or
through the power of aggregated capital should be limited or con-
trolled by governmental authority. This question presents itself
in innumerable forms, for there are many kinds of combinations,
agreements and co-operative arrangements differing widely in
character and in their constraining influence upon competition.
Again, it is a matter of vital importance to determine the
question a? to the nature and extent of proper governmental in-
terference in the social, commercial, and industrial operations of
the people. The love of liberty begotten of the circumstances
attending the immigration of our forefathers to these shores, their
colonial experiences, and the struggles which terminated in na-
ional existence led them to establish upon this Continent a sys-
:em of government based upon the idea of the smallest possible
terference with the commercial and industrial affairs of the
Our whole theory of government is founded upon faith
conservatism which inheres in the untrammeled interac-
168
tion of forces, a faith expressed in the motto "In God we trust/'
This faith was the guiding star of all their conceptions of self-
government. Thomas Jefferson was the most conspicuous apostle
of that faith, in his first annual message to Congress as Presi-
dent he said, "Agriculture, manufactures, commerce and navi-
gation, the four pillars of our national prosperity, are the most
thriving when left most free to individual enterprise." The pol-
icy thus commended has with few departures been the guide of
our national legislation and it may be regarded as the settled
policy of the country.
New forces now assert themselves and new conditions con-
front us. Hence the old problems concerning the regulation of
competition through combination and of governmental restraints
upon combination present themselves under new conditions.
The task which devolves upon the man of the present generation
is to solve those problems, at least for our own time, upon ap-
proved principles of justice and of sound public policy, and in
such manner as not to disturb the sure foundations upon which
our civilization and our governmental system rests. The whole
question, as I view it, relates to the limitations which should be
imposed- upon both competition and combination by the people
themselves in the course of their own interaction and through
beneficent governmental regulation justified by the lessons of
experience. The subject runs into almost illimitable detail. The
question as it touches eacli industry and occupation must be
judged upon its particular governing facts and conditions. It
appears to me that the proper way to conduct the inquiry is for
each debater to consider and discuss the merits of the particular
phase of the question to which he has devoted his best efforts as
student, or in the course of his business experiences. In view of
the fact that my business life began as civil engineer in the con-
struction of railroads, was continued as officer of the national
government charged with the duty of investigating and report-
ing upon matters relating to commerce and transportation, and
latterly has related to my professional work as statistician and
economist, it appears proper that on this occasion I should invite
your attention to the American Kailway System, its evolution,
the stages of its development, its efficiency, and the evolved law
of its being.
The manner in which, and the extent to which, competition
has been operative in the course of the development of railroad
transportation in this country, are indicated by leading facts in
the history of the evolution of the American railroad system.
Such facts also indicate the manner in which and the extent to
159
which railroad combination has been created by the interaction of
commercial and industrial forces and by the exigencies of railroad
management.
The year 1830 very nearly marks the genesis of railroad trans-
portation in the United States and England. It^was -evident at
the very beginning that in so far as relates to carriers it is impos-
sible to apply the time-honored rules of the free highway to an
avenue of commerce whose pathway is no wider than the wheel
of the vehicle which moves upon it. It also became apparent
that considerations of economy, of safety, and of commercial
efficiency require that the entire railroad establishment, includ-
ing roadway and equipment, must be placed Under one central
ownership and control, and that the management of the traffic
interests of each railroad must be subjected to the same central
authority. This gave to railroads at the very beginning a de-
cided but absolutely unavoidable aspect of monopoly. Precon-
ceived ideas in regard to the freedom of the highway at first
caused the civilized world to be amazed at this conclusion. In
order to meet public prejudices it was proposed that railroad
transportation should be made a public function. The experi-
ment of state ownership and management was tried in this coun-
try under conditions much simpler and much more favorable to
success than those which exist to-day. Six states of the Union
attempted the experiment, namely, the states of Massachusetts,
Michigan, Pennsylvania, Illinois, Indiana and Georgia. Each
one of these experiments resulted in absolute failure, and for a
period of about sixty years the people of this country have
acquiesced in railroad corporate management and control. The
results of this system have been grand beyond the dreams of even
the most sanguine railroad projector. There have been con-
structed in this country 247,532 miles of railroad track. More
than half a continent has been reclaimed from a wilderness, the
habitation of wild beasts and of savages and converted into homes
of an enlightened and progressive people mainly through the
facilities of transportation afforded by railroads. An internal
commerce has been built up, the value of which is twenty times
that of our foreign commerce. The facilities of direct trade to
the remotest parts of this country have been provided for. Con-
stant improvements in the mechanical features of roadway and
equipment, increased facilities, advanced methods of administra-
tion and innumerable and ingeniously devised economies have so
reduced the cost of transportation in this country that the aver-
age rate by rail is to-day only about one-third what it was even
thirty years ago.
160
This enormous accretion to the world's commerce and this
wonderful reduction in the cost of internal transportation have
resulted in an ever tightening grasp of competition in all the
productive industries. Besides there has been an uncontrollable
and ever-quickening tendency toward a parity of values in all
parts of the country. This in turn has become the most coer-
cive cause of the reduction in transportation charges. Instead
therefore of restricting competition, as at the beginning was
feared might be the result of a railroad system of transportation
under corporate ownership and control, the actual result has been
a fiercer and a vastly more extended and potential competition
than the world had ever before seen. The competition thus cre-
ated is between rival towns and cities between different sections
of the country, and between mines and manufactures and mar-
kets. Such competition for its intensity and the extent of its
potentialities is unprecedented in history. Ever improving
facilities, economies and administrative measures have so reduced
the time and charges of transportation by rail as largely to divert
commerce from competing water lines.
From the year 1830, until about the year 1850 each railroad
in the United States was, as a rule, operated independently of all
other railroads. Different track gauges were adopted in many
instances for the express purpose of preventing "the carriage of
freights from being, and being treated as one continuous carriage
from the place of shipment to the place of destination," a prac-
tice now interdicted by the interstate commerce act as a public
offense. (See Act to Eegulate Commerce, Section 7.)
But a great change came. The social, commercial and postal
necessities of the age, and the military exigencies of the late Civil
War rapidly brushed aside all obstacles to the formation of that
great American railroad system which is to-day unto the traveler
and the shipper as one instrumentality of transportation, embrac-
ing 247,532 miles of track, administered and operated as though
by one central authority. This wonderful organic unity embraces
connected rails, a common track gauge, union depots, joint rates,
the uniform classification of commodities, rate agreements of
various sorts, through tickets, related time schedules, the unim-
peded passage of freight, passenger, express and postal cars and
locomotives over the tracks of different companies, and to a con-
siderable extent the employment of operatives in the pay of one
company, upon the lines of other companies. Each company has
thus become, in many ways, the agent of other companies.
This practical unification of the great work of transporta-
tion by rail came about not as the result of design or
161
forecast on the part of the companies, but as the outcome of an
evolution responsive to the demands of the public interests.
Objections to the juncture of lines and the combination of traffic-
interests which at first appeared insuperable were swept aside by
an imperious force of circumstance. At last a consensus of the
social, political and commercial forces of the country led to a
statutory enactment by the national government which ratified
the combination of railroad interests just described. I refer to
the act of Congress approved June 15, 1866.
In view of the foregoing the historic fact stands out indisput-
ably that the firmly united and deftly articulated American rail-
road system had its origin in acknowledged public needs and in a
coercive public sentiment which remains unchanged to this day.
It is a form of combination which subserves the interests of every
person on this continent and it is prejudicial to the interests of
none.
In the course of time, this extension of the facilities of joint
railroad traffic placed the companies under a stress of competition
and begat administrative difficulties which for years threatened
the financial existence of every railroad corporation in the coun-
try. It also demoralized commerce. This was the inevitable
outcome of a great organic unity lacking the means of administra-
tive control. The situation, for years, was described by the late
Albert Fink as follows :
"The stockholders, in the first place, surrender their control
to a board of directors, the board of directors surrender it to the
president, the president surrenders it to a general manager, who
ir turn surrenders it to the general freight agents of his own
and a great number of other roads, who again surrender it to a
large number of soliciting agents, and finally these soliciting
agents surrender it to the shippers. The shippers practically
make their own rates. The result is confusion and demoralization
o f traffic, and no end to unjust discriminations between shippers
and localities."
In a word, the railroad system of the country fell into dis-
order. In the fierce struggle for traffic which ensued the execu-
tive officers of the railroads lost the power of maintaining rates,
and the transportation and commercial interests of the country
fell into confusion. Outrageous and absurd discriminations pre-
vailed. The situation became intolerable.
The president? of certain of the great trunk roads hit upon
the expedient of so extending their lines as to gain control over
the commerce of defined areas and in this way to maintain just
'tes and to preserve order. But niW P.normmip railroad system?
162
under single corporate management had been established it \ras
found that the control over rates was farther from realization
than before. The tendency of rates was constantly downward
and discriminations continued. At last the companies which
had indulged in the policy of expansion, to their astonishment
discovered that they had created new elements of competition
more powerful and destructive than those which they had hoped
to eliminate. Thus they were brought to realize the fact that
elements other than the way of carriage control both rates and
the course of traffic. At last it was realized by every intelligent
student of the transportation problem that the whole trouble
arose from a lack of administrative control ; for no great organiza-
tion can long exist without some sort of central directory. The
world's history is replete with illustrations of this fact. The plan
of railroad federations as a means of self-government and of pro-
tecting the public interests against the evils of an uncontrolled
and demoralized transportation system was therefore devised.
The late Albert Fink, a man of surpassing genius as an organizer
and administrator of complex and involved commercial interests,
was the author of this system.
The plan adopted had for its object the maintenance of order
and the maintenance of rates. Boards of trade, chambers of com-
merce and representatives of trade interests of the country
heartily concurred in this conclusion ; for the demoralization of
rates before alluded to had set the commerce of the country in
confusion. "^ ? ff >'
The railroad companies clearly perceived that in order to pre-
vent unjust discriminations, the most important duty devolving
upon them was to agree as to the relative rates which should pre-
vail between competing points, as for example the relative rates
which should prevail between Chicago and Boston, Chicago and
New York, Chicago and Philadelphia, and Chicago and Balti-
more. This was necessary in order to compose the competitive
struggle between those four seaboard cities. The merchants of
the cities mentioned also perceived the absolute necessity for
agreement between the companies as to relative rates. In the
absence of such agreements their trade wjth the great West had
fallen into confusion; financial ruin confronted the merchants
as well as the railroad companies. This in brief is the historic
origin of agreements both as to absolute rates and as to the rela-
tive rates which shall prevail as between competing sections,
cities, markets, and centers of production and distribution.
For years it was difficult, and finally it became impossible to
maintain such rate agreements, none of which were enforceable at
163
law. It became evident, therefore, that the companies must de-
vise some remedial measure, suggested by the incidents of their
own interaction, and by the commercial needs of the country with
respect to transportation. Evidently such rule must also be sus-
tained by that enlightened sense of self-interest which Blackstone
has declared to be the substantial foundation of beneficent law.
The expedient finally adopted was that of agreements as to the
share of the competitive traffic which should be awarded to each
competitor; as the first object in all competitive traffic struggles
is to secure the largest possible amount of traffic, and the second
to secure on it the best possible paying rates.
I think I mistake not in saying that in the minds of thought-
ful men engaged in transportation, in commerce, in manufactures
and in the great productive industries of the country the expedi-
ent thus adopted constituted the logical and beneficent adjust-
ment of struggles which had run to demoralization and ruin. 1
think I am also justified in saying that the majority of the reflect-
ing men who have been appointed to positions as state and na-
tional railroad commissioners are in favor of the maintenance of
rates through agreements as to the division of competitive traffic.
From the foregoing the following conclusions appear to be
justified :
First. While the railroads cannot, for the reason before stated,
be free to all carriers, they can and rmist be free and impartial to
all shippers.
Second. Experience, the only safe guide, has proved beyond
all doubt that unrestrained competition in railroad transportation
invariably runs to unjust discrimination and to disorder.
Third. Restraints of competition through combination in
railroad transportation have been beneficial toward the public
interests.
Fourth. Combination in railroad transportation under the
limitations and restraints upon it which prevail in this country,
has been beneficial toward the public interests.
When Mr. ISTimmo concluded, the conference adjourned until
10:30 o'clock, September 14.
The Committee on Organization and Program held a pro-
tracted session before the conference assembled for the second
day's work. The business before the committee was the question
of the appointment of a committee on resolutions. This action
was opposed in committee, but it was decided, after long debate,
in the affirmative.
164
MORNING SESSION, SEPTEMBER 14.
The conference was called to order at 11 o'clock by Chair-
man Howe. The Committee on Organization and Program pre-
sented a report recommending the appointment of a committee
on resolutions, said committee to be composed of fifteen dele-
gates to be appointed by the chair, the committee to have author-
ity to pass upon all resolutions presented, which should be sent
directly to the committee without being presented to the con-
ference.
Claggett of Idaho moved the adoption of the report, and was
seconded by a number of delegates simultaneously.
An amendment was offered by McQuirk of Iowa that the
committee be enlarged to include one from each state and
national organization, and the members be selected by the state
delegations.
Weil of Pennsylvania opposed the passage of any resolutions
on the ground that the conference was for educational purposes
and under the call could not adopt a policy.
Jones of Indiana and Rosewater of Nebraska led the debate
in favor of a committee on resolutions. The opposition was led
by Prince of Texas and Atkinson of West Virginia, who moved
to lay the report on the table. A substitute was offered that all
resolutions be referred to the Committee on Organization and
Program.
The debate was exceedingly warm, but no party or sectional
lines were drawn. A dozen delegates clamored for recognition.
Cockran of New York secured the floor and moved the previous
question, that of adopting the committee report. In doing so
the speaker pointed out that the debate was doubtless the result
of a misconception of the duties of the committee. He was
desirous of careful action by which alone a harmonious confer-
ence could be completed, but was satisfied with the resolution,
adding, however:
"I presume, with the consent of the mover, that on the last
day of the conference motions shall be in order to discharge
165
that committee from the consideration of any resolution which
may have been committed to it and on which it has not been able
to report."
The amendatory clause was accepted. The substitute send-
ing the resolutions to the general committee was lost.
The report was then adopted with the amendments offered
by Messrs. McQuirk and Cockran.
The chairman introduced the morning speakers in turn as
named by Program Committee.
LAWSON PUKDY.
I New York Reform Club.
Lawson Purdy, of the New York Tariff Eeform League, was
then presented to the conference, and said:
The Commercial Year Book for 1899 defines the popular
meaning of the word "trust" as "any consolidation, combine,
pool, or agreement of two or more naturally competing concerns,
which establishes a partial or complete monopoly, in certain
territory, with power to fix prices or rates in any industry."
This definition may seem to include some concerns which
it is not my purpose to discuss, and in order that they may be
excluded. I wish to call attention to the words of the definition,
"naturally competing concerns." I believe it is now generally
conceded that there are certain kinds of business in which com-
petition is not natural, and consequently any attempt to intro-
duce competition in such businesses is certain to fail. More-
over, so long as competition continues, the public suffers by
reason of the unnecessary expense of conducting the business.
A broad distinction between naturally competitive concerns, and
those which are not naturally competitive, lies in this, that any
business which can be prosecuted by an individual or corporation
without assistance from the state, and is, therefore, open to all.
is naturally competitive business, and any business which can
only be prosecuted if some state power is delegated to the indi-
vidual or corporation which desires to engage in it, is naturally
noncompetitive.
Examples of naturally noncompetitive businesses will occur to
everyone. To supply a city with gas requires an exercise of gov-
ernmental power, and it is at once seen that competition is ex-
tremely wasteful because of the necessity of the duplication of
166
the plant. In the same way it is impracticable to have true com-
petition in the carriage of passengers through the streets of a
city on a street railway, and no one can build such a railway with-
out the delegation of state power.
Everyone is familiar with the attempt to foster and maintain
competition in the supplying of gas and electricity and in the
carriage of passengers and goods on railways, and the result has
been the merging of competing lines, or some combination be-
tween them to maintain prices and divide the business.
The difference of opinion which now exists as to the manner
in which natural monopolies such as these should be treated, is
a difference of degree rather than a difference of kind. The
opinion is practically unanimous that there must be some gov-
ernmental regulations and supervision, and more and more are
coming to the conclusion that governmental regulation should
extend to the point of absolute ownership and operation.
It is the combination of concerns which are naturally, com-
petitive, and such combination as establishes a partial or com-
plete monopoly, which I wish to discuss.
Mr. Charles F. Beach, Jr., in an address on "The Trust an
Economic Evolution," delivered before the Union League Club,
Chicago, in 1894, says : "Nothing is so certain as that the profit
of any sort of business can never be raised by increase of price
to the consumer, beyond a normal amount for any length of time,
without tempting the cupidity of men in other lines, and creating
at once an outside competition. No combination of manufac-
.turers, not protected by government patents, by an iniquitous
tariff, or by unholy alliances with railways, can, by never so
stringent a compact between themselves, prevent any other set
of men from going into their business, whenever the condition
of the trade promises more than an average profit." The impor-
tant part of this statement by Mr. Beach is the exception, for the
combinations not protected by an iniquitous tariff are few in
number. Of some four hundred trusts enumerated in the Com-
mercial Year Book, more than two-thirds are directy affected
by the tariff, and there are very few which do not get some tariff
assistance, directly or indirectly.
It is loudly asserted by some that England is a free trade
country and that there are as many trusts in England as in the
United States. In the first place, England has not pushed the
doctrine of free trade to its logical conclusion by any means, and
still suffers from tax restrictions upon production and trade. In
the second place, those who assert that England is plastered with
trusts have so far failed to name any which compare with hun-
dreds in the United States in their power to raise prices and prac-
tice extortion upon the public.
In an article in the Forum of May, 1899, on "Trusts in
Europe," Wilhelm Berdrow says that trusts have extended rap-
idly in Germany and France, but that "as far as England is con-
cerned it must be admitted that, notwithstanding her great in-
dustrial activity and a competitive warfare not less pronounced
than that of other states, the trust system has as yet found but
tardy acceptance in that country. This is doubtless due in some
degree to the thorough application of the principles of free trade,
for it is well known that the largest trusts are powerless unless
their interests are secured by a protective tariff excluding from
the home market the products of foreign countries."
It is so obvious to the most ordinary intelligence that it is
more difficult to make a combination of the producers in many
countries than in one, that it hardly needs proof.
In 1889 the Hon. John Sherman said: "The primary object
of a protective tariff is to divide the fullest competition by indi-
viduals and corporations in domestic production. If such indi-
viduals or corporations combine to advance the price of the
domestic product and to prevent the free result of open and fair
competition, I would without a moment's hesitation reduce the
duties of foreign goods competing with them, in order to break
clown the combination. Whenever this free competition is
evaded or avoided by combination of individuals or corporations,
the duty should be reduced and foreign competition promptly
invited."
I do not contend that the only cause for combination which
restrains trade is the tariff, but the tariff does foster and assist
in maintaining such combinations. The tariff is under the con-
trol of the federal government; the abolition of duties upon
articles produced by trusts is easy, immediate, and effective.
When this special privilege is withdrawn we will then be in a
better position to do what further may be necessary.
Many manufacturers are selling goods for export at prices
much lower than at home, and a condition which permits and
induces manufacturers to do this is indefensible-.
For many years manufactured goods have been sold cheaper
for export than at home. In 1890 the Australasian and South
American, a paper devoted to the export trade, made the fol-
lowing admission: "By comparing the prices at which goods
are sold to the export merchant and the catalogue rates which
the ordinary purchaser pays, it is possible to show a very striking
discrepancy in favor of the exporter." The paper claimed that
PAUL MORTON
SAMUEL ADAMS ROBINSON
JAMES H. RAYMOND
BENJAMIN R. TUCKER
LAURENCE GRONLUND
H. T. NEWCOMB
these lower prices were for the wholesale trade alone, whereupon
the New York World published a letter from the Engineering
and Mining Journal) a paper which also paid special attention to
the export trade. An extract from the letter, dated August 26,
1890, is as follows : "Your statement that the foreigner can buy
at retail in this market cheaper than the domestic consumer is
as indisputable as the daily revolution of the earth. We can
enumerate any number of instances where houses have written
us, Trices furnished are for export only, and it would be most
injurious to us if these figures were circulated in the home
market/ "
In a speech delivered a few months ago before the Foundry-
men's Association of Philadelphia, Mr. A. B. Farquhar, a large
manufacturer of agricultural tools, testified to the conditions
which exist to-day. He says: "We must see at a glance that
there are a great many products of manufacturing industries in
this country which, whatever may have been their need of pro-
tection heretofore, most certainly do not need it to-day. In the
ten months ending with April last, the country exported $276,-
000,000 worth of manufactures, nearly 18 per cent more than
the corresponding ten months of 1897 and 1898. This amount
considerably exceeding that of our import of manufactured goods
for the same period, covering a wide range of products, conclu-
sively proves that we have nothing to fear from foreign manu-
factures. Yet a duty is still demanded on these very products,
and why? Not for revenue, because the government gets no rev-
enue from such duties, but to enable the combinations that mo-
nopolize their production to exact higher prices in this country
than they can obtain abroad, and for no other reason. The Sugar
Trust, with its rebates to encourage exportation and its high pro-
tective duty to keep up the price of its products within the
country, thus favored by the law in two directions; the steel rail
combine, which sends its product to all quarters of the globe (one
mill recently shipping 70,000 tons of rails for the North China
Eailway), and put them down at the very doors of the British
shops, while at the same time a Boston Company finds it cheaper
to get rails from England and pay the duty than to buy at the
terms allowed at home. . . . These and many other asso-
ciations, all profiting handsomely by legislative favoritism, tempt
us to appeal to the law not to lay its hand upon them in any way
directly, but only to lift from us the hand with which it holds
us down in order to give the monopolies advantage."
I believe we have passed the point where any objection can
be raised to the abolition of protective duties on the ground that
169
they sustain or raise wages. Years ago we had the testimony of
Mr. Evarts and Mr. Elaine that American labor was the cheapest
in the world, and received the smallest share of its own product.
We have grown great in manufacturing because we have the most
skilled labor and the best material with which to work. The
truth is that the tariff, by shutting out foreign competition, en-
ables the trusts to shut down domestic factories, employ less labor,
and thereby reduce wages. Mills make money by shutting down
instead of by the production of goods.
Of course consumers suffer. That is why this conference was
called. Professor Maas, formerly chemical expert of the Glucose
Sugar Refining Company, testified before the Industrial Com-
mission that the price of Glucose was doubled as soon as the trust
was formed and the glucose plant worth $6,000,000 was capital-
ized at forty.
The National Glass Budget on July 22d said editorially:
"Manufacturers have, through the strength of their combination,
succeeded in raising and maintaining prices to an extent that
would have been considered dangerous and ruinous to the indus-
try if it had resulted directly from an advance of wages enforced
by the workers' organization, but having been the result of a
closer union among manufacturers, the thing is very different,
and the increased influx of foreign glass, stimulated by high
prices of domestic, with which conference committee men have
for decades threatened the workers, has, strangely, not material-
ized, but in spite of all that the workers are economically in a
worse position to enforce an advance than they have been for
many years."
The Independent, of Forest City, Iowa, reports that, "The
Indiana Wire Fence Company of Crawfordsville has been ab-
sorbed by the American Steel and Wire Company, and its build-
ings now stand deserted. The fence factory was Crawfordsville's
chief industry. The product became known all over the country,
and the demand increased so that the factory was enlarged almost
weekly. There were regularly employed about seventy-five men,
sometimes more than that number, nearly all of whom have fam-
ilies. The pay-rolls for labor alone amounted to nearly $52,000
a year, about every dollar of which was spent in Crawfordsville."
The company did not wish to sell out to the trust, but was threat-
ened that the trust would cut prices so low that they would be
forced out of business, and the sale was made on January 23,
1899. The account continues: "Then the blow fell upon Craw-
fordsville. The men were thrown out of employment. Most
of them had gone into building and loan associations, had bor-
170
rowed money, and were building themselves homes. They could
not meet their payments. Their homes were taken away from
them and they left the city. There was no work for them here.
Clerks and salesmen lost their positions and every branch of busi-
ness felt this blow."
It is sometimes said : "Law made trusts, and law can unmake
them." I believe this is absolutely true, but I think it commonly
conveys a wrong impression. Law has made trusts by conferring
special privileges, and those privileges can be abolished. The
chief privilege, and the one most easily reached, is the tariff.
Let no one imagine that corporations, which are creatures of law.
are the only trusts, for secret agreements between individuals
have been effective to control supply and raise prices without a
single corporation being involved.
The doctrine of laissez faire has been much abused, and it is
common to hear that it has failed. It has never yet been tried.
It does not mean, "Let things alone as they are," but "Clear the
road and let them alone." Clear away every special privilege.
Then, and not till then, can we know whether any restriction is
necessary. While special privileges remain, attempts to restrain
combination will be futile.
Trusts have little dread of statute law which the courts will
take years to interpret. They fear the repeal of privilege, and
"Bepeal" should be the battle cry of those who believe in equal
rights before the law.
BYEON W. HOLT.
New England Free Trade League.
Byron W. Holt spoke on "Tariff, the Mother of Trusts" :
When H. 0. Havemeyer last June startled the country with
the declaration before the Industrial Commission that "The
Mother of All Trusts is the Customs Tariff Bill," he came so near
to telling the truth that the protectionist organs of the country
immediately began calling him names and saying "sour grapes,"
and the organ of the Protective Tariff League is still devoting
a large portion of its space to the wicked, traitorous Havemeyer.
If he had said special privileges, of which the tariff is foremost,
are the mother of trusts, he would have been still nearer to the
truth.
That the tariff, by shielding our manufacturers from foreign
171
. competition, makes it easy for them to combine, to restrict pro-
duction, and to fix prices up to the tariff limit ought, to be evi-
dent to every intelligent man. It ought also to be evident to
all here that the greatest objection to trusts is due to their ability
to raise prices above a normal, profit-producing point. That the
trusts raise prices whenever possible to what they consider the
maximum profit point is certain. It is asserted by the trusts'
advocates that trusts can produce more cheaply than individual
firms, and that they have lowered prices. It may be, and prob-
ably is, true that trusts usually produce cheaper, but it is cer-
tainly not true that they have lowered prices.
Out of four hundred trusts which I have enumerated, I do
not believe that ten have lowered prices. In fact, I know of
none, except one or two, and these have depreciated the quality
of their product. In one such case the prices are held so high
that there are heavy imports of competing goods, although there
is a duty on them of nearly 100 per cent. In nine cases out of
ten trusts have raised prices often more than 50 per cent. That
much of the present rise in prices is due to general economic
conditions is probably true. On the other hand, it is just as
true that, had there been no tariff duties, the rise in prices would
neither have been so general nor so great. The trusts have taken
full advantage of the powers and special privileges derived from
their tariff partner the government. Congress should speedily
dissolve this iniquitous partnership.
If time permitted, I should be glad to take up the trusts in
detail and show how each is fostered and protected by the tariff.
Some of these are the various glass, furniture, leather, iron and
steel, -paper, coal, woolen goods, and silk goods trusts. The sugar
trust is still a tariff trust. The protection on refined sugar on
the cost of refining is, as Henry T. Oxnard, of the beet sugar
industry, says, fully 50 per cent, instead of only 3^ per cent,
as Mr. Havemeyer told the Industrial Commission. It is, how-
ever, probably true that Havemeyer would be glad to see free
trade in raw sugars and little or no duty on refined. He is
anxious not only to compel his present cane sugar refining com-
petitors to sell out to him at reasonable figures, but he wishes to
prevent the further growth of the beet sugar industry.
If there is one industry more than any other to which the pro-
tectionists have always "pointed with pride," it is the American
tin plate industry. "Just look at this great industry if you want
to see an object lesson in protection!" There are two points of
view that of the manufacturer and that of the consumer.
To the manufacturer everything looks lovely. He asked to
" 172
have 2 1-5 cents per pound duty added to the price of imported
tin plate until he could experiment to see if he could make it
at a profit at about double the price of foreign tin plate. Mc-
Kinley granted the request and the experiment began. It was
rendered successful largely through the aid of cheap iron and
steel from 1893 to 1898. So great was the reduction in the cost
of steel bars and sheets that the 1 1-5 cents per pound duty of
the Wilson bill, from 1894 to 1897, afforded about the same
protection as did the McKinley duty of 1891. The profits of
tin plate manufacturers were great, and by 1897 we were making
half of the plates consumed in this country. In 1897 the duty
was gratuitously raised to 1^ cents per pound.
By 1898 the great profits of the business had increased the
number of tin plate plants to about forty and the number of mills
to about 280. For the first time in our history internal compe-
tition had so lowered prices that but few plates were imported
except for re-export by large manufacturers who could avail
themselves of the benefits of drawback duties and our manu-
facturers were not reaping the full benefit of the duties levied
especially for their benefit. This situation worried the manu-
facturers. A part of the duty was being wasted and lost by their
foolish policy of competing with each other. They got together
and formed a compact, air-tight monopoly, which is a credit to
its mother the tariff. To make certain that they would be
able to put and hold prices up to the Dingley duty limit, they
clinched their trust, it is said, by making a five-year contract
with the producers of tin plate mills, which practically prevents
others from starting in business during this period. They also,
through their relations with the chief steel-bar producing com-
panies, obtained such control of this principal raw material that
even if an outsider could obtain a mill he would still be unable
to produce tin plates for lack of raw materials. Hence, while
there is some talk of outside competition, there is virtually no
competition at present, nor is there likely to be any while the
present duty is in force. The mills and plants of this trust arc
worth about $10,000,000. It is capitalized at $50,000,000
$20,000,000 preferred and $30,000,000 common stock. Big div-
idends will probably be paid on both kinds of stock, the total
market value of which is now about $30,000,000.
Thus, from the standpoint of the manufacturers, all is rosy,
and is likely to remain so if the wicked free traders will only let
the tariff alone.
The consumer, if he has his eyes wide open, sees a different
picture. He saw prices held up by duties until the tin plate in-
ns
fant was full grown and capable of giving him cheap tin plate,
and now he sees them held up by means of a monopoly trust sup-
ported by what he considers an iniquitous tariff. He figures up
what this duty has cost him. He finds that from the time the
McKinley act took effect in 1891 to the Wilson law of 1894, there
were 1,783,000,000 pounds of tin plate imported, on which he paid
a duty of 2 1-5 cents per pound amounting to $39,226,000. Dur-
ing this period our home manufacturers made 242,700,000
pounds, on which they virtually collected a duty of $5,339,400.
From 1894 to 1897, 1,123,000,000 pounds were imported, on
which a duty of $13,442,000 was paid. During this period the
American manufacturers produced 948,000,000 pounds, on which
about the full duty, or $11,376,000 was collected. The con-
sumer therefore finds that when this infant was five years old it
had cost him $69,383,400, or about $14,000,000 a year. During
1898 materials were cheap, and the infant cost only $5,000,000
or $6,000,000 to keep. The consumer hoped that by 1899 the
infant would be able and willing to support itself. The price at
which our manufacturers laid down tin plate in New York in
1898 ($2.75) was only 20 cents above the price of English tin
plates in bond. Surely this slight difference could be overcome
in 1899, and the consumer would no longer have to pay millions
of dollars each year to support this costly infant. But the infant
had been spoiled by too much protection and refused to give
up its luxurious living and to support itself. It returned to its
tariff nourishment, and is now eating it as greedily as ever. It
has put up the price of tin plate from $2.75 per box of 100 pounds,
in October, 1898, to $4.80, the price to-day an advance of $2.05
per box, or over 70 per cent. During the same time the price of
imported plates has risen from $2.50 to $3.60, or $1.10 per box
in bond, or from $4 to $5.10 out of bond a rise of only 27^ per
cent. The consumer estimates that the tariff food for this greedy
infant will cost him not less than $10,000,000 in 1899, and, at
the present rate, will exceed $12,000,000 in 1900. He is getting
out of patience with the youngster, and threatens to cut off his
supply of tariff food and to let him shift for himself.
The protectionist gravely tells us that the tin plate tax is
paid by the foreigner; that a combination of Welsh manufac-
turers kept up prices before the McKinley bill existed and ex-
torted from the American consumers all the tariffs would bear;
that they afterwards lowered their prices because they could not
live without the American market, and that if we were not now
producing our own tin plate the Welsh trust would be charging
us just as much as are our own manufacturers. The fact that
174
prices went up under the McKinley duty, down under the Wilson
duty, and up again under the Dingley duty, upsets the plausibil-
ity of this theory, which, at best, is based upon unsubstantiated
assertions.
It would be interesting to discuss the effect of the tariff upon
wages, through the trusts. The only way in which tariff duties
can benefit labor is through a double trust composed of both
manufacturers and their employes. This can occur only when
the employees are well organized and have iron-clad apprentice-
ship rules. It has occurred only temporarily, and in a few in-
dustries notably in that of window glass. But even in this in-
dustry it is doubtful if the employees as a whole got much of the
tariff benefits, for what they apparently gained in higher wages
was lost through lack of employment when the mills were closed
for the purpose of restricting production and raising prices.
It would also be interesting to discuss the relation between
the tariff and the lower prices at which foreigners can obtain our
trust products than are charged to American consumers. Nearly
all kinds of manufactured goods are sold at considerably reduced
prices when for export. An acquaintance of mine about to sail
for India has just purchased a bicycle for $25 which agents are
not allowed to sell for use in this country for less than $40. The
Eemington typewriter has for years been sold for export at 25
per cent below home market prices. The foreigner buys Diss-
ton's saws at a discount of 45 per cent, while our own dealers can
get a discount of only 25 per cent, or, if they are wholesalers, 25
per cent and 10 per cent an advance of 22 per cent on the prices
to foreigners. Our sewing machines cost South Americans much
less than North Americans. To fully appreciate the beneficent
effects of American tariffs and trusts you must be a foreigner.
"We are told, about once a week, by the New York Tribune
and other high tariff organs, that the tariff cannot be the mother
of trusts, because there are trusts in free trade England. It is
true that there are occasional trusts in England. But it is not
true that they have generally raised prices as have our own tariff-
protected trusts. The British consumer has the whole world for
his market, and, if some home trust attempts to raise prices, he
can supply his wants from abroad. England has comparatively
few trusts, and they are far less obnoxious than are the numerous
trusts in protected Germany and America.
The heart of the trust problem is in our tariff system of plun-
der. The quickest and most certain way of reaching the evils
of trusts is not by direct legislation against them, or by consti-
tutional amendment, but by the abolition of tariff duties. Let
175
Congress take up the Dockery amendment to the Dingley bill,
and, if there he any likelihood that it will pass, the lobbies at
Washington will he filled with trust directors and agents. Let
a constitutional amendment he proposed, and the trusts will take
only a passing interest in the discussion. They care but little
for legislation or constitutions, but they have a mortal fear of
free trade.
The tariff-trust situation may be illustrated in this way:
A great city is on the banks of a river, the water of which is
contaminated by the refuse of other cities further up the stream.
The city gets its entire supply of water from this river, not be- .
cause there is not an ample supply of pure water near at hand,
hut because the fathers of the city, in their wisdom, have passed
prohibitive laws which practically prevent the people from ob-
taining the pure water. The city is stricken with disease, and
the death rate has reached an alarming height. The city has
twice as many doctors, druggists, and undertakers as other cities
of similar size. The doctors have combined to obtain the highest
possible rates for their services. The druggists, undertakers,
coffin-makers, pill-makers, distilled water manufacturers, hearse-
drivers and flower-growers and wreath-makers all have compact
organizations, to make it as expensive as possible to die. All
of these "protected" industries are in politics to see that the city
council remain true to "home industries."
Money is spent freely to prevent the re-election of any coun-
cilman who is such a traitor to his own city as to advocate free
and pure water. The citizens becoming rebellious at the high
prices charged for doctors, medicine, coffins, hearses, and flowers,
a trust conference has been called to discuss what evils, if any,
grow out of these various death-dealing trusts, and what laws, if
any, are necessary to do away with these evils or with the trusts
themselves. Some assert that the present anti-trust laws are suf-
ficient if only there were courageous attorneys-general and hon-
est judges to enforce them. Others believe in more drastic anti-
trust legislation and in constitutional amendments. Some of
the learned doctors in the council attempt to quiet the alarm by
asserting that the trusts have really lowered instead of raised the
cost of dying, and that anyway people sometimes die in other
cities. Some plain, ordinary citizens who have not much stand-
ing or power in the community suggest that the way to get rid
of the trusts and to lower the death rate is to remove the restric-
tions and to give the people pure and cheap water. But little
attention is paid to the suggestions of these "theorists," though
some of the other delegates agree that pure water might be a
176
partial remedy. When the conference adjourned it declared that
trusts were both good and bad and recommended that a con-
stitutional amendment be submitted to the people which would
make it possible to annul the certificates and licenses of doctors
and druggists found guilty of belonging to bad trusts.
What should have been the principal question discussed at
that conference? Mere trust legislation or simply free water?
What is the vital question before this conference? More
complicated and dangerous restrictive legislation or simply free
trade?
JOHN F. SCANLAN.
Western Industrial League.
John F. Scanlan, of Illinois, spoke on "Trusts and Free
Trade," and said :
After the object-lesson of the last panic it requires, shall 1
call it courage, for any person to come before the American peo-
ple and ask them to adopt free trade as a system of political
economy for this nation. For seventy years the industries of this
country have been bombarded from within and without, with an
energy born of the most vicious and destructive spirit, and the
leading hosts in that bombardment have been and are enemies
of our welfare, aided by a few theoretical professors, free trade
dreamers and political free lances. Experience has pushed aside
the free trade shibboleths of "the tariff is a tax," "robber barons," -
"the duty is added to the cost/' "the farmer is robbed/' etc., all
these falsehoods have now been boiled down to a legitimate suc-
cessor, "The tariff is the mother of trusts."
To charge the existence of trusts to protective tariff is as un-
fair, if not as ridiculous, as to charge them to the Declaration of
Independence, which gave the opportunity, or to human life that
gives us the energy. Were it not for protective tariffs, we now
would be, not the leading farming, manufacturing and consuming
nation, with the best credit and most gold of any in the world,
on the contrary we would be down among the poor nations and
would not be troubled with the problem of how to chain down to
the best interest of the majority, this new development of Ameri-
can energy, the trusts.
The collecting of revenue is not the sole object of protection,
That is secondary. The most important is the creating centers
of industrial activity within our country; bringing the consumers
177
and producers close together; adding the labor profit of both
to the nation's wealth, which gives the people an opportunity
to develop their natural genius, sure to produce more freedom
and a better civilization ; increase wages, lower the price of com-
modities and increase the consuming powers of the home market.
Experience proves we cannot have these conditions under free
trade.
All down through the ages man has lived under liberty or in
slavery. There are two kinds of slavery, the slavery of purchase
and the slavery of conditions. Man is a slave of conditions when
he cannot use the forces of nature to help him to better results
and higher civilization. The latter state is brought about by the
absence of national industry or its destruction.
We have been victims of the latter system of slavery six times
since the Republic was established, resulting from the six free
trade panics, each of which was but a repetition of the losses and
suffering, in proportion to the inhabitants, which we experienced
in the recent panic of 1893 to 1897.
The dates of these panics are 1784, 1820, 1837, 1857, 1873,
1893. During those panics a great proportion of the wealth of
the nation passed away from us. During the intervening pro-
tection eras all the wealth and progress we made was achieved,
and if free trade will be adopted it will turn our home market
again over to the tender mercies of foreign trusts. If we must
have trusts let them be American with a well employed and a well
paid labor, a prosperous free citizen to bring the trusts within
the law. I wish to call your attention to the remarkable fact that
every one of those free trade panics brought the same character
of commercial losses and physical suffering to the people, namely :
1st. Low duties brought larger importations, loss of con-
fidence and suspension of industries.
2nd. Labor idle, moody and rebellious, reduction of wages,
worldngmen fed at public soup houses.
3rd. Great increase of commercial bankruptcy.
tth. Gold leaves the country in vast quantities.
5th. Government revenues less than expenditures.
6th. Consuming powers of the home market greatly reduced.
Increase in the price of foreign goods, decrease in the price of
home products, with a landslide progress of all the people towards
the slavery of conditions, which always brought forth an agitation
the American system of tariff; when enacted it invariably
topped the panic and as regularly brought about the reverse of
the above conditions, namely:
178
1st. American industry fully and profitably employed and
increased.
2nd. Labor employed, good wage, progressive, saving money.
3rd. Great stability in commercial circles, decrease in bank-
ruptcy.
4th. Government revenues more than expenditures.
5th. Gold flows into the country in vast quantities.
6th. Consuming powers of the people vastly increased, with
great expansion of liberty, by reason of the wealth created through
diversified industry, bringing prosperity and happy Saturday
nights to the fireside of all the people.
Permit me to mention a few incidents brought about by those
panics to illustrate the condition of a people and government
suffering from the slavery of conditions.
During the panic of 1784 the woes of the people were so de-
plorable and our young government was in such danger that
Washington, writing to Col. Humphrey on the calamity of that
day, cried out : "For God's sake tell me what is the cause of these
commotions? * * * It is but the other day that we were
shedding our blood to obtain the constitution under which we
now live a constitution of our own choice and making and
now we are unsheathing the sword to overturn it." Of the panic
of 1820 Benton wrote it was "a period of gloom and agony."
During the panic of 1837 labor was a lost art, corn was burned
for fuel, the people were fed at public soup houses, the states could
not pay interest on the public debt, and this now mighty nation
could not then borrow $10,000,000 at any interest at home or
abroad. During the panic of 1857 the people were idle, wages
dropped down to the European standard, government revenues
fell short $90,000,000, and the government paid as high as 36
per cent for the use of money to keep the machinery in motion.
You can place your ears to the ground and yet hear the dying
wail of the groans and agony of the people's suffering from the
panic of 1893. During each of those panics, as in the last one,
it was utterly impossible to keep gold within the control of the
nation. Between the dates of those free trade periods in the his-
tory of our country, protection controlled the destinies of our in-
dustries, during which years all was joy, ease and contentment;
it may be said, in the Scripture phrase, of those protection
periods, "The hills and the valleys sang with joy." During free
trade we were the slaves of conditions, during protection we were
the freemen of liberty.
I ask as a pertinent question, if we are to fight the evils of
trusts, whatever they may be, which of the above conditions
179
shall govern our welfare while the fight is going on? That of the
slavery of conditions, or that of well paid freemen, working be-
neath the canopy of universal national prosperity?
The free traders are now attacking, with all their forces, the
tin industry, that being the last industry, which in a most won-
derful manner, through protection, was lifted bodily over into our
country from England. The true inwardness of those attacks may
be gleaned from the statement of Mr. Holt, of the New England
Free Trade League. He said "that the tariff, by shielding our
manufacturers from foreign competition makes it easy for them to
combine." The fact that the foreigners have lost their hold on
our market is where the shoe pinches, and explains why free trad-
ers have so suddenly become such violent opponents of trusts.
Mr. Holt speaks correctly when he says that the protectionists
point with pride to the victory of the American tin plate indus-
try. Never in the history of nations was there such a peaceful
industrial victory achieved as that of the transfer of the tin in-
dustry from England to the United States in the last nine years,
and upon that victory and the reduction of the price of tin to the
consumer the protectionists might, if needs be, rest all their
laurels. The assertions of those modern Don Quixote tariff fight- '
ers that the tariff is the mother of trusts becomes a doubtful state-
ment in the presence of the fact that the Standard Oil and sew-
ing machine combinations, the two most powerful trusts in the
country, have no interest in the tariff, and those industries are not
in existence by reason of the influence of the tariff.
The perpetual cry of the free traders, and repeated in all its
moods and tenses on this platform by Mr. Holt, that the tariff
is added to price paid by the consumer, that the tariff is a tax,
that the tariff does not raise wages, and that the tariff is a mother
of trusts, is answered fully by the results of protection upon the
tin industry, now safely housed under the American flag.
In 1873, when we had no tin factories in this country, the
American people paid for coke grade tin $12 per box, charcoal
rade tin $14.75. About 1875, some Welshmen who understood
tin business, under the stimulus of a tariff of 1.1 cents per
pound, started small works at Wellsville, Ohio, Leachburgh and
>emler, Pennsylvania. When those factories were ready to put
ir product on the market the British tin trust at once dropped
their prices down to $5.18 and $6.25 per box, and, of course, wiped
, in short order, the capital of the much derided infant tin
istnes of the patriotic Welshmen, after which prices again
nt up, and from that period until the much abused McKinley
snt into force, we did not manufacture a pound of tin in
180
this country, during which time we had to pay such prices for tin
as the foreigners deemed it wise to charge.
During that period we paid to foreigners from twenty to thirty
millions of dollars per year for our tin, but the McKinley tariff put
a protective duty on foreign tin and by reason of that duty
American capital invested in tin mills and commenced producing
until we have grown to such dimensions that American factories
now supply the entire consumption of the country. Let us com-
pare the results :
1873, no American factories, price of foreign tin per box,
$12 and $14.75.
1892, one half consumption supplied by home factories, price
$5.35.
1898, entire consumption supplied by home factories, price
<U9 lyti
p/c. ( O.
Amount of money paid by American people to foreign fac-
tories per year, when we had no tin industry, twenty to thirty
million dollars.
Amount paid now that the tin industry, through protection,
is domesticated, practically none.
In 1897 there were 200 tin mills in this country, with a capital
of $33,836,782, employing 40,000 workmen and paying wages
from 75 cents (boys) to $8.00 per day. Eighty per cent of the
capital employed in the tin industry go into wages and we pay
from two to three times higher wages than are paid in England
for the same class of workmen. Were it not for protection, not a
dollar of those wages would be paid to American workmen, not a
dollar of American capital would be employed in the tin in-
dustry and the American consumer would in all probability be
yet paying the old high prices for tin. The price of tin is now
$4.65. I am informed it can be accounted for by the wave of pros-
perity that has increased the consuming powers of the home mar-
ket, increased the price of raw material, and increase of wages
and employment over that of the late panic years. Even wheat
has risen fifty per cent in price since prosperity has again shed its
happy rays on our country, and our free trade friends cannot
charge the increased price of wheat to a trust.
The fact that it is the foreign manufacturers who are always
spending their money and sending agents into our country,
agitating for the repeal of the tariff, should convince all thinking
citizens who it is that pays the duty. If the American consumer
pays it, why should the foreigner spend his money to relieve us?
"Beware of the Greeks, even when they come with presents."
The history of the transfer of the tin industry to this country
181
is but a repetition of the results of protection in its influences
in the transfer of nearly all our industries from Europe, and there
is not a single article among the thousands that go to supply the
needs of the American people which cannot now be purchased
vastly cheaper than they could when we depended upon Europe
for our supply. Even sugar, which is yet a revenue product, can
be purchased for a third of what it could in the fifties. These
facts should convince the people of this country that protection
is the guardian of our prosperity and free trade is the poisoned
dagger that foreign trusts continually aim at the vitals of our
industries, for which reason you find the free trade agents, who
spoke to you from this platform, ignoring all recommendations of
regulation through American law and crying out: "The heart
of the trust problem is in our tariff system of plunder. The
quickest and most certain way of reaching the evils of trusts is not
by direct legislation against them or by constitutional amend-
ment, but by the abolition of the tariff duties." Pray what ef-
fect will the abolition of the tariff duties have on the sewing ma-
chine, the Standard Oil and other trusts with which the tariff
has no relation? Past experience clearly points out that those
people who now ask us to abolish our tariffs are not interested in
crushing trusts, but they are anxious to destroy our industries and
our prosperity in the interest of foreign manufacturers.
But, say our free trade friends, if we can sell cheaper than the
foreigner why continue the tariffs? For the very same reason
that we do not destroy our government in times of peace, or re-
move the side walls of our houses in summer time. We know
war and winter are liable to come, so we retain our government
and the side walls 'of our houses. Experience has taught us that
the war of industry is liable to come, hence we continue pro-
tection.
The seeping of a few gallons of water through a nmskrat hole
in the Mississippi levee is more dangerous to the welfare of the
people living in the lowland than the millions of tons of water
that flow by. Open a muskrat hole in the tariff, as those agents of
foreign factors and would-be haters of trusts ask us to do, and their
employers, the foreign manufacturers, would swoop down on that
opening, and Johnstown flood like, they would undermine the
foundations of our industries and sweep us into another panic.
A 10 percent reduction of our tariffs brought on the panics of
*37, 1857, 1873, and a promise of a reduction brought on the
panic of 1893.
A few illustrations, out of the hundreds, will show what we
182
have lost through free trade and what we have gained through
protection.
In 1850 we numbered twenty-three millions of people. We had
just got control of the Pacific coast. Our flag kissed two ocean?
and welcomed all lovers of liberty to our shores. California gave
us $1,100,000,000 in gold just for picking it up. The Crimean
war and European conditions gave us a plethoric market for our
bounteous crops. Peace and health prevailed. Providence poured
blessings beyond number upon us during that decade, but the
madness of political insanity controlled our lawmakers, hence we
reaped thistles instead of fruit.
The Walker tariff became a law in 1846 and struck such a blow
at our industries that it paralyzed all our energy. The 1856 tariff
was the last straw that turned the gifts of Providence and all our
wonderful wealth making conditions into dead sea fruit. What
were all these opportunities given to us for? History has recorded
the hell of war we passed through soon after that period. Was it
to aid us in preserving this Republic? Was it to strengthen our
souls for the atonement for the crime of slavery? Whatever it was,
man's unwisdom put them aside. At the close of that providen-
tial decade this nation was poor indeed. Free trade had destroyed
our industries and sent all the California gold to Europe to pay
for foreign goods. If we were wise, protected and developed our
industries during that decade, that $1,100,000,000 gold would
have remained with us and made a financial basis of $36.66 per
capita, which with cur increased industries would long ere this
have made us the commercial clearing-house of the world. OUT
gold went to Europe and she now occupies that position. Hence,
I assert, the crime of the centuries was perpetrated against this
Eepublic in that decade by the sectional madness of our legisla-
tors who threw a bombshell of unwise legislation in the midst
of our industries, dissipating the rich conditions that poured on
our country at that time, conditions that may not again happen
in ages.
At the close of President Buchanan's administration we num-
bered over 30,000,000 people, yet so poor were we that the govern-
ment then paid 36 per cent for the use of money, and after twelve
years of peace and agricultural plenty, there was a deficit in the
revenues of $90,580,873. That was during free trade, when the
highest expenditures of the government were only $45,000,000 a
year. From 1861 to 1865 was a period of destructive war, which
removed for the time being ten millions of taxpayers. During
that war our expenditures were $2,000,000 per day. But then it
was also an era of protection and industrial activity, during which
183
four and a half years, the twenty millions, who remained faithful
to the Union, paid into the United States Treasury $4,753,811,-
777.74. I wish to specially direct your attention to those two
events, illustrating the helplessness of a people living under the
slavery of conditions arising from free trade, and the wealth-
creating power and freedom of that same people living under
the conditions which arise from protection. I wish to emphasize
the fact that every dollar of that sum was paid by the people of
this country. Some persons are under the impression that Europe
loaned us some of that money. Not one dollar until the Union
proved its stability.
Mr. Fessenden, Secretary of the Treasury, commenting on this
subject, in his message, 1864, said:
"This nation has been able thus far to conduct a domestic
war of unparalleled magnitude and cost without appealing for
aid to any foreign people. It has chosen to demonstrate its power
to put down an insurrection by its own strength, and furnish no
pretense for doubt of its entire abilitv to do so, either to domestic
or foreign foes. The people of the United States have felt a just
pride in this position before the world. * * * After nearly
four years of a most expensive war, the means to continue it seem
apparently undiminished, while the determination to prosecute
it with vigor to the end is unabated."
When this nation entered into that war we had no army, no
ships, no money, no credit, comparatively speaking no factories.
During the war we equipped 2.778.304 soldiers, built 700 ships of
war, expended $6.000.000.000 in suppressing the rebellion. When
we got through we were richer than when we commenced. Pro-
tective tariff was the ally that aided the brain and brawn of this
nation to produce such marvelous results.
Thus it will be seen that protection is a law which creates an
economic condition that emnlovs land and labor in active pro-
duction, establishing in our country centers of industrial activity
which brinjr forth wealth, srood money, prosperity, national pow-
er, individual happiness, education and hiarher civilization. Such
results rlo not create injurious trusts, but free traders coollv come
before us and ask n= to abolish all these because a few men among
our people would imitate the selfish class of Europe by establish-
ing trusts in onr midst. To take this advice would be as sensible
as stopping the circulating of the blood for the purpose of curing
a boil on one's neck.
Tinkering with the economic conditions of a great industrial
nation is a serious matter. The ups and downs of our industrial
184
history emphasize most forcibly what Sir Hely TTutchinson wrote
on that subject one hundred years ago:
"Compare this period with the former and you will prove this
melancholy truth, that a country will sooner recover from the
miseries and devastations occasioned bv war, invasions, rebellion,
massacre, than from laws restraining the commerce, fettering the
indnt.rv. and above all breaking the spirit of the people."
Tn 1892 we were in a very healthy industrial and monetary
condition. A five line free trade plank in the platform of one of
our political parties brought on the panic of 1893 that cost the
nation more than it cost to put down the rebellion.
From 1862 to 1892, with the exception of six years, was a
period of protection, during which period we brought into ex-
istence more original wealth than the entire wealth of England,
and enough of wealth to purchase all the lands, houses, ships and
personal property of Germany. The bringing into existence
that vast sum in one generation and controlled by our people, who
are human like the rest of mankind, developed the spirit of an
Alexander, who sighed for more worlds to conquer. To be rich
beyond precedent is a craze, species of insanity. Insanity is not
held responsible by God or man, but it is subject to law. Give
the people time and if trusts prove to be against the interest of the
majority, the law will harness them to the people's interest, not
by killing the goose that laid the golden eggs, but by regulating
a.nd correcting the evil. In the last generation we had as for-
midable and healthy a trust in this country as ever filched the
sweat of the poor man to enrich the rich. It was a trust that
made a door mat of our Constitution, it controlled the political
independence of a majority of the people of this country, it used
the stars and stripes as a defender of the slave barracoon. But
when the conscience of the American people was awakened the
slave trust went to the grave of the dead. It cost money and
life. Yes, and that is the best evidence that the American people
will not permit any combination to interfere with the mission of
the Republic.
To the men who would create trusts T would say you are es-
tablishing the most gigantic schools of socialism the world has
ever known. If a few men can run all the industries why cannot
the government run them more eauitably in the interest of the
people? That is the lesson the trusts will teach the people, the
all powerful people, who through the ballot box are peacefully
revolutionizing governments every year. The people of the south
tried the experiment of free trade, and as a result for a generation
they have been bleeding at every pore. Previous to the Revolu-
185
tion they understood the principle of diversified industries, and
then that part of our country controlled the centers of industrial
activity. After the Revolution cotton became king, and they
deemed it necessary to marry free trade to slavery, while New
England and the Middle States, recognizing the coming events,
laid the foundation for diversified industry in their midst, with
the result that in fifty years thereafter the center of industrial
activity was transferred to the north, and the people of the south
had to come north to find a market for their raw produce and to
"borrow money, even though, as Benton says, the south in the
meantime had exported raw products to the amount of $800,000,-
000, a sum equal to the product of the Mexican mines since the
days of Cortez.
Six years ago we entered into one of those free trade eras and
expatriated our industries, our people were idle, banks and busi-
ness houses toppled over like rows of bricks, commercial credit
was wiped out as if the safeguards of civilization had been abol-
ished. No talk of trust then except the trust of poverty, and
protection could say, "Point not thy gory fingers at me." You
all remember what a terrible time we had trying to keep $100,-
000,000 gold reserve in the Treasury. Officials and business men
sat up nights and generally became nervous over that fund, but
it would not stay. All the power and influence of this govern-
ment and people with $70,000,000,000 of wealth could not keep
that small sum in the Treasury. $250,000,000 gold was borrowed
and imported, but it would return to the source of confidence,
centers of industrial activity, where we had expatriated our in-
dustries. The people changed the government. An American
tariff was passed. Presto! the smokestacks signaled the work-
men to their benches, and gold, as if some living thing, heard the
click of the anvil and came over here in such quantities that we
have to cry, "Hold, enough!" and a late report shows that we
have in this country $1,000,000,000 in gold, a greater quantity
than any other nation. With such an object lesson before us
would it not be wise to look before we take the advice of free trade
doctrinaires, because a few unpatriotic and selfish men have crept
into the temple and seek to grasp the people's interests through
the agencies of trusts? No! let us rather follow the example of
whip them out who would make our temple dens of
thieves. Do not unwisely pull the temnles down, but let our
:puntains of wealth continue to flow, as they now are flowing,
nee we have tanned prosperity through the magic of protection,
rl in all our political thought let us consider the source and ob-
rvl. country, home. Then, T am satisfied, we will not kill
186
protection for the sake of curing a wart on its face, and under the
same principle of political economy, we will go on enriching the
people and nation until we will have imbibed the spirit of the
higher law and learn THAT WEALTH is A GUAEDIANSHIP, EDUCA-
TION A MIXISTEY, AND THE CAPTAINS OF INDUSTEY FATHEES TO
GUIDE THE MASSES TO HIGHEE CONDITIONS.
THOMAS UPDEGRAFF.
Ex-Member Congress, Iowa.
Thomas Updegraff, of Iowa, said :
It is said that nothing on earth is so utterly useless that it
will not be thought of some use once in seven years. It is just
seven years since the atmosphere of the whole United States was
agitated with the free trade shibboleths we have just heard from
this platform. Deceptive as they have proved in the past by
actual experience, it was to be hoped they would not be resur-
rected here.
I am not going into a speech here in favor of protection. It
is too late. I shall speak only of protection as it affects trusts.
If the experience of the American people during the last seven
years has not taught them better than the doctrines that have
just been read from this stand, then God help them! The ob-
ject lesson has not been forgotten, and whoever now raises his
voice before an American audience for free trade labors in vain.
The head of the trust that is taking more money out of the
pockets of the people than any other has been introduced as a
witness here, and he testifies on his "honor and conscience" that
the tariff is the mother. of trusts. I thought the witness was
smarting a little with resentment because the protectionists had
not given him enough in their last tariff bill. If the tariff were,
in truth, the mother of his trust it is not likely he would have
rushed voluntarily into so savage a denunciation of her char-
acter.
That great aggregations of capital have wrought incalculable
public good is not denied. A monopolistic trust I stand against ;
an aggregation of capital, however large, properly managed, I
approve. As was said a few moments ago by the gentleman who
preceded me: It is only a fool who kills the goose that lays
daily the golden egg. We will not give up the tariff; if it be
in any sense the mother of trusts, we will save the mother and
raise her children in the nurture and admonition of the Lord.
187
Did any one ever see rich and fertile lands without, weeds? What
do sensible people who have rich and fertile soil do? Do they
abandon it because of the weeds and go to raising grain among
the rocks of New England? Do they not rather kill the weeds
and save the soil?
It has been said there never was a paradise without snakes.
Protectionists would kill the snakes and save the paradise. Free
traders in America would devastate the paradise and save the
snakes.
That there are abundant and sufficient remedies, within con-
stitutional limits, for all the evils arising from those trusts or
combinations which seek to extinguish competition and fix prices
is not to be doubted. That the public good arising from greatly
cheapened production attainable by great combinations may be
saved, is equally clear. This is the work to be done. Whenever
the American people have been sufficiently aroused and take the
work earnestly in hand it will be accomplished. The party which
hesitates may be lost; but we shall ultimately save whatever is
good in aggregations of capital and control whatever is bad.
HOKATIO W. SEYMOUR.
PublisheriChk-ago Chronicle.
Horacio W. Seymour discussed "Excessive Financial Energy/'
and said :
The trusts or combinations which should be destroyed and
which can be destroyed are those which exist by reason of the
protective tariff or which could not exist if there were no pro-
tective tariff, and those which either in their organization or in
their methods since organization have adopted criminal practices
and are therefore amenable to the criminal laws. In the one case
there is need of the repeal of unwise and unjust legislation. In
the other there is need of the enforcement of penalties which run
against individuals hiding behind trust organizations as well as
they do against individuals who stand upon their own respon-
sibility.
These are simple remedies, and the wonder is not that they
are needed, but that, being needed, they are not applied. The
reason is to be found, I think, in a certain weakening of the moral
ibre of the American people, partly as a result of the economic
errors which have been inculcated so industriously and partly
188
in response to the tireless propaganda of calumny and calamity
which has become in a manner a public disease affecting injuri-
ously the entire body of the people.
This habit of complaint is something more than mere discon-
tent. It is sullen, despairing, slothful fault-finding, which quar-
rels with every new condition, and particularly with every new
manifestation of mechanical, financial and commercial energy.
It looks upon the dark side of everything. It corrects no evil
because it represents every wrong as necessarily incurable. It
is pleased with nothing that does not in some manner promise a
gratuity. It is continually asking or expecting something for
nothing. It teaches that corruption is the mainspring of all suc-
cess, and that honest effort in any direction is hardly worth while.
Its existence indicates quite clearly that the development of great
financial energy in this country lias been attended by a decided
loss of tone on the part of the people.
The supporters of the protective tariff are largely responsible
for this condition of affairs. One political party has taught prac-
tically nothing else during the past twenty-five' years. Most of
our political campaigns during that period have turned upon such
selfish pecuniary interest as this party could persuade the ma-
jority of the people that they, or somebody with whom they were
in touch, had in the control of government and in the making of
the laws. The indiscriminate granting of pensions and the sale
of franchises, grants and other special privileges by municipalities
have also done much to fill the minds of the people with wrong
ideas as to the relation which they hold to their own government.
Trusts need not be more objectionable than corporations or
sole ownerships. They are subject alike with them to the laws.
If they violate the laws, their officers may be punished. If they
secure advantages under unjust laws, purchased in their interest,
or if they escape the penalties of wise laws enacted to prevent and
to punish crime, it is certain that representatives of the people in
office have betrayed their trust and would have done it as quieklv
if the bribe giver had represented individuals or had represented
himself alone.
The evil to be intelligently complained of and redressed, in
the first instance, therefore, is more the weakness and dishonesty
and heedlessness of many of the people and their agents than it
is the rapacity of the trusts. There is not an unlawful com-
bination in America to-day that does not owe its existence to some
unfaithful representative of the people. There is not one that
cannot be destroyed in short order by an honest enforcement of
the laws. Those trusts <^r mhination<= asrainst which the laws do
189
not run are no more to be decried than any other manifestation
of business enterprise.
Aside from such trusts as might have had a dishonest origin
or as may be conducted contrary to the law, the great mass of
these combinations will stand or fall exactly as, under similar
circumstances, individual enterprises would. If conducted wisely
and economically, with due regard to public rights and public
opinion, and with a sagacious comprehension of changing condi-
tions in markets and methods of production and distribution, they
will succeed and will deserve to succeed. If inflated at th'e start,
dishonestly managed, and conducted without a decent regard to
public sentiment and public rights, they will go to ruin, as they
will deserve to do.
Over-capitalization, big salaries and incompetent manage-
ment are practically certain to wreck a large percentage of these
trusts in the course of a few years. The number of men of first-
class ability who might be able to manage such combinations sat-
isfactorily is large enough, but such men are not always selected
for such positions, and if they are so chosen they do not always
have the power necessary to bring about the best results.
The trust exemplifies in a broad field of action a condition
which prevails in every crossroads village throughout the civ-
ilized world, wherever one man through superior industry, skill,
finesse or capital may have gained some advantage over his fel-
lows. It is the highest expression of human selfishness as applied
to business affairs. It is on a grand scale, exactly the same thing
that every man of enterprise is attempting on a smaller scale.
Unlawfully conducted, the trust may undertake by conspiracy
to restrict trade, to destroy competition and to limit production,
but numberless corporations and individuals are doing some of
these things all the time, and have been doing so for years. The
same law which will prove sufficient if invoked against a dis-
orderly vendor of bananas who, by main force, drives away a com-
petitor, will be potential, if honestly enforced, to deal with every
lawless combination of capital.
Before instituting prosecution, however, it will be well to con-
sider with some seriousness the fact that business methods in this
country, whether in trade imions or in combinations of capital,
are not wholly idyllic. The man who undertakes to work when a
trade union decrees that he shall not work, is likely to have his
hoad broken, unless society bravely and honestlv comes to his
defense, as it should.
The weak will suffer at the hands of lawless trusts in the same
manner until society, through its proper agents, comes to their
190
relief. Its failure to do so "is due to the popular delusion that
lawless trusts present a new phase of crime, whereas the new and
novel feature that they present is the ability and the willingness
to corrupt or to intimidate the people's servants. The lawless
trust can be proceeded against as easily and as effectively as a
lawless individual can be, and it would be so proceeded against
were it not for its corrupt relations with politics and politicians.
To talk about new laws and new penalties against trusts when
those now in existence are not enforced, and when it is not even
seriously proposed anywhere to enforce them, is idle. If we will
not or cannot enforce the laws that we have, it is hardly worth
while to ask legislature or congress to enact others. This amazing
manifestation of official dereliction is fittingly supplemented by
the despairing and discouraging popular cry in many localities
that socialism or state and municipal ownership, as it is now
called is the only remedy for monopoly and extortion. Incapa-
city or worse in the officer of justice and abject helplessness in the
citizen are a deplorable combination in a republic. No remedy
that can be proposed will reach the unlawful trusts until this
double infirmity shall have been removed.
Hence the problem to be considered in connection with un-
lawful trusts and combinations is not so much one of undue and
criminal financial energy as it is of deplorable popular and official
weakness. As a result of the appeals of ignorant or crafty dema-
gogues, who lightly assail all progress and all prosperity, and the
wretched and despairing preachments of socialistic agitators, who
find no remedy for any ill except in their own miserable process
of leveling, too many Americans have lost sight of the fact that
the first requisite in a well ordered republic is a self-reliant, self-
respecting citizenship.
It is not remarkable that we have lost some sturdiness of
character of late, for we have pursued many false ideas as zealous-
ly as we formerly adhered to the wiser ones. Forty years of pro-
tective tariff legislative hypocrisy and deception have taught the
average American that a wise man before entering upon any im-
portant enterprise secures a favoring law or privilege or franchise
at the hands of government, local, state or federal.
The upholding of this doctrine has educated a generation of
Americans to the belief that there is nothing discreditable in ask-
ing and accepting public assistance. Imitating our conspicuous
public dependants, the tariff beneficiaries, we find in every walk
of life that beggary is becoming a great profession, followed bv
a mighty host made up of every manner of man, woman and child.
In addition to our pension roll of nearly a million names, we
191
have several millions of workingnien who, with their families,
have been taught that except as government taxes all the people
for the beneht of their employers, they cannot hope for work or
wages. We have also a propaganda of helplessness and imbecility
carried on sometimes in the name of democracy, but oftener out-
side of its councils, which teaches hostility to all wealth and to
individual enterprise, which informs the young falsely and ma-
liciously that every avenue of promotion is cloced to them and
which oilers no remedy for existing ills save the enfeebling and
destructive ones which are to be found in socialism and anarchy.
Under such conditions, who can wonder that every aggrega-
tion of capital, no matter how laudable, is viewed by many Ameri-
cans with dissatisfaction and discontent, or that defiant lawless-
ness on the part of some of the rich and powerful is everywhere
helplessly ignored? To enforce any law, public sentiment is
needed. To maintain a republic in respectable form, it is neces-
sary that a majority of its citizens shall be self-sustaining men
who scorn pauperism, who detest robbery of every description,
and who have sufficient intelligence and individuality to detect
and repudiate the sophistry of socialism as well as to meet with
proper rebuke the fiercer fanaticism of the revolutionists.
With a citizenship honestly and wisely inspired and officered
there would be no more reason for holding a conference to con-
sider how to deal with lawless trusts than there would be to as-
semble a mass meeting for the purpose of discussing the propriety
of enforcing the laws against housebreaking. The unlawful trust
would be punished as a matter of course. The lawful trust would
be permitted to pursue its business unhindered, as a matter of
course.
The need of an invigorating tonic in American political, busi-
ness and social life is very great. The want of it is felt on every
hand where senseless agitation merely for the sake of agitation
embitters the old and discourages the young, where the corrupt-
ing influence of the dishonest rich finds a ready response on the
part of the vicious poor, where demagogues mislead the idle and
careless, and where designing men sow the seed of lawlessness
and perhaps of revolt.
There is need of some sturdy response to the numerous irre-
sponsible spokesmen of calamity and slander who have the floor
at all seasons, and whose influence upon the thoughtfulness and
inexperience is far reaching and dangerous. There is need in
every section of the country of more hopeful, helpful and sug-
gestive leadership and less of chronic and wholly useless lamen-
tation.
192
Conditions change rapidly in these days. Puhlic intelligence
and virtue must and will keep pace with them. The most difficult
prohlems will be solved quickly by a people actuated by rugged
honesty, common fairness and a desire to see justice done for the
sake of justice. The world grows better daily, presenting more
opportunities than ever before, but calling all the time for greater
intelligence and a stronger purpose in the pursuit thereof.
The American republic needs a tonic of sound doctrine for
the instruction of youth and for the admonition of the aged,
which will inculcate the wisdom of hope and the folly of despair,
which will show that no abuse of power is too deep seated for cor-
rection and which will hold ever before the republic the countless
shining examples of success achieved not as a result of jealousy
of and slanderous attacks on the triumphs of others, nor by rea-
son of despair and indifference because the obstacles to be sur-
mounted seem greater than formerly, but by faithful work and
indomitable courage.
One immediate and wholesome effect of such a tonic would
be the impartial enforcement of wise laws against all offenders,
the strong as well as the weak, and the repeal r i. obviously unwise
laws, regardless of the protests of their beneficiaries. No unlaw-
ful trust could stand for a day in the face of a public sentiment
so actuated.
SAMUEL ADAMS KOBIFSON.
American Protective Tariff League.
Samuel Adams Eobinson said :
We are to suppose, in dealing with this question, that those
who contend that "the customs tariff is the mother of trusts/' and
that the surest way to kill the child is to kill the parent, are
sincere in that contention. In taking such sincerity for granted
we are, it must be owned, obliged to close our eyes to certain evi-
dences which conflict with this conclusion. We must, for ex-
ample, ignore the eagerness with which free-traders have sprung
to the front with their anti-protective antidote for trusts, while
at the same time extending to the trusts the consoling reassur-
ance that it is not the trust, but the protective tariff, whose scalp
they (the free-traders) are after. Such reassurance was not long
ago conveyed in connection with the published announcement of
the New England Free-Trade League of its arrangements to
secure the publication of a series of articles tending to show that
193
it is to the protective tariff that trusts are indebted for their exist-
ence primarily and their survival ultimately. In response to the
gratifying assurance that the chief concern of the New England
Free-Trade League was for the foreign producer and not for the
domestic consumer it is to he presumed that contributions to the
publication fund from trust sources were not altogether lacking.
They should not be. In this connection let us note a curious
fact, namely, that while demagogic theorists have been prompt
to suggest the removal of the tariff when a domestic trust has
increased prices, there is no recorded instance, I believe, of these
gentlemen demanding that the tariff be doubled when price-;
have been increased by a foreign trust.
Assuming, however, for the purpose of this discussion, that
the enemies of protection are also the enemies of trusts, in equal
sincerity, it ought to be plain to every unbiased mind that the
remedy for trust oppression is not to be found in the death of
domestic competition. At least, we should not make a head-
long rush for that remedy until we are sure that it is the right
one. Rather let us be wise and patient and inform ourselves
a? to the precise character of the disease before attempting to
diagnose and prescribe. When we shall have done this it is not
impossible that the trust antidote will be forthcoming in the
shape of effective laws bom, not of guesswork and dogmatism,
but of the knowledge gained from test and experience.
If experience has taught anything, it has taught that in a
country such as our?, with its limitless latent resources, awaiting
development, you cannot pluck the fruit of prosperity from the
tree of free-trade. It does not grow there. "Do men gather
grapes of thorns, or figs of thistles?" On general principles the
remedy for monopoly is not the limitation of internal competi-
tion. Gasoline is not a good medium for fire extinguishment.
Free-trade is not the remedy we are in search of, unless the
people of the United States are prepared to enter upon an experi-
ment certain to overthrow our industries, but not certain to
"smash the trusts." So I say, for the present:
"Rnther bear those ills we have than fly to others that we
know not of."
Considered in the light of logic and expediency, the present
line is most inopportune for striking down the economic policy
which, according to the increasing testimony of British writers
and thinkers, has created in the United States the great manu-
facturing industry which threatens British commercial suprem-
acy American free-traders are about the only people on earth
to-day who do not concede this to be a fact
194
Let us suppose a condition. In the event of the consolida-
tion of all industries into trusts, with -the protective tariff for-
ever removed, and with its removal all incentive to new com-
petitive enterprises wholly lacking, does any one suppose that
the trusts would dissolve and their constituent companies return
to unrestricted competition and price cutting among themselves?
Would they surrender to foreign competition and go out of busi-
ness entirely? No sane person could for a moment anticipate
any of these results. On the contrary., the assured prospect of
a permanent removal of protective tariff would impel every indus-
trial enterprise in this country now operating independently to
rush for shelter into a trust organization. Domestic competition
would be at an end. What of foreign competition? The answer
is plain. On a free-trade basis, and with the certainty that no
new domestic competition could arise to complicate matters, our
industrial captains, being absolute masters of the situation, would
not surrender the home market to foreigners, but would make a
tremendous fight for the preservation of their existence. They
would fight inside the limits of a very small ring the ring of
reduced prices and reduced wages. Prices and wages must come
down to approximately the European standard, to say nothing
of the Asiatic standard. ]STo use for American wage earners to
rebel, for you must remember that we are now organized on a
free-trade basis into a compact national trust of wage payers, and
that our industrial captains, secure through free-trade from the
menace of new domestic competition, are in a position to dictate
the rate of wages. No such dictation is possible in the presence
of such open and unrestricted domestic competition as is made
possible through the operation of the protective principle. But,
in the condition we are now supposing, protection has been aban-
doned and free-trade is the order of the day. The industrial
captains are organized under the new conditions, not the old,
and they will know how to handle the wage question. Having
reduced wages and lowered the cost of production, wo arp thus
in shape to meet foreign competition. We can control the great
home market, and, more than that, we are able to realize the
free-trade dream of underselling the rest of the world in the
markets of the world. To be sure, we have reached that ideal
(free-trade) condition by a sweeping reduction of the American
wage rate and a corresponding drop in the American standard
of living. But, no matter, we have got there, and that was the
main consideration. We have succeeded in bringing about a
sweeping reduction of prices and values, and have done it at the
expense of the American workingman. What have we to offer
195
the lower paid wage earner in the way of compensation for his
sacrifices? A lower cost of living, some one will reply. Yes, we
have done that, to some extent, it may be, but to no extent that
is at all commensurate with the loss of his ability to earn, buy
and consume. He is still the loser by the readjustment of things
a terrible loser, I think. But he is not the only loser. What
of the general body politic? Has any one ever figured out what
it would mean to the business of this nation of seventy-seven
millions if the average wage rate were to be reduced 25 per cent?
To express such a result would require so many ciphers following
a unit and a dollar mark that I shall not attempt the calculation.
1 don't like to imagine, much less depict, such a state of things,
and I prefer to dismiss this appalling aspect of the question with
the conclusion that it cannot and will not come to pass.
However, we have brought about unrestricted foreign com-
petition by means of abolishing protective duties, and we have
"smashed the trusts.'" But have we smashed the trusts? Have
we not given them a new lease of life by the removal of the peril
of domestic competition outside the trusts? Have we not opened
the door to the international trust? With the American market
closed against them by reason of a lower cost of production in this
country, and with American competition crowding them out of
the world's markets, will foreign industrial producers lie down
and give up the fight? Probably not. Being already familiar
with the development and operation of the trust plan, they will
naturally undertake the arrangement of a modus vivendi, and
by easy stages will reach a modus operandi, with the all powerful
American trust. Behold the international trust, the universal
trust, if you please. It is not an impossibility. It is not even an
improbability. It is a certainty. In such an event will our last
stale be better than our first?
I have said that in the altered conditions brought about by
the permanent abolition of the system of protection, the trust
would find its operations facilitated, not hindered. Hard time-
are the best times for trusts. It is then -that profits are smallest
and that combination is easiest. In good times the problem is
not so simple, for it is complicated by the alertness with which
capital seeks employment in new ventures and by the active com-
petition in all productive lines, which is a natural consequence of
such activity in the employment of capital.
Tin plate has been selected as a bright and shining mark, a
conspicuous target for the shafts of those who while pretending
3 aim at trusts direct their volleys at protection. Tin plate i?
indeed a bright and shining mark, for it is the most recent and
196
hence the most notable exemplification of the practical workings
of a policy which establishes industries by means of guaranteeing
a stable market for their products. It also happens that the tin
plate trust is the most conspicuous one among the trusts whose
products enjoy the benefits of a protective tariff which has in any
notable degree advanced its prices. It is'not my purpose to de-
fend or apologize for this action on the part of the manufacturers
of tin plate, but rather to inquire into the facts with a view to
arriving at an intelligent conclusion as to the merits of the ques-
tion. I find, to begin with, that the difference between the pres-
ent price of American tin plate and the price of Welsh tin plate
laid down in this country, duty paid, is very much less than the
duty of 1-J cents per pound. Recent quotations for tin plate in
Wales for export are 16 shillings per box of 108 pounds, while the
price in the United States is $4.52^ per box of 108 pounds. The
Welsh price is equivalent to $3.89 in United States money. This
price is subject to discounts 'for cash of 3 and 1 per cent, and a
brokerage of 2 per cent is customarily paid to the foreign broker
for buying the plates and inspecting them, so that the net price
would be practically 2 per cent less than $3.89, or $3.81. To this
must be added 15 cents for ocean freight and insurance, making
the price in bond in Few York $3.96. The duty on 108 pounds,
at 1^ cents, is $1.62, making the price on dock in New York, duty
paid, $5.58. While foreign plates would cost in New York $5.58,
American plates are costing at mill $4.52-|, or $1.05 less. The
price of American plates at mill is $0.56| more than the price
of foreign plates at New York, before the duty is paid, so that
under present conditions just about one-third of the duty, or
one-half a cent a pound, is actually benefiting the American tin
plate industry. The other two-thirds is nominal. It should be
noted that the comparison made is not as favorable a one as might
be drawn, because the principal consuming centers of the United
States are nearer the mills than they are to New York, and the
freight from New York to the point of consumption would aver-
age more than the freight from mill to point of consumption.
There is no question that had there been no tin plate industry
established in this country, Welsh tin plates would be selling at
very much higher figures to-day. The Welsh manufacturers were
securing very good profits out of the American trade before the
McKinley law, from the absence of competition. They would
have continued to secure such profits had no competition arisen
in this country, while the demand has so increased that were there
no source of supply but the Welsh tin mills, there would have
been an excess of demand over production of 25 to 50 per cent
197
at the present time, and prices would without doubt have been
sent much higher. It would be the height of folly to attempt to
deny that with the Welsh manufacturers retaining a monopoly
of the American demand, their prices would be, not $0.56^ higher
than they are now, but many times this advance, and in this
case free Welsh plates- would cost the American consumer much
more than American plates do now. The American tin plate
industry is to-day indebted to the tariff for but about one-third of
the protection it nominally offers, and it requires this small pro-
tection only because Welsh tin plates are selling much lower than
they would be selling were there no American industry.
The advances that have occurred in tin plate in the last nine
months are in great part, if not wholly, explained and justified
by the advances in raw material on the one hand, and the in-
creased demand on the other. That such influences are fully
able to produce still greater advances is shown by the condition
in tank plate, which early last year sold at one cent a pound and
is now selling at 2f cents for delivery in the next two months, an
increase of 175 per cent, as against an increase in tin plates of
less than 70 per cent, from $2.60 to $4.37 for 100 pound cakes.
With a very few exceptions, iron and steel products, which have
no trust control whatever, and on which the duty is merely nom-
inal, have advanced much more than have tin plates. From
August 1. 1898, to August 1, 1899, the standard grade of tin
plates quoted by the Treasury Department in the monthly sum-
mary of the Bureau of Statistics increased in price 77 cents a
box. In the same period the same grade of goods in Wales in-
creased $1.45 a box, and that foreign increase was nearly all made
in 1899. In other words, in free-trade England tin plates in-
creased twice a? much in price as in the United States under a
protective tariff.
It is urged in behalf of tin plate manufacturers that they had
no desire, when the Dingley bill was under discussion, to see
the rate of duty advanced, and it is a fact that some of them were
actually opposed to the increase. They knew that the advance
would not secure them any higher prices for their product, and
that the workmen Avould make it a pretext for demanding higher
wages, and the outcome proved that they were right, the only
tin plate lobby was that of the Amalgamated Association of Iron.
Steel and Tin Worker?, through the influence of which the duty
was advanced. The price of American tin plate was not raised
a particle by the increased duty, but at the next scale settlement
the workers demanded an advance in wages on the strength of
t.ic higher duty, and they got it. Last summer they demanded
198
another advance, and they got that also, the two advances
amounting to about 25 per cent over the wages paid under the
Wilson law. The earnings of about 54,000 tin plate operatives
have been affected by these advances. Xine years ago there were
no operatives in the tin plate industry; there was no such indus-
try in existence in this country.
Contrasted with tbis large increase in the rate of wages among
tin plate workers in the United States is the action taken by the
provisional committee of the newly formed South Wales Tin
Plate Masters' Association, which met representatives of the
workmen in conference in Swansea recently on the wage question.
A cable dispatch says :
"After two hours' discussion it was decided to recommend the
acceptance of a 10 per cent reduction throughout the trade."
No one has yet succeeded in showing that prices of tin plate
have been advanced in the United States to the point of unrea-
sonable or oppressive exaction, in view of the large increase that
has taken place in the cost of production by reason of higher
wages, increased cost of materials, etc. It is not my purpose to
either accuse or defend the tin plate trust. That organization,
like all other trusts, will stand or fall on its merits. This much,
however, is clear and indisputable: That to the policy of pro-
tection is wholly due the fact of the establishment of the tin plate
industry in the United States: and that through the establish-
ment of this industry, many millions of dollars have been saved
to the consumers of tin plate, and many millions of dollars have
been added to the gross sum of wages paid to American labor.
Enemies of protection, unable to explain away the catastrophe
which has overtaken their cherished theories through the won-
derful development of our export trade in manufactured products,
seem to find much comfort and consolation in the assertion that
this tremendous trade has been brought about by means of a gen-
eral cut in prices, and that the home consumer pays more than
the foreign consumer pays for the same article. There was a
time, in the four years of depression following the free-trade tri-
umph of 1892, when to a considerable extent our manufacturers
were compelled to sacrifice their profits in order to find a foreign
outlet for their surplus products. This was a time of national
underconsumption and hence of national overproduction; a time
when a reduction of prices afforded a means of obtaining ready
cash for products rendered unsaleable because of the greatly di-
minished purchasing and consuming power of tbe nation as a
whole. In this way manufacturers found it possible to keep their
plants in operation and their labor employed during a long and
199
trying period of deadly depression. Their goods were marketed
abroad at figures which left little or no margin of profit, and
sometimes involved actual loss. But there was no choice. Either
this, or close the factories and discharge the workpeople. But
this dismal necessity no longer exists. Export prices are now
much nearer on a parity with domestic prices. It would be hard
to find a manufacturer to-day who is developing a foreign trade
without profit or at a loss. Mills are too busy working over-time
to catch up with orders. Discounts are allowed on goods sold
for export, for several good reasons such as the spot cash pay-
ment for such goods, whereas in domestic trade long credits are
the rule and spot cash the exception ; and the additional fact that
in marketing his product through the export trade the manu-
facturer is at no expense for advertising, maintenance of agencies,
and other items in the cost of distribution amounting in the ag-
gregate to fully the difference between export prices and domestic
prices. The domestic consumer understands this perfectly, and
does not grumble at it. It is only the American free-traders who
feel aggrieved at a condition which increases the use of Ameri-
can material, increases the employment of American labor, and
increases the consumption of American food products by Ameri-
can workers to the enormous average of over $50 per capita,
against an estimated per capita average of less than $1.50 of
American food products sold to and consumed by the workpeople
of Europe. "Who should find fault with such a state of things?
The foreign manufacturer and his American agents and friends
don't like it, of course; but I think it will be found that the
American farmer is not losing any sleep because Europeans get
a small discount from current American prices on agricultural
implements, sewing machines, or typewriters; still less is the
American wage earner worrying over the practical workings of a
system which gives him increased wages and increased employ-
ment. Chir export trade of a million dollars per day, including
Sundays and holidays, in the products of American manufacture
is one of the glories of the protective policy. Foreigners know
it, and recognize it as the direct outgrowth of that policy.
Mr. Havemeyer's contention that "the customs tariff is the
mother of trusts" was a blessing in disguise. It was intended
as a blow at the party in power at the time Mr. Havemeyer failed
to get the increase of dmios he wanted on refined sugar, and also
failed to get a reduction or repeal of the duties on raw sugar.
Its effect has proved to be exactly the opposite of that which was
intended. Before Mr. Havemeyer left the witness stand he placed
on record the damaging admission that the sugar trust could,
200
SAMUEL GOMPERS
EDWARD Q. KEASBEY
U. M. ROSE
T. B. WALKER
M. M. GARLAND
A. LEO WEIL
if assured of the absence of domestic competition outside of his
trust, get along extremely well without any protection whatso-
ever, and that he would welcome the abolition of all protective
duties on raw and refined sugars. So we may dismiss Mr. Have-
meyer with the remark that in his testimony before the Industrial
Commission he served his country better than he knew, and much
better than he intended, by making it clear that in the case of the
sugar trust protection is more a hindrance than a help.
The question of the effect of a protective tariff upon wages
has been injected into this discussion somewhat gratuitously on
the part of the enemies of protection; somewhat unwisely, too,
it must appear, for no one, I believe, claims that a reduction in
wages has yet been put in force by the trusts. The fact is that
in the general advance of wages, estimated at 15 per cent for the
entire country, which has taken place in connection with the
phenomenal prosperity following the restoration of the policy of
protection to American labor and industry, trust wage payers
have thus far shown no disposition to shirk their share. So we
must conclude that the free-trade claim that wages are not
affected by tariffs is a proposition on general principles intended
to discredit protection and not aimed at the trusts. Here again
the American free-trader stands solitary and alone, a gloomy
Napoleon on an economic St. Helena. His foreign fellows long
ago abandoned the contention. There is at present scarcely a
shade of difference among European manufacturers as to the true
cause of their inability to compete with America in the world's
markets. With common accord they say it is the result of the
high wages paid American workingmen, and that the establish-
ment and maintenance of the American standard of wages has
been made possible only by the operation of the protective prin-
ciple. The American wage earner has lately had an object lesson
along the line of tariffs and wages. The lesson lasted four years,
and he is not likely to forget it.
The free-trade advocate of the removal of protection as a
trust antidote finds himself upon the horns- of a dilemma. Either
we need protection to hold the home market against outside com-
petition, or we do not need protection and can get along equally
well without it better, our free-trade friends tell us. If we do
not need protection, its removal would be valueless as a trust
antidote. If we do need protection in order to maintain our hold
upon a market with a consuming capacity estimated at nine
billions yearly, then the remoTal of protection would work such
havoc with our country's prosperity as the gloomiest of pessimists
would find it well nigh impossible to adequately foreshadow. I
201
am not a pessimist. I am a protectionist, a very different thing,
now and always. Protectionists in the past have known how to
confront a danger with a defense. They will know how to meet
the trust question at the proper time and in the proper way.
They have never failed in an emergency; they will not fail now.
A remedy will he forthcoming whenever the pathological moment
arrives. We all rememher the practitioner who could cure .but
one disease, and who always threw the patient into a fit, and then
prescribed for the fit. History does not, however, record that
he was invariably successful in curing the fit. The stage of fits
has not yet been reached, though some of the quacks would have
us think otherwise. Their antidote is an old and a well known
one. It was tried in 1892, and we all know how it worked. Do
we want any more of it ? I think not.
The conference took a recess until 3 o'clock in the afternoon.
AFTERNOON SESSION, SEPTEMBER U.
The conference was called to order at 3 o'clock by Vice-
Chairman Dudley G. Wooten. The chair announced that owing
to the number of papers the twenty-minute rule would be
enforced. He then introduced S. H. Greeley of Illinois, repre-
senting the National Grain Growers' Association.
S. H. GEEELEY.
National Grain Growers' Association.
An evil from which no relief is possible seems to be an
lity m this age of progress and discovery, but the producers
and shippers of grain in the great Mississippi Valley are to-day
the grasp of a number of so skillfully managed combinations,
ed by secret rates and special privileges, granted them by
iilroads that he brightest mind cannot suggest a practical
xiy; by practical, I mean a remedy which the people are ready
apply, for I assume from the general tone of the press, that
on-we are not yet ready to own the railroads, the very
nn.prmg o f many of the combinations and trust, which are
the dle class in the United
uvt^u j.j.i i, lit V_/ 111 LCV.
5 to the condition of the yellow race
capital and labor are prosperous, the intermediate
class find themselves struggling against hidden and unscrupulous
foes, to maintain an independent position in society, they share
hut slightly in the general prosperity and are fast drifting into
the employ of combinations and trusts, and disappearing as inde-
pendent factors in society.
To my mind the most glaring examples of the power of the
railroads to make and unmake men, is seen in the Chicago grain
market of to-dav: merchants no longer huv and sell grain in Chi-
cago, hut their places have heen usurped hv the "recipients of cut
rates and srtecial privileges," who have hecome as necessary an
adiunct of the modern railroad, tapping; the grain helt, as the
general freight office it is their husiness to see that the railroad
favoring them erets their share of the grain tonnasre, and where a
merchant paving the tariff rates of freio-ht wonld lose monev. this
specially favored class grows rich : thpv hapdle all the graip that
thev are phvsicallv capable of caring" for <vr\ the particular line of
railroad of which thev arp the favored dpalers.
. The effect of this condition has hepn disastrous in manv wav :
1. Competition has been destroyed to a great extent, and
the bnsinpQf? of handlip.o 1 grain in Chicaq-o markets, has Obv force
of snpcial favors from railroads^ eonceptrnted in the hands of SPV-
eral larsre concerns, who do not hid against each ot^er. hut are
known to agree op prices each dav for o-raip in territory where
thei r bids are liable to reach the same sellers.
Without advantages of ability or oat-vital, over the merchants
whom thev have driven from the fielo 1 . these copoerns through
prn-nlovees and ao-pnts rarrv OP a traffic, pot IP orm'p. but in
freiVht. switching- apd plpyator chnrorpa: -incidePtallv the grnip is
tranonortpd. but if tariff rates and fixed charges were paid it
woT^d ?T->ow a loss.
2. Vnlnps suffer far more th^n would be conceded evep bv a
maion'tv of the grain prowprs. TTn -natural conditions nonstnntlv
snrronnd the movpTPent of <rrain : if t^p business of a railroad la^s,
.fr^ip is forced to move bv that rail^onr? through its favored
shi-nner. bv a, cut rnte, thns cre^tino- a fictitious cup^lv at a time
^hep the de^mand is mpon-pr. apd t^>p result ic q n'pp'Jinp in values
p-\r rp^oon of PTCPsaivp offpririq-s. -nrTiilp norl the PTain b^en ^-vpr-
mittp-l to remaip at the conptrvnoints irntil thp fjprnand iusti^e^
ifc sTii-nrnent. the der>rpQciop in valnps would havp bpp~n qyoi^p^
aprl thp dernapd wonld havp been all the more urgent by reason
of t^p grain not nping- in sig-ht.
.Anothpr conrlifTnn which tends to r?pnrpSS volnoa io fhp n'l'nor
UP of vast stocks of graip IP thp -wamhoncpc! of ChiVcio-o anr? bv
every trick and device preventing the moving of these stocks,
203
so long as they can be sold for future delivery at a profit. The
public and private elevators of Chicago have passed into the
hands of the concerns specially favored by the railroads ; several
of them lease the terminal elevators of the railroads. The result
has been that the public warehouse system of Chicago has been
prostituted to the extent that the public no longer can handle
grain through them, and what was once the depots for the pub-
lic's grain are absolutely the storehouse of the railroad's favored
dealer to the exclusion of all other persons. It is to the advan-
tage of this favored class that low prices should prevail, so that
they can fill their vast warehouses (aggregating almost 40,000,-
000 bushels' capacity) with cheap grain, sell it for future delivery
at a premium, buying back and selling for a still more deferred
delivery as often as market conditions will permit. When it
ceases to pay tribute as a speculative commodity, they then pro-
ceed to sell it in easterji and foreign markets, and having driven
out of business all other grain shippers by their methods, they
merchandise the grain themselves; but no matter how urgent
the consumptive demand, so long as speculative sales pay best,
consumers cannot get supplies from the vast stores held in Chi-
cago.
This feature of the grain trade and its tendency toward mo-
nopoly are clearly set forth by the courts, in decisions affecting
this very condition, in an action brought by the attorney-general
of the state of Illinois against the public warehousemen of Chi-
cago.
The eminent Judge Tuley, after listening three weeks to evi-
dence, and pleadings of counsel, rendered an opinion in favor of
the people, in which he used the following language:
"The great weight of evidence is to the effect that the ware-
housemen of Chicago did not commence to so deal in grain to
any general extent until about the year 1885; that the practice
has grown so rapidly that now and for two or three years last past
they are the principal buyers and sellers on the Chicago market
1 upon the Chicago Board of Trade; that by reason of the
antages they possess, and by reason of certain changes in the
gram trade, they have practically driven out of business the class
a who were before them engaged in buying and shipping
on the Chicago market. And it is admitted that they have
m gram to the extent that they now own at least three-
t all the grrain stored in the public warehouses of the
Chicago, and it also appears by the evidence that they are
st monopolizing the business of dealing in grain in the Chicago
204
"It is in evidence that they not only own this large proportion
of the grain stored in their public warehouses, and also are the
principal buyers in the Chicago market, biit that nearly all of
them deal in 'futures/
"It is easy to perceive the temptation they would be under as
to mixing the grain of their customers, and also to control the
market by the ownership of such a vast proportion of the ware-
housed grain. It is also easy to perceive in selling grain the
temptations they would be under to abate or remit storage charges
in order to effect sales.
"In the case at bar it is shown that the public warehouse-
men of Chicago, being licensed to carry on a warehouse, have
used their capital, to wit, their warehouses and business as ware-
housemen, to aid them in trading in grain in competition with
the public," and having a great advantage over such public in such
trading, by reason of their control of such licensed warehouses,
they have become the principal buyers and sellers of grain in the
Chicago market and upon some lines or systems or railroads cen-
tering in Chicago, almost the only buyers.
"It is, however, contended that the warehouseman gets the
grain because he pays more for it than other bidders; that the
constitution of the state requires the law passed in pursuance
thereof to be construed 'in the interests of the producer,' there-
fore it is to the interest of the producer that the warehouse be
allowed to enter into the grain business. No monopoly in grain
dealing can operate in the long run to the interest of the producer.
There is no truer maxim in economics than that 'competition is
the life of trade/ The warehousemen may be able to pay more
than outside shippers or buyers until he has driven them out of
the market ; when he has succeeded in so doing (and the evidence
shows that that time has nearly arrived) and he has practically no
competition, then the producer would suffer. The law should
not be so construed as to give the warehouseman the right to use
his privilege, his public business as a warehouseman to crush out
competition against himself as a dealer in grain/'
In affirming the decision of Judge Tuley, the Supreme Court
of Illinois, touching on the tendency toward monopoly, said :
"It is a firmly established rule that where one person occupies
a relation in which he owes a duty to another he shall not place
himself in any position which will expose him to temptation of
acting contrary to that duty or bring his interest in conflict with
his duty. This rule applies to every person who stands in such a
position that he owes a duty to another, and courts of equity have
never fettered themselves by denning particular relations to
205
which, alone, it will be applied. They have applied it to agents,
partners, guardians, executors, administrators, directors, and
managing officers of corporations, as well as trustees, but have
never fixed or defined its limits. The rule is founded .upon the
plain consideration that the one charged with duty shall
act with regard to the discharge of that duty, and he
will not be permitted to expose himself to temptation or
be brought into a situation where his personal interests
conflict with his duty. Courts of equity have never allowed a
person occupying such a relation to undertake the service of two
whose interests are in conflict, and then endeavor to see that he
does not violate his duty, but forbids such a course of dealing
irrespective of his good faith or bad faith. If 'the duty of the
defendants, as public warehousemen, stands in opposition to per-
sonal interests as buyers and dealers in grain storing the same in
their own warehouses, then the law interposes a preventive check
against any temptation to act from personal interest by prohibit-
ing them from occupying any such position.
"The public warehouses established under the law are public
agencies, and the defendants, as licensees, pursue a public em-
ployment. It is clothed with a duty toward the public. The
evidence shows that defendants, as public warehousemen storing
grain in their own warehouses, are enabled to, and do, overbid
legitimate grain dealers by exacting from them the established
rate for storage while they give up a part of the storage charges
when they buy or sell for themselves. By this practice of buying
and selling through their own elevators the position of equality
between them and the public whom they are bound to serve, is
destroyed, and by the advantage of their position they are en-
abled to crush out, and have nearly crushed out, competition in
the largest grain market in the world. The result is, that the
warehousemen own three-fourths of all the grain stored in public
warehouses of Chicago, and upon some of the railroads the only
buyers of grain are the warehousemen on that line.
"In exercising the public employment for which he is licensed
he cannot be permitted to use the advantage of his position to
crush out competition and to combine in establishing a mo-
nopoly by which a great accumulation of grain is in the hands of
the warehousemen, liable to be suddenly thrown upon the market
whenever they, as speculators, see profit in such course. The
:endants are large dealers in futures on the Chicago Board of
LTade, and together hold an enormous supply of grain ready to
their opportunities as speculators. The warehouseman issues
own receipt to himself. As public warehouseman he gives a
206
receipt to himself as individual, and he is able to use his own
receipts for the purpose of trade and to build up a monopoly and
destroy competition. That this course of dealing is inconsistent
with the full and impartial performance of his duty to the public
seems clear. The defendants answer that the practice had a
beneficial effect upon producers and shippers, and naturally were
able to prove that when, by reason of their advantages, they were
overbidding other dealers there was benefit to the sellers, but
there was an entire failure to show that in the general average
there was any public good to producers or shippers."
Would any honorable man try to override so sweeping a
decision of the highest court of the great state of Illinois? Indi-
viduals would bow to this logical and equitable decision, appeal-
ing as it did to common sense and sustained by well-settled prin-
ciples of law; but the railroads and their favorites, who had
tasted the advantages of monopoly, immediately set to work to
break the force of this victory, which had carried joy to the
hearts of hundreds of small dealers throughout the state of Illi-
nois and the great Northwest; it could not be done by honorable
methods; intimidation, bribery and deception were their only
tools; and by the aid of the officers of the railroads, who traveled
from town to town, in the interests of this monopoly, to inform
shippers it would be as well for them to submit; by the special
train provided by the railroads to carry the agents of the Chicago
warehouseman from town to town ; by offering labor one incentive
to support their methods, and grain handlers an incentive
directly opposed to the one offered to labor; and finally and more
effectually placing at our state capitol a strong lobby whose argu-
ments were made in private, this combination, embracing all the
public warehousemen in Chicago and almost every trunk line
operating west of that city, forced through the Legislature of
Illinois a bill which for the time being again placed the yoke of
monopoly on the neck of the grain trade in the greatest grain
market of the world and its great tributary states which produce
the surplus grain crops. As a result, individual effort to succeed
is no longer possible, the conditions outlined in the court decis-
ions are intensified, that is, the monopoly has become complete
and the railroads simply dictate who shall and who shall not do
business. This condition, originally affecting only the business
coming to Chicago from the west has now extended to shipments
of grain to the east from that market, and scores of individuals
and firms formerly prosperous, have disappeared or drifted into
other, and in some cases, less legitimate lines.
Practically all the great railroads tapping the grain belt are
207
in the grain business; the details of their arrangements are, of
course, secrets, but it requires but very little investigation to
satisfy the most skeptical that they each have one, two or three
concerns handling the bulk of grain on their lines, to whom the
published tariffs are simply a guide as to what the public have to
pay; the public soon discover that the favored shipper can do
business with an entire disregard of fixed charges and .still pros-
per. One railroad president admitted at a public investigation
that his company had organized a corporation for the purpose of
carrying on a grain business at all points on their line, that it
was necessary to do so to protect their interests, as their com-
petitors had arrangements with shippers that were practically
preventing the competition of the ordinary shipper. With this
tendency to create a monopoly, to destroy competition, to
secretly enrich a few men and destroy the business of hundreds
of others, to evade laws, to override courts, to bribe legislators, to
intimidate the public, to create unnatural conditions, by destroy-
ing the natural laws of supply and demand, the railroads and
their creatures are making rapid strides toward a complete con-
trol of the grain markets of this country not for the purpose of
advancing the price paid to the producer or cheapen the price the
consumer is compelled to pay but to force it forward to points
of accumulation to be held for speculative purposes when it is
possible to collect a tax in the form of storage charges from the
speculator, who is willing to pay an enhanced price for a deferred
delivery.
For twelve years the federal law, known as the Inter-State
Commerce Law, has been on trial, that railroads and individuals
do not even respect the law, or try to obey it, shows that our so-
called great men of commerce and corporations have no use for
_ laws except to appeal to them for protection for themselves' or
their soulless creations behind which they hid their individuality
and from whose coffers they obtain the millions to endow colleges
and bribe public officials.
Money is a giant, beside which law is a pigmy; to attempt to
control the present greed for wealth by laws, is like trying to
make Niagara's waters turn back and climb the precipice over
which they now flow. The disregard of the Inter-State Com-
merce Law and other laws by accumulated wealth is sufficient
argument that such accumulations are a menace to the welfare of
the nation ; they respect neither the nation nor the individual, and
have reached a point where they no longer can be tolerated except
with great danger to our institutions.
We find no difficulty in conquering a foreign enemy. Why
should we not do the same with domestic enemies, even though
they are so magnificent in capitalization and water? The rail-
roads for twelve years have given us proof of their contempt for
our laws ; shall they now be permitted to consummate the en-
slavement of a majority of the people or will our national gov-
ernment rise to the occasion and conquer and own the giant that
threatens the liberty and happiness of its people ?
With the railroads in the hands of the people, with rates
equitable and alike to all, men now unable to cope with their
favored competitors will be enabled to live; ability, energy and
industry are useless when a cut rate of freight supplies the mar-
gin to a competitor.
Protect the value of farm products by preventing unnatural
conditions, which overcome the laws of supply and demand and
depress values, to the end that railroads may earn freight and
elevators collect storage. Kill trusts and combinations by cut-
ting the "tap-root," railroad discrimination.
J. C. HANLEY.
National Farmers' Alliance and Industrial Union of America.
J. C. Hanley said :
On behalf of the National Farmers' Alliance and Industrial
Union of America, I desire to express the approval of our asso-
ciation of the object and purpose of this gathering, if that object
is for the purpose of securing information and education on the
subject, trusts and combines, their cause and effects upon the
financial, commercial, industrial and agricultural interests of our
country, and to find a remedy to apply that will be both practical
and effective.
With this idea before me, I can assure this conference that I
will render every possible aid to bring good out of this meeting,
and will pledge the earnest and active co-operation of the officers
and members of our association in carrying out anv plan or policy
that has for its aim the betterment of conditions for the people in
general.
The marvelous development and growth of trusts and com-
bines within the last few years, and the changed conditions which
it has brought about, in all walks of industrial and social life, have
brought the people abruptly to consider this new phase of con-
ditions which are novel, significant and far-reaching. It has finally
dawned upon the people that the formation and extension of the
209
trust movement means new and changed conditions for them,
and whether these conditions are for better or for worse, is deter-
mined by those who are affected by its operations.
Trusts and combines if conducted on a strict business com-
petitive system would be a blessing rather than a curse. But the
operation of many of these gigantic monopolies as conducted
at present is a menace to the existence and stability of our
nation.
The causes in brief are the tendencies to capitalize combina-
tions at enormously watered values, and then exact tribute in
the shape of fixed interest on this .vastly over-capitalized stock.
The effort to earn these fixed charges often, places these trusts
and combines under public disapproval. Because of the power
they control, they can suppress competition, put down the price
of the raw material or product, and put up the price of the man-
ufactured article, while in the same breath they can reduce wages
and reduce labor. Under these conditions the trust becomes a
curse, as none but the members of the combine or trust is a
beneficiary, while the producer and consumer are obliged to pay
the tribute.
I am convinced that legislation cannot remedy this evil, ex-
cept it strikes at the root of the evil, and that the government
should own and control all means of transportation, and public
utilities, and operate them in the interests of the people. I refer
to such agencies as railroads, telegraph and telephone lines, mines
of coal, iron, oil, etc. While I firmly believe that this will be the
only correct and finally effective remedy, I am still aware that it
will be some time before this condition will be realized, and the
trusts themselves are hastening this day faster than the most
ardent socialist ever dreamed of. But as we must offer some rem-
edy that will meet the conditions that confront us, a remedy both
practical and effective, and which can be put into operation at
once, I can sum the whole thing up in one word, "competition."
I will therefore apply my remarks to matters and conditions hav-
ing direct bearing on the interests of agriculture.
There are many ways in which the farmer is made the helpless
victim of the numerous combines through which his products pass
in transit from the farm to the consumer, and every one of these
combines levies tribute on him. The transportation, elevator and
cotton combines are possibly the most exacting of local combines,
and are of such importance that we have left it to the delegates
of one of our grain growers' societies to make a special subject
of investigation of this form of combine, and its cause and effect on
agriculture. In order to secure competition for the products of
210
the farm I propose four remedies which will be necessary to carry
out successfully the permanent establishment of competition,
which is absolutely necessary to relieve the conditions which agri-
culture endures, and to make the great national crops of the
United States wheat and cotton profitable crops, instead of
crops raised at a loss :
1st. The opening and extending our foreign markets in
Oriental countries.
2nd. The building of our own merchant ships to carry our
products to foreign markets.
3rd. The establishment and maintenance of permanent in-
ternational exhibits, in the Orient, of American raw and manu-
factured products.
4th. The protection of American grain markets from rail-
road and warehouse monopoly and the encouragement of local
and terminal competition.
The records of the Agricultural Department show that the
average cost per pound of raising cotton was 6 2-10 cents, while
the average market price was 4J to 5 cents per pound. The enor-
mous loss on this great national crop of nearly three and one-half
billions of pounds of cotton can be appreciated.
This feature of the cotton situation last fall and winter in the
south was aptly put by Col. J. P. Sossaman, of Charlotte, K 0.,
who said in a letter to me: "The cotton industry is in terrible
p'ights. There is so much cotton in the south that the ware-
houses are full and the people are going naked, while the crop is
for sale a.t 4^ cents, and no takers. The planters measure their
loss by the amount of cotton they raise."
And the same condition applies to the wheat section. It is
also raised at a loss. I have compiled statistics from every section
of the wheat raising country, from all kinds of land, prairie, tim-
ber, small and bonanza farms. Eich and poor, educated and ig-
norant farmers, each and every one has the same story to tell,
and that is- that wheat raising is done at a loss. The following is
a report by Mr. A. S. Stephens, of Beardslev, Minn., a well-to-do
farmer, who has had nineteen years' experience as a successful
farmer, 200 miles from a terminal market, but who has been
obliged to make up the losses on the farm from other business
pursuits. His report is an average one from many sources, and
will reveal the average condition on the American farm. He
says:
"My experience in producing 160 acres of wheat has been as
follows :
211
Cost of producing 1 acre of wheat of 13 bu. per acre (a very libera
yield).
Value of land 829.00 per acre.
Interest on same at 8- -
Taxes on same -- - i'o~
Plowing same.- - 1-2&
Harrowing and seeding - -50
Cutting and binding - - 1-25
Stacking -90
Threshing at 3c. per bu -- -39
Help for threshing 75 acres, one day's work 20 men at
$2.00 per acre, one" day -54
Board of crew for threshing as above and machine crew. .20
Delivering to elevator, 6 miles, 3c. per bu. -
Seed, 1)4 bu. at 50c. per bu.-- .62
Natural wear and tear of machinery and earnings of
housewife -2B
$8.02^
Making an actual cost of nearly 62c. per bu. for production.
Average highest price paid at this station in the last past 19 years,
7Gc.
Average lowest in the same period, 43c.
"In finding the above average prices, I take $1.38, which was
paid at this station only one day during the Joe Leiter specula-
tion, whilst the.low prices have been paid fully seventy days out
of every 100 days during the above period. The above is the
actual cost of producing a bushel of wheat on an area of 160 acres
of land. In addition to the above, which cannot be avoided, the
farmer has to pay fire insurance, usually hail insurance, road
taxes, and feed horses in idle times, and other incidental ex-
penses too numerous to mention, which will amount to at least
60 cents per acre, making a total cost of $8.62 per acre, or 66 4-13
cents per bushel, whilst the average prices in the above period
have been 50 cents per bushel, or an actual loss of 16 cents per
bushel, or $2.08 per acre, or $332.80 per 160 acres.
"It appears quite evident that there are several causes for
the low prices, viz:
"1st. "We have rings and combines of mills and line elevators
that apparently make agreement to pay (especially early in the
threshing season) a stated price, regardless of cost of production
or prospect.
"2nd. "We at present practically have but one foreign buyer
or market, which is England. It is natural for human ambition
to pay as little as possible for all purchases, and between
the friendly feeling of American monopoly and English com-
bines, the American producer is at their full mercy, to that ex-
212
tent that we have produced wheat at a loss for a number of years
past.
"The result of it is that one-third of the homes that were given
to the tillers of the soil by the United States government have
been lost by foreclosures, one-third are now paying tribute to
mortgagees, the other third have succeeded in keeping their
homes by force of economy and hard work."
Now, gentlemen, I come to the matter of this paper, and that is
the establishment and extension of our foreign markets and its
effect on agriculture and labor. It is well known that we can
raise more wheat, meat and textile fabrics than would feed and
clothe a nation double our size. We have a great deal of export
products that we must sell to dispose of our surplus. We Taise
in round numbers 500,000,000 bushels of wheat annually. We
consume for home consumption about 400,000,000 bushels. We
have, therefore, about 100,000,000 bushels of wheat for export
annually. We are so situated that the export crop sets the price
by which the whole crop is measured. If we have but one cus-
tomer who will buy from us, and he is quite indifferent about
what prices he pays, so long as it is the lowest possible price that
he must pay, the price that he pays for our products is the
price that the producer measures the profits or losses of his toil
and industry by.
Now the very necessities of the farmers compel them to part
with the grain in the early months of the crop year, and by the
very volume of grain thus thrown on the market they assist the
gamblers who are utilizing every means to "bear" the market
at that time of year when the bulk of the grain is passing out of
the farmers' hands. We find that of the 100,000,000 bushels of
grain that is for export, 50,000,000 is on the western slope, and as
a natural consequence must be loaded into ships and sent to for-
eign markets. The very instant that a vessel clears port it is
registered on the boards of the markets of the world that a ship
loaded with grain or produce containing - bushels of grain,
destined, for instance, to Liverpool, England, has cleared. The
moment that these vessels are placed on the blackboards and
marked "to arrive," they know that it will arrive sometime un-
less it should encounter storms and go to the bottom of the ocean.
But barring accidents it will arrive and the purchaser knows
that he must take it at some figure, and of course he will drive as
sharp a bargain as possible and bear the market to its lowest pos-
sible point.
These ships, laden with about one-half of our grain, have a
long and dangerous journey, and are from four to five months at
213
ea, making the trip around Cape Horn and crossing the equator
twice. This immense volume of grain being afloat and marked
"to arrive" at a time when the bulk of the farmers are parting
.with their grain, contributes in no small degree to the establish-
ment of the "low prices" at which our farmers are forced to part
with their grain. England is our chief and only consumer on
whom we must depend to take our surplus food crops, and a
'natural consequence is that any agency that will create com-
petition and give us another market for our surplus products will
stimulate the prices which competitors will establish in order to
secure the products that they must have. And any advance on
the prices of such products gained by this agency will go to the
producer and he at once becomes the beneficiary.
Let us for a moment consider the Oriental situation and draw
intelligent conclusions. Here we have a vast population aggre-
gating 400,000,000 people which would be asked to consume our
40,000,000 to 50,000,000 bushels of wheat. This would mean
that each inhabitant would consume less than .one-half a peck.
While on the other hand this nation, with 70,000,000 inhabitants,
consumes 400,000,000 bushels, or 5 5-7 bushels per inhabitant. It
will thus be seen that one-half of our wheat export crop would
not provide enough to make pie crust in that country. It might
be suggested that the inhabitants are too poor to be able to buy
wheat flour, as it would be considered a luxury, and could not
afford it. To this question I would answer that there are wealthy
and middle classes in that country the same as we have here, and
those who could afford to buy wheat bread would do so. History
has shown that where wheat bread has come in competition with
rice and coarse grain it has displaced them permanently. Being
a luxury, we could not expect to establish it as a stable article of
food, but the demand would grow as fast as the people would
acquire a taste for it, and know that they could get it when they
wanted it.
It has been computed that the establishment of this market
will bring from 15 to 20 cents a bushel extra for the export crop,
and as the export sets the price for the entire crop the saving to
the American farmer would be $75,000,000 to $100,000,000 an-
nually on the item of wheat alone.
It has been remarked by a prominent man that he examined
e records of Congress for the last thirty years, and he has not
n one single word or line indicating that an attempt has been
J to establish and extend our foreign markets. This is a sad
I humiliating spectacle that the law-makers of this great na-
214
tion have shown to the calling of agriculture, upon which the
greatness of this nation is built.
I will quote from the address of Col. B. F. Clayton, president
of the National Farmer's Congress, to show how our law-makers
have disregarded the interests of the farmer, bulwark of the na-
tion:
"A biographical sketch of a recent Congress as furnished by
its members, discloses the fact that out of a membership of 444
in the Senate and House of Kewesentatives, the farming element,
representing the majority of all the people, have thirty-five mem-
ber's in the House and one in the Senate. The chairman of the
Senate agriculture committee records himself as a lawyer. The
only farmer on the committee is at the tail end. Ten of the
eighteen members of the House committee, including the chair-
man of the agriculture committee, are lawyers. The only chair-
manship held by a farmer is on the committee of "ventilation and
acoustics."
This gives an eloquent but humiliating picture of the way the
farmer is represented in the hall of our national legislature.
The remedy for this is to nominate farmers from agricultural
districts in all political conventions, and it will make no differ-
ence which political party wins, a farmer will be elected, and a
friend of agriculture will be present to work and vote for meas-
ures that will advance his calling. The remedy is in the hands
of the farmer.
I will now discuss briefly another phase of this question, which
deals direct with labor and the farmer, and that is the building
of our own merchant ships to carry our products to market.
It is a sad and humiliating spectacle for a great nation like
the United States to become compelled to permit foreign nations'
ships to come to our doors and load up our products for export
and watch them bear away to the world's markets the products
of this great nation. Many nations boast of their greatness be-
cause of their commerce on the seas. Why cannot the United
States also be rated as a maritime power? Is it because we are too
weak to engage in this line of trade? Is it because we have not the
capital to engage in building up a fleet of ships? Is it because
we have no freight to carry when built? Is it because we lack
enterprise and patriotism? Is it because we have no idle work-
men to employ in such enterprises? Is it because the American
sailor is afraid of the sea? To all of the above questions we can
answer emphatically no.
But like all great nations and enterprises, often the most im-
portant matters of general interest are lost sight of in the mad.
ffl
scramble for development and wealth, and there follows the lack
of organization that would give influence and backing to any de-
mand coming from sources of recognized character and standing.
This nation has recently shown that it has some claim for recog-
nition ;ts a power on the seas. Its splendid victories in the recent-
war have been a source of pride and exultant joy to ourselves and
a revelation to jealous powers, who never thought the Yankee
was "in it" on the sea. We have compelled the respect of the
world to be laid at this nation's feet, through the achievements
of our brave naval heroes, Dewey and Schley, and the "men
behind the guns." Xo more will the face of the American blush
to hear the insulting and contemptuous remarks of foreign na-
tions about interfering in the policies or purpose of this great
nation. "We find instead that nations who have always in the
past proved our most inveterate enemies have suddenly reversed
themselves and are now proclaiming from the housetops that
they are our great friends, and that we are of one blood, and all
that kind of rot. Don't you believe it. Do not permit the advan-
tage that has been achieved by the valor of the Yankee in the
fields of battle and in the domain of enterprise through his own
energy and bravery to be now surrendered to a nation hostile
in the past, but transformed into a demonstrative friend in the
present, caused by a reverence which all the world entertains for
successful achievement. When we get down to business the
practical common sense of the people will work out the prob-
lems that confront us, though they be new and novel to our states-
men.
One of the nation's first requirements is a merchant marine
compatible with our dignity and importance as one of the lead-
ing powers of the earth. It is our first duty as citizens, from
the standpoint of patriotism, to see that American ships be built.
It should be the aim of every citizen to declare that our shipping
shall be restored, and restored as quickly as possible. It will
be seen what advantages this will give our nation and its citizens,
as it will at once place at our disposal in time of war a fleet of
vessels that is second only in importance to the navy itself. A
great navy and auxiliary ships will be the best guarantee of
peace, as no nation will be anxious to invite its own destruction
by hastily declaring war. !\ T ow, as a resource of this nation, it
opens up the most profitable avenue of enterprise that is now
left undeveloped. Our commerce on the seas is as expansive as
3 surface of the earth. Xew markets can be found and extended
iat will absorb the products of the farm and manufactured
products of labor. Regenerating our merchant marine will ere-
ate a new industry in the United States, shipbuilding, and a new
occupation, that of the American sailor. A merchant navy
would be built by American labor of American material, for
Americans to man and navigate. Then we can earn the two
hundred million dollars which we pay annually to the owners
of foreign vessels for doing our carrying trade for us. With this
enterprise thoroughly established and equipped it will take half
a million men from the ranks of idle labor and give them perma-
nent and profitable employment, and to the American capitalist
an avenue for investment for over $100,000,000. Owing to the
generous treatment that foreign nations give their ships and
commerce we will be at an immense disadvantage if we do not
receive government aid in starting this enterprise for the first
twenty-five years in the shape of bounties and subsidies.
Let us consider for a moment what can be done with a small
appropriation of say $25,000,000 annually. Let us pay a bounty
of $2 per ton on all freight of American production and manu-
facture. This to apply to two ships of 10,000 tons capacity
which could leave our shores daily. Such ships leaving 300 days
each year would giye us 6,000,000 tons of American products
carried in American ships to foreign markets. This would be
$12,000,000. With the balance, $13,000,000, we could establish
permanent national exhibits of American products which would
assist in extending our trade in such countries. This small ap-
propriation could be taken from the rivers and harbors and public
buildings appropriations and scarcely be missed, while it would
give to the neglected industry of agriculture a small measure of
the protection which is so lavishly bestowed on all other interests.
This appropriation will establish a fleet of American ships for
the Pacific trade of about 100 ships of 10,000 tons capacity,
which would cost about $1,200,000 each. This would call for an
investment of over $100,000,000 in a new enterprise, which up
to this time has remained undeveloped, and which is almost as
important to the success of agriculture as a market for our sur-
plus crops. When we have no vessels to carry our crops, we are
almost as helpless as if we had no markets.
When we have to depend on the favors of foreign nations'
ships to engage in the carrying of our crops to market, which
may often come in competition with the products of their own
country, our products suffer accordingly. Then, when such na-
tions, with whom we have trade relations, shall be assured that
communication between us and them will be speedy, regular and
permanent, and that they can place orders with us for our prod-
ucts, they will largely increase their orders for our goods. This
217
subsidy is absolutely necessary to permit our American ships to
compete successfully with foreign ships which receive such gen-
erous aid from their respective governments.
Mr. Hanley concluded by congratulating his hearers on the
uprising of independent parties, and the liberalizing of the two
old parties, and reminded them that the leaders of all parties were
warm advocates of trade expansion and the restoration of our
merchant marine.
As Mr. Hanley sat down the chairman invited the governors
in the auditorium Stanley of Kansas, Atkinson of West Vir-
ginia, Pingree of Michigan, Scoville of Wisconsin, and Poynter
of Nebraska to seats on the platform. The distinguished dele-
gates were warmly applauded and loud calls were made for a
"speech" from Governor Pingree. He declined to respond.
AAEON" JONES.
Grand Master National Grange Patrons of Husbandry.
Every citizen of this republic should be free to use his labor
as will best contribute to his benefit and happiness, not, however,
infringing on the rights of any other -citizen.
The right to acquire, own, control and enjoy the use ?md in-
come of property, is an inalienable right, that should be enjoyed
by each individual. Governments are organized and laws are
enacted to better protect life, liberty, and the ownership and use
of property. It is the legitimate function of governments to pro-
tect its citizens in the full and free enjoyment of these rights.
It is for this security of life and the ownership of property that
people are willing to pay taxes for the support of state and na-
tional governments.
The tendency of the times i? for conducting large business
enterprises and concentration of business into the hands of a
few. In the early history of this country, when individuals de-
sired to do a more extended business than they had capital to
control, partnerships were formed of two or more, and the busi-
ness was conducted by them jointly. These partnerships gave
them no additional powers or privileges beyond those enjoyed by
the individual citizen.
As the demand for concentration and the conduct of business
On a still greater scale, the laws provided for the formation of
corporations to conduct certain lines of business^ and the state
granted them certificates of incorporation with certain defined
privileges and the right to conduct business along certain lines,
and in the case of canals and railroads they were granted the
extraordinary power of condemning lands found necessary for
the constructions of their roads or canals, and issue stock, limit-
ing liability within certain limits defined by law, and granting
absolute control of the minority of stock by the majority, and
many other advantages and privileges not enjoyed by any indi-
vidual citizen. These forms of corporation served a useful pur-
pose, but within the past few years the ambitions of men to
acquire power and wealth rapidly, these corporations have been
-consolidating many separate corporations located in one or sev-
eral states, selling out their plants to a corporation organized for
the purpose of buying up all these separate plants and conduct-
ing them under one management, and it has been found that the
_increased power possessed by these large consolidated corpora-
tions or trusts, as they are commonly known, have caused them
to pursue a policy that has infringed on the rights of individuals,
or have used their influences, in restraint of trade, been detri-
mental to the rights of labor, destroyed the value of other prop-
ert} r , and deprived other individuals of the use of their capital,
and so far as this has been done, is clearly against public policy;
and subversive of the best interests of the republic. The purpose
of this conference, as I understand, is to consider this great ques-
tion so vitally effecting the property rights of the citizens of the
United States and make such recommendation to the Congress
of the United States and the several legislatures as will secure
such legislation as will in no wise cripple legitimate enterprise
and the development of the resources of our country, and yet
secure the passage of such laws as will restrain the abuses that
have grown up in corporate management of the various corpora-
tions now doing business in the United States. This is one of the
most important questions now confronting the American people
and one that must be met,, and wisely met, or the republic is
drifting on very dangerous grounds, that sooner or later will sub-
vert the liberties of the people. We believe every good and loyal
citizen should wisely consider this grave question and cast their
influence to secure such legislation, state and national, as will
eliminate all the evil practices of these so-called trusts and com-
binations.
Tt occurs to me that the first step to be taken in remedial
legislation is to pass a well-considered anti-trust law by the Con-
219
guess of the United States, clearly defining what practices on the
part of any corporation would be injurious to public policy, and
cripple or injure individual enterprise, thrift, and the acquire-
ment and use of the property of any citizen of the republic ; and
to supplement this law by equally well-considered anti-trust laws
by each of the several state legislatures to reach and apply to such
phases of the matter as could not be reached by the act of Con-
gress of the United States. These laws should have such provi-
sions for their enforcement and provide penalties for violations
by fines or imprisonment or both as will insure the compliance
and observance of the laws by all corporations and combinations.
To make these laws effective, it is absolutely necessary to know
what these trusts and combinations are doing ; and as these trusts
have assumed so far as appearances go, to be honest, legitimate
corporations, it is difficult to ascertain which ones are operating
in a way detrimental to public policy. It would therefore seem
that these laws should provide for government and state inspec-
tion of their business, of their books, agreements, receipts and
expenditures, and that the state may have full knowledge, the
right to examine all vouchers and records of the meetings of
directors and managers; in short, full and complete knowledge
of all the business of affairs of the corporation. The individuals
in seeking a corporation franchise have asked the state to help
them to a privilege or advantage they did not possess as indi-
viduals, or they would not seek to be incorporated as a corpora-
tion; and on account of that advantage granted and to protect the
public, this inspection should be rigid and full. The people
must know what the specific acts are that are against public policy
before the laws can be enforced as against them, and the rights
of the public protected. Corporations may object to this inspec-
tion on the ground that it would expose what they claim as their
private business. In answer to this it might be said that the
rights of the citizens of the state who grant the articles of incor-
poration or allow them to do business in the state, special privi-
leges, have a right to know that the .privilege has not been used
against public policy ; besides, there is no law now, never has been,
never can be any law compelling any one to form a corporation
and invest his money in any corporation enterprise. Those who
invest in corporation stock, do so voluntarily.
_ If the corporations are conducting legitimate business, no
injury will be done them by inspection. If they are using the
powers granted to them by the state, to crush out other enter-
prises and deprive other citizens of the use and value of their
property in order to avoid competition; if they are using their
220
power and influence in restraint of trade; if they are using large
sums of money to illegitimately control political parties or to con-
trol legislation, as was testified before the Congressional investi-
gation that the "Sugar trust made it a rule to make political con-
tributions to the Republican party in Republican states and to
the Democratic party in Democratic states." Mr. Havemeyer
testified that, "We get a good deal of protection for our contribu-
tions," and when asked if his company had not endeavored to
control legislation of Congress with a view of making money out
of such legislation, he answered : "TJndoubtedy. That is what
I have been down here for/' and many other cases might be cited.
If they have agreements with railroad companies for rebates of
freights, as has been shown to be the case in the Standard Oil
trust and many others, these practices are most reprehensible
and should be punished by such penalties as will effectually stop
them. The agreements and conspiracies to depress the prices of
raw material and staple products are equally against public policy.
In speaking for the agricultural interests of our country, that
great basic industry that produces 70 per cent of the wealth of
the country, and furnishes 60 per cent of the freight on all rail-
roads, lake, river, and coastwise trade, and 69 per cent of all
exports, and that make it possible for the other industrial inter-
ests of our country to prosper, I desire to say, these practices and
conditions most seriously and injuriously affect it, and they de-
mand of the legislatures of the several states and of the national
Congress, well considered and effective legislation that will pre-
Vnt the injurious practices of trusts and combinations.
I believe it to be the settled purpose of a majority of the peo-
ple, to hold our representatives in Congress and in the several
legislatures personally responsible for the enactment of such
laws as will restrain and prevent the continuance of acts of trusts
that are against public policy. I do not believe that the people
hold any one party, as responsible for the present conditions, but
I do believe that each individual member holding official position
will be, and is, held for his voice and vote and action in the enact-
ment of demanded remedial and protective legislation.
Our country is so vast, its interests so extended, and the con-
stantly increasing wealth in its multiplied forms of the people
need carefully considered laws governing the rights and uses of
property, that corporations or individuals by agreements, may
not be able to oppress or destroy any of the great industries of
the nation. The demand of the times is for sound, sensible, good
business men, with broad common sense, to frame the laws of our
country, state and nation.
221
JOHN M. STAHL.
Secretary Farmers' National Congress.
Trusts are the latest device for doing things in a large way.
They are the latest advance in a steady, persistent movement that
has dominated the industrial development of the past one hun-
dred years; that has gathered the isolated workers with tools,
working alone, into shops; and then has brought a score of shops
into a factory; and has then combined factories; that while thus
developing the factory system until the result has been well
termed an industrial revolution, has none the less "worked a
similar revolution in merchandising, in transportation, and in
yet other lines of human activity, always resistlessly absorbing
and combining to put more men and greater means under the
control and direction of the masterful brain that has reached the
place it occupies by a civil service indisputably based on merit,
truly a "natural selection" in industrv, always having for its
object doing things in a larger way, because it is constantly
proved that this is doing things in a more economical way
(whether, all things considered, it is the best way, I cannot dis-
cuss here). Hence the trust is a logical phenomenon in this
industrial development. Being such, it may be destroyed in
form, but I do not believe that.it can be destroyed in essence. It
will doubtless be modified, in time it will be superceded, and cer-
tainly while it exists it may and ought to be directed, controlled,
and made an instrument, not for private gain alone, but for the
public good. I believe that it will be wiser for us, not to seek to
destroy it, but to make it our servant. We have the machine ; it
is for us not to try to smash it, but to discover how best to use it.
I believe that anything that increases the productivity of
mankind is a good thing and should work good ; that if it does not
work good, it is not the fault of that thing per se; that whatever
increases the productivity of human labor gives man more to
enjoy and more time for recreation: that it is a good, though to
reach the ultimate benefit of the many, it may for a time hurt the
few,' as when a new labor-saving machine for a time throws men
out of employment, and therefore the trust ought to be a good
thing. If so far it has wrought ten times as much harm as good
to the people, as it seems to have done, that is not the fault of the
trust, which certainly can exist without being a monopoly, but
because it has been misused. I doubt if any discussion of the
effect of industrial combination on the individual, for example,
will show otherwise.
222
But some men are greedy and hard, and have little regard for
others. It has heen found necessary to control many instruments
of industry that man's brain has devised machinery, factories,
stores, banks, transportation facilities, corporations, insurance
in fact, very few, if any, means of industrial or commercial ac-
tivity are not more or less controlled by law. To control trusts
by law will not introduce any new principle. The Emperor Zeno
found it necessary to decree that all monopolies and combinations
to keep up the price of merchandise, provisions, or workmanship,
should be prohibited, upon pain of forfeiture of goods and per-
petual banishment. Blackstone tells us that "combinations also
among victuallers or artificers, to raise the price of provisions or
any commodities, or the rate of labor, are in many cases severely
punished by particular statutes; and in general by statutes II
and III of Edward VI." While the principle was early estab-
lished that government had the right to take cognizance of the
instruments of industry, increasing experience and wisdom
showed that efforts should be to direct rather than suppress, and
probably it has no more perfect flower then the law that grew
out of "the Granger cases" of a quarter of a century ago, which
demonstrated that the strongest corporations are the servants of
the state and subject to its control. The same application must
be made to the trust, which seemed to be a plant, not to be rooted
out or to be allowed to grow as a weed, but to be cultivated and
cared for and trained, to increase the food and clothing of man-
kind.
Certainly we should lose no time in taking control of the
trust, which up to this time has been a great curse to the Ameri-
can people.
Using terms in their popular meaning, the price of an article,
which roughly indicates the difficulty of enjoying it by the people,
may be lowered in two ways : By lessening the cost of produc-
tion, or by lessening the profit of the manufacturer.
Competition keeps down the profit of the manufacturer ; and
by stimulating the discovery of methods and the invention of
means that economize in production, lessens the cost of produc-
tion.
The trust, which is opposed to competition, lessens the cost
of production apparently even more than competition does; but
its avowed object has been to hold up the profit of the manu-
facturer. If, however, it brings the price down to the figure
made by competition, it would appear to be the better, since gen-
erally it is better to lower the price by lessening the amount of
energy required in production than by lessening the profit of the
223
manufacturer below a certain point. If less labor is required to
make certain things, then men, working as before, will have more
things to enjoy, or, having the same to enjoy, will have more time
for culture and recreation; while if the manufacturer has a
fair profit he can pay fair wages and will have increased capital
to be taxed and to be used for the employment of labor.
But if this profit be excessive the result must be evil, for so
much capital will accumulate in the hands of the few that it can,
and probably will, be used to oppress the t>eople, corrupt public
officials, and destroy good government. Certainly when trusts,
instead of lowering prices, advance them, those trusts yield exces-
sive profits while directly hurting the people. Nearly all trusts
have advanced the prices of the things the production of which
they control. This makes it imperative and urgent that they be
regulated by law.
The nature of much of this law to regulate trusts must be
decided upon after the beginning has been made. Eesults will
indicate further actions. I will, however, take the liberty of sug-
gesting that when a trust is favored by artificial conditions
created by law, as, for example, a protective tariff (and I am and
always have been a protectionist), those conditions should be
removed. The very existence of a trust controlling our market as
to anything removes all grounds for a protective tariff on that
article.
Many trust properties are capitalized at much more than
their worth. This is unjust and dangerous. It is unjust because
in order that a fair return may be made on all the capitalization of
the trust, the people are made to pay too much for a trust article.
It is dangerous because, first, selling large plants for twice what
they are worth puts into the hands of a few a dangerous amount
of capital; and, secondly, because the public is led to invest in
properties at an exaggerated value and collapse and panic and
hardship will ensue. Hence a trust should not be allowed to put
its bonds and stocks on the market until its properties have been
carefully investigated by public officials, whose minute statement
is open to the public, and it is found that every dollar of bonds
and stocks offered to the public for investment is backed by a dol-
lar of real value.
I will confess that I tried hard to reach conclusions not so
favorable to trusts per se, as those stated. But I am constrained
to write the truth, as it is given to me to see it, knowing that any-
thing in any wise favorable to trusts is very unpopular, especially
among farmers. And trusts have been so outrageously diverted
from their proper use and have been so used to rob the people,
224
that I heartily sympathize with the public opinion of them;
especially when I come to buy some trust article, fencing wire,
for example. Further, I have not a dollar invested in any trust
in any way; and, more, so far as I know, or have reason to
suspect, no one that I know has a dollar invested in a trust.
In the weeks that I have spent in Great Britain England,
Wales, Ireland, and Scotland and on the Continent, I have not
once heard trusts mentioned in conversation, except when I spoke
of them; and I have seen them mentioned only twice in the
papers on this side of the Atlantic. Here they are not of public
interest or concern. This has a deep significance, when one re-
members that the industrial revolution has been less rapid here.
There are trusts in Great Britain and in the continental coun-
tries, and apparently a protective tariff slightly favors them, but
this is by no means certain. But certainly no trusts here have
robbed the people as trusts have robbed the people of the "United
States, and I do not believe that trusts would dare, in any
European country, Kussia and Turkey possibly excepted, to
double and treble the price of articles, while lowering wages and
discharging men. Our people are greater than the trust, and
when it oppresses them beyond endurance it will be roughly
handled, then more wisely attended to, and ultimately it will be
used for the public good.
J. STERLING MOKTON.
Ex-Secretary Department of Agriculture.
In my letter to the Civic Federation July 22d I think I
sufficiently indicated my opinion of the present agonizing solici-
tude which seems to have permeated the practical politicians of
all parties as to the possible despotisms and outrageous monop-
olies which combinations of large capital may bring about in
the United States.
But there is no reason for apprehension. There can be no
monopoly if trade and commerce are free. The combination of
millions of dollars in any special manufacture can do no more nor
less than compete with alert individual enterprise making the
same staple. And the competition may make an article of
equally good quality and sell it at an equally low price, and have
logically an equal share of the market. Small corporations, even
copartnerships, will be free to enter every field of competitive
manufacture and commerce whenever demand makes high prices
and gives promise of profits. Smaller concerns will seldom be
225
overcapitalized. They will seldom be extravagantly managed.
Many of the larger combinations, however, will be threatened
and jeopardized by overcapitalization and extravagant manage-
ment. It will be impossible therefore to pay dividends upon
their common stock. That stock will then soon have no value
in. the market, and the "trust" will speedily go into bankruptcy.
The whisky and other trusts that failed from these, causes verify
this prognosis. There are, however, no "trusts" in the United
States, as trusts in their obnoxious sense are defined, but there are
many very large corporations. It is impossible to prevent such
great corporations, unless each state repeals its general incorpora-
tion laws.
Forty-five years ago I came to Nebraska. It was then more
than three hundred miles from any point within its boundaries
to a railroad. All capital was individual. There was no corpo-
ration anywhere within the limits of the territory. There were
very few corporations in Iowa or Missouri.
The first corn planted on the farm where I lived in 1855, and
have lived ever since, was dropped by hand and covered with a hoe.
So was the second crop. But the man with the hoe has departed.
The village blacksmith who made hoes has been crushed out by
the cruel competition of combined capital. There are to-day ten
million acres planted to corn in Nebraska. It promises an average
yield of thirty bushels to the acre. This will make an aggregate
of 300,000,000 bushels for the state. If the hoe and the man with
the hoe who dropped the corn with his fingers had never been sup-
planted by the double-rowed, two-horse corn planter and, in till-
age, crushed out by the double-rowed cultivators, such a breadth
of corn would have been an impossibility. Combinations of capi-
tal made the corn planters, made the cultivators, crushed out the
village blacksmith, and relegated the man with the hoe to ever-
lasting inutility.
But the great multitude of mouths which consume food made
from corn get this food at a less price than they ever did before
and for a very small per cent of what the cost of corn food would
have been at this time if it had continued to be planted and cul-
tivated by a man with a hoe.
These examples are illustrative of the fact that all these great
combinations of capital, while they may put out of employment a
vast number of traveling men and others differently employed,
they also reduce competitive waste. The traveling men and all
their expenses have been paid invariably by the consumers of the
goods which they sold. The entire advancement and improve-
ment of the industrial world are marked by the wrecks and rums
of individuals, but illuminated and glorified by the advantages
which they have given to the multitude.
The West has been opened up by combinations of capital.
The means of production, all the improved implements for plant-
ing and tillage, all the perfected machinery for the speedy liar-
vesting and storing away of crops, together with their accelerated
cheap distribution by rail, make this fertile West inhabitable and
prosperous. But if there had been no incorporation of money
out of which to evolve manufactories for improved and cheaper
agricultural implements and machinery, these crops, which now
astound the world with their magnitude and money value, would
never have been grown west of the Missouri river. And even if
they could have been grown without the direct power and influ-
ence of improved machinery, they could never have been cheaply
distributed to the markets of the world, unless there had been
further incorporations of capital to build and operate railroads.
The state of Nebraska is swiftly paying off all of its land mort-
gages. These mortgages largely represent the purchase money.
Originally, prior to the alleged "crime of 1873," mortgages upon
these farms carried from 40 per cent down to 12 per cent interest
per annum. The latter figure was regarded exceedingly low and
quite favorable to the borrower. But to-day, upon the same
number of acres of land, three times the amount of money can
be borrowed that would have been loaned on the same security
in 1870 and 1871, and the rate of interest is now 6 and 5 per cent
per annum.
By combinations of capital the railways have been doubled as
to their mileage in the last fifteen years. Instead of their mort-
gage bonds bearing 8 per cent, they now carry only 4 per cent.
Thus, instead of seeing great possible evils in incorporations of
capital for the future, it is better to contemplate and verify the
great good which has come to the country because of capitalistic
combinations in the past.
The word "trust/ 5 as used by partisans, particularly those who
are endeavoring to organize the discontent of the United States
against the courts, and the laws as construed by the courts, is
given a sinister significance. Without any attempt at analysis,
definition or explanation, every combination for investment of
capital, of whatsoever kind, is denounced as a "trust." This is
merely an appeal to envy, malice, and the other meaner charac-
teristics of humanity. Originally, however, the word "trust" was
defined as "a beneficial interest in land or other property, the
legal title to which is in another, recognized and enforced by the
courts of equity."
227
Having observed individual capital carrying on business in
Nebraska prior to its.invasion by a single corporation ; and subse-
quently having experienced the change of cost made in the same
business when taken up by incorporated capital, and noted par-
ticularly the reductions in transportation as charged by stage
coaches and ox and mule trains, when compared to rates charged
by passenger and freight trains on railways, one is rejoiced at the
advent of the money power and the agents of capital into this
wilderness. The cost of carrying 100 pounds of freight from
Nebraska City to Denver by mule or ox trains was from $5 to
$12. Freight between the same points to-day is 50 cents per
hundredweight. Passenger fare from Nebraska City to Denver
by coach was $150; by rail to-day it is $17. For a seat in the
coach from Nebraska City to Salt Lake Citv one paid $300; the
rate by rail to-day is $80.- -Steamboat rates from St. Louis, by the
Missouri river, were, on freight, from 75 cents to $4 per hundred-
weight (the steamboats, however, were not owned by corpora-
tions), and passenger fare was $30.
Combinations of capital for vast production and distribution,
while they may have destroyed small dealers in great numbers,
have, as a rule, ultimately benefited the great majority of man-
kind. The present tendency toward large aggregations of money
for the purpose of carrying on manufacture, commerce, and trans-
portation, may therefore be not dangerous to the millions of con-
sumers who may thus be furnished more bread and more clothing
for less hours of labor.
The consummate perfection of civilization will be realized in
the lowest possible prices for all the staples of life. The cheaper
all staple commodities become, the less hours of efforts and exer-
tion will each member of the human family be obliged to put
forth in order to maintain and- clothe himself. The more leisure
the mass of mankind may have from bodily effort, the more time
they may bestow upon intellectual development and moral cul-
ture. High p'rices are not a boon to mankind. High prices
always prevail in newly-settled and crude communities. The
lowest prices will be at hand when, by combinations of skill and
capital, mankind shall have reached the ultima TJiule of cheap
production combined with speedy and cheap distribution.
By protective tariff advocates, paternalism has been preached
in the United States for many years. Out of protection many
monopolies have been evolved. When protection shall have been
abolished many will die.
Free trade will not compel anybody to trade anywhere, but
will permit everybody to trade everywhere. Under free trade
228
monopolies can not be long-lived. Under free trade the homeo-
pathic maxim that "like cures like," may be verified by killing
off one -combine with another combine, and by organizing syndi-
cate against syndicate for intense competition, thus keeping
prices and profits at a minimum.
Trusts which are over-capitalized are born of the machinations
of shallow and impractical men. They will fail and no one be
harmed except those whose credulity led them to invest in their
securities.
There is much misapprehension as to incorporated capital in
the United States. Oratorical vagarists have endeavored to make
common people believe that incorporations are not subject to
economic laws of competition and that the relation of supply to
demand is not the sole regulator of values. The fact, however, re-
mains that money invested in manufactories or in railroads be-
longing to incorporations is no stronger, no better and no more
exempt from the operation of commercial laws than the money
which is owned by individuals. There need be, in my judgment,
no apprehension as to the trusts crushing out all competition.
With the exception of the oil trust and the sugar trust, failure
among trusts has been universal. The whisky trust, the tobacco
trust and all the other trusts of any importance up to date, except
those that have been formed very recently, have been complete
failures. These failures have come, firstly, from over-capitaliza-
tion; and, secondly, from mismanagement. Intelligent competi-
tion can enter the field against any trust on earth except one which
has a natural monopoly (by this I mean one which, like the
, Standard Oil Company, owns the only oil-producing lands in the
country), and successfully put its products upon the market with
the sympathy of the consumer all on its side. By this I mean
that outside of the trusts co-partnerships and stock companies
may be formed with capital, energy and ability to successfully
take the market against any and all trusts' products, except those
which are the result of a natural monopoly.
Enactments will not cure the tendency toward combines.
Economic laws will rectify their errors and protect the people.
Whenever legislatures invade the domain of economic laws with
statute laws, they merely show the power and majesty of the
former and italicize the feebleness and littleness of the latter.
Too much legislation begot all the real and all the possible evils
which combinations of capital, even under a protective tariff, are
capable of inflicting. "Let alone" trade, manufacture and dis-
tribution are good servants to all the people. Favored by special
privileges they may become servants to the few and masters of
229
the many. The less legislation after repealing the protective
tariff about restraining capital, the better.
Of course, it is fashionable, it is epidpmic. to denounce all
large aggregations of capital as "trusts." This mania will at la=t
exhaust itself and fhe country will find that those who have been
damaged by trusts were those who bought their securities for
more than they were worth.
CYRUS G. LUCE.
Ex-Governor of Michigan.
As a lifelong farmer I crave a few moments of voiir valuable
time to nresent the interests of that great portion of the American
people that are engaged in agricultural pursuits.
Much attention has been (riven bv this conference to schemes
and methods that are intended to increase our exports. "With all
proper efforts in this direction we are in heartv svmpathy. Our
enormous exports of the last few vears have been the wonder of
the civilized world. We have surprised ourselves bv their mag-
nitude. We have forced a great balance of trade in our favor.
We have loaded ships with gold coming from other nations to our
shores. These copditions have contributed la-reel v to the present
prosperous condition of our own country. It is well to pause and
reflect upon the sources from whence these exports come. Be-
ginning with 1892. arid coming down to the presept honr, nearly
eighty per cent of the products that have produced these vast
sums have been wrung from the brown soil. In faith the
American farmer has sown and planted. He has with industry
cultivated and with rejoicing harvested the wheat, cotton and
corn that has gone abroad to feed and clothe the people of other
nations. He has reared, watched, cared for and fed the herds
and flocks that have, together with the grain and cotton, loaded
the cars and the vessel* that hive brought profits to the owners
of railroads and steamships. He. with the necessitv of his prod-
nets, stands a a breastwork against the dangers of foreign wars.
Tn the conideratiop of questions that affect t^e welfare of the
natiop nope are entitled to greater or more Candid attention, and
vet during all the dismissions here he. with his great contribu-
tion to the general welfare, has occupied just tweptv minutes of
vour time. His interests were championed and his views pre-
sented grandly and nobly bv the mnstpr of the ~N"ntiopal Orange,
and that was all. His interests have pot been directlv attacked,
but by all others quietly ignored. I do not say this to complain,
230
but to intimate to you the modesty of those engaged in this giant
pursuit. But with all this modesty we are not disinterested lis-
teners to the discussions of the trust question, nor are we ignorant
of the tendency of the times nor of the inclination to unite cor-
poration with corporation until they have hecome a threatening
menace to their interests. We are not unfriendly to the ordi-
nary corporation where other corporations can exist as competi-
tors in the production of goods, articles and implements in the
same line. While human nature remains the same we do not
arid can not believe that it is safe to lodge in the hands of one
man or set of men the power that would be given him by union
of all the corporations under one management engaged in the
production of any one line of goods. It is idle to claim, as some
men do, that these men, clothed with such unlimited power,
would suddenly become so good, just and humane that he would
mete out even-handed justice to all. He would create a mo-
nopoly in his line; he would force down the price of articles that
he must purchase and put up the price of products that he makes
for sale. This prophecy is made with some knowledge of human
nature and the policy pursued in this and other generations. But
more than this, we have the evidence of practical demonstrations
by every day's occurrence at the present time. The modern
trust is comparatively new in its existence and operations, but in
all cases where it is fairly on its feet it is doing and undertaking
to do the very things that we have predicted it will do. Of the
hundreds of articles that the trust has been able to control, prices
have been advanced in nearly all cases; still it is claimed with
great confidence that the advance in price grows out of the gen-
eral tendency of events. But is it not a singular coincidence
that the price so suddenly advances as soon as the trust secures
control? It is freely and gladly admitted that labor is securing
an advance in wages, but this is slight compared with the advance
in the price of trust-made articles. Now, if it is true (and more
than possibly it is) that these mammoth combinations produce
and place on the market their goods, wares and implements at
lower prices than the ordinary corporation can where competition
exists, where do all the increased profits go? Who is getting
them? They very likely save enough by their improved methods
in making and selling to pay all the advances made to the labor-
ers, and this would leave the enhanced prices secured for prod-
ucts to pay increased dividends to the stockholders. Among all
who have made a defense or a quasi defense no one has given any
other solution of this question, hence the conclusion reached is a
safe one. All corporations have not yet formed themselves into
231
trusts, but it is safe to conclude that all who can, seeing the
increased profits secured by those who have united their forces,
will be inclined to do so, and others will be compelled to do so
or die. And this justly causes great apprehension upon the part
of the American farmers. I do not see how it is possible for
them to unite in a counter trust these great producers of the
world's wealth. I know that some with a more vivid imagina-
tion than I possess have conceived the project. I can readily see
how labor can respond to the appeals made here and elsewhere to
unite and join forces with the great productive combinations,
but how the farmers can do so is beyond my imagination. But
even if they can form one so comprehensive and so perfect in its
operation that they shall be enabled to absolutely control produc-
tion and prices, with my present ideas of human nature I am
afraid that in too many cases the children of the poor would go
supperless to bed. It is neither here nor there a safe power to
place untrammeled in the hands cf any one man or set of men.
But if the trust reaches the height of its ambition, the great army
engaged in agricultural pursuits will be driven to desperation.
The tendency will inevitably be to force them through a trust
or otherwise to reduce production, to cease in their efforts to load
the cars and vessels as bounteously as before, they will cease to
purchase as generously as in the past. In this many others will
suffer as well as they. This is no fancy picture, and far be it
from a threat, but it is believed to be the inevitable result of
operating causes, and the conclusion is drawn from the fact that
in all the relations of life and positions occupied men usually
exercise all the power and authority lodged in their hands. This
is just as true in America as in any other land. We do not
clothe the President or the Governors of states, the Congress or
state Legislatures, or even the courts, with unlimited power. We
do not permit any of these to discharge duties at their own sweet
wills, but they are hedged about by constitutional provisions and
by legal enactments and somehow or in some way these mighty cor-
porations known as trusts must be checked, trammeled, restrained.
In all my acquaintance I know of no farmer who feels safe in the
prosecution of his calling without placing restraint upon them.
In the incorporation of corporations they make bold claims not
for the public, perhaps, in relation to what they can and expect
to do. No better or more dangerous illustration can be given
than the one presented to the woollen manufacturers, and the
same claim is made and presented as an inducement to the manu-
facturers of leather and of its products. They or their promot-
ers claim that when they are properly organized and in working
232
HOWARD S. TAYLOR
AZEL F. HATCH
FRANCIS B. THURBER
WILLIAM FORTUNE
EDWARD C. AKIN
JEREMIAH W. JENKS
condition that one man can buy all the wool in America, fixing
their own prices without fear of competition. Another man can
sell all the cloth made by all the factories, limiting the products
and fixing prices. All this may never be realized, but it is the
scheme desired and presents a glowing, fancy picture. We con-
ceived the difficulty in devising and executing remedies for these
present and prospective evils. Absolute publicity and oversight
is good as far as it goes. Absolute prevention of discrimination
in freight rates will help in some cases. A modification or re-
peal of the tariff on trust-made articles will aid in other cases.
But in spite of these suggested remedies the trust will continue
to live, thrive and monopolize. Nothing short of a united,
determined public opinion in opposition to the monopolizing
power of the trust will conceive and execute efficient remedies.
While the farmers themselves entertain decided opinions in rela-
tion to the central question, yet because of their generally isolated
condition and want of organization they do not contribute toward
molding public opinion in proportion to their numbers and the
magnitude of their contributions to society. They seldom secure
seats in Congress, and only occasionally anything like a majority
in Legislatures. Hence we make an earnest appeal to all the
agencies that contribute so largely to forming public opinion for
the enactment and enforcement of just laws. We ask no special
favors, but demand even-handed justice and exemption from
threatened dangers. We desire to live and let live. Our purpose
is not to tear down, but build up. We ask for no acts of incorpo-
ration for ourselves or our interests, but we do insist that if other
interests are incorporated that ours shall be sacredly guarded and
safely protected. This claim is not made solely for ourselves,
but in behalf of all the great interests of the republic. Without
reasonably prosperous agriculture other interests can not prosper.
Farmers are quiet, unobtrusive citizens, but they are not cowards,
as has been attested in peace and in war. The farmers fired the
first shot in the great conflict that gave to us liberty, independ-
ence and power. That liberty they still enjoy and highly prize.
They do not believe that the trust has or will become so great in
strength and power that it can not be overthrown, hence they
have no sympathy with the sentiments that it has come to stay
and can not be dislodged from power. And the more speedily
and effectually attempts to carry out its purposes the more cer-
tainly will it be overthrown. The ballot box is the natural place
for the American people to fight their battles, and I am sure that
the farmers will be there.
MARTIN A. KtfAPP.
Chairman Interstate Commerce Commission.
The purpose of this brief paper is to suggest a phase of the
general subject which is quite commonly overlooked. In dealing
with the trust problem there is frequent failure to distinguish the
activities engaged in private pursuits from the agencies employed
in public service. The restraint of competition among railway
carriers, for example, is often opposed on the same grounds and
with the same arguments as are relied upon to prove the danger-
ous consequences of restricting competition in the fields of indus-
trial production.
But there is a fundamental difference, I maintain, between
those combinations in private business, the formation of which
is of such recent and rapid growth, and associated action by those
who furnish the means of public transportation. This difference
may be stated in a single paragraph. As regards actual prop-
erty, the products of labor and skill in any vocation, the things
we eat and wear and use, we do not want under present economic
conditions at least uniformity of price. Every producer should
be perfectly free to sell for all he can get, every purchaser equally
free to buy just as cheap as he can. The dealer should always be
at liberty to make one price to one person and another price to
another person, or to vary the price to the same person as and
when he sees fit. That is to say, in the exchange of goods there
should be the utmost freedom of contract between the parties.
As between buyer and seller the power to bargain should be unre-
strained, for in that power is the essence of commercial liberty.
Therefore, speaking in general terms, whatever tends to abridge
this freedom of contract and so to bring about uniform or non-
competitive prices, whether by limiting production or controlling
the markets, is to be deprecated as on the whole against the pub-
lic interest. For this reason, legislation which checks this ten-
dency and promotes industrial freedom may well be regarded as
defensible and necessary.
But as respects public transportation, which is not property
at all, but a service, not a commodity, but a function or agency of
government, we do want uniform charges under like conditions
without preference or exception to any person. Rightly con-
sidered, the tolls paid to the public carrier are in the nature of a
tax, and the relations between carriers and the public are not con-
tract relations, save in a very limited sense and for special pur-
poses. I do not procure transportation as the result of a bargain
234
with the carrier., but in the exercise of my political rights. The
right to that transportation is primary, indispensable and inalien-
able. The essential element of this right is equality. The
privileges I enjoy as a citizen in this regard are precisely the same
in every respect as those possessed by any other citizen under like
circumstances, and impairment of those privileges is a depriva-
tion of like character and scarcely less serious than restraints
upon my personal freedom or the denial of protection to my prop-
erty. Therefore, whatever promotes stability and uniformity of
charges by public carriers, whatever tends to secure equality of
right in the use of transportation agencies, should be encouraged
and promoted. Indeed, I go to the extent of saying that we can-
not have that free and fair competition in the fields of production,
which is the condition of industrial freedom, without methods
and charges for public transportation which amount to a mo-
nopoly.
The benefits supposed to result from railroad competition I
believe to be greatly exaggerated. Those who honestly uphold
the present policy to sa) r nothing of those who oppose a change
-from unworth}'' motives apparently assume that the public gets
the same advantage from competition between carriers as from
competition between producers and dealers generally. That this
is a mistaken and fallacious view I am fully persuaded. I do not
see how any one can derive benefit from competition in the mat-
ter of his daily wants, unless he is in a situation to choose freely
between two or more persons who are each able to supply those
wants. The objective value of competition, I submit, rests in
the power of selection, and he who is debarred from choice must
be deprived of any direct advantage from the rivalry of others.
As to most of our ordinary w*ants broadly speaking every
person in every place has the opportunity to choose. If the only
merchant in a remote hamlet charges more for his wares than his
customers are willing to pay, there is another store at a near-by
cross-roads where they can purchase the same commodities; and,
like liberty of selection, is commonly enjoyed as to the various
needs of social life, whether simple or complex. But in respect
of railroad transportation only a few people comparatively are so
situated as to have any available choice between carriers. So
that, without amplifying the argument, the simple fact is that
only a small percentage of population, and an exceedingly small
fraction of territory, are so located as to have any practical op-
portunity for selection in the matter of public conveyance. To
the great majority of people railway transportation is now a vir-
tual monopoly. I do not mean to say that the competition be-
235
tween railroads connecting great cities by different lines has not
had an indirect and important influence upon railroad charges at
intermediate points which are dependent upon one of those lines
alone ; hut I venture the opinion again speaking hroadly that
the limit of such indirect advantage has already been reached,
and that further benefit from that source cannot reasonably be
expected. The result is that a few commercial centers and a few
large shippers, having this power of choice, and finding their
traffic indispensable to the carriers, secure enormous advantages,
either by evasion or violation of law, of which the masses are de-
prived. It is entirely plain to me, therefore, that co-operative
methods, the general discontinuance of competition in rates be-
tween rival railroads, would tend strongly to remove the inequali-
ties which now exist, and prove a positive and substantial ad-
vantage to the great majority of producers and consumers. And
I firmly believe that while there is a popular objection to railroad
pooling, as it is commonly called, founded largely upon ignorance
of its purpose and misconception of its effects, the principal oppo-
sition to legalized co-operation, the opposition which has thus far
prevailed, comes from the favored few who are reaping unearned
profits by the discriminating practices which they virtually com-
pel and of which they are the sole beneficiaries.
In harmony with this view, as I conceive, is another sugges-
tion. The opposition to trusts, so far as it is sincere and intel-
ligent, seems to be based largely upon belief that they do, or ap-
prehension that they will, so use their combined power, and the
degree of monopoly thereby secured, as to obtain extortionate
prices from the consumer, or at least higher prices than would
otherwise prevail. The demand for laws to prevent these com-
binations arises from our inability to control by legislation the
prices of industrial products. We cannot by law fix the price of
sugar, petroleum, cotton cloth or any other commodity. And if
we could, we should be powerless to compel their sale in any case
at the price so fixed. Therefore, since the apprehended evils
cannot be reached by direct legislation, we seek to accomplish the
desired end by the indirect means of preventing the combination,
and these indirect means must be resorted to because no others
are available.
But this difficulty does not exist in respect of prices or
charges for public transportation, for those charges are under
direct and complete legislative control. Within limitations
which secure to the owners of railway property the equal protec-
tion of the laws and prevent the taking of such property without
236
due process of law, being the same limitations as are applied to all
legislation, the power of Congress and of the several states in
their respective spheres either by direct action or through the
medium of commissions to control and prescribe the charges for
public carriage is plenary and exclusive. This ,being so, the
above mentioned objections to industrial combination are mainly,
if not wholly, untenable in the case of railway combinations.
The end desired, viz., protection of the public against unreason-
able charges, can be secured by direct legislation, and hence there
is no occasion for employing the indirect method of preventing
the combination. And if the right to equal treatment in all that
pertains to transportation service will be better secured, as un-
questionably it would be, by allowing and legalizing association of
public carriers, our legislative policy should be shaped accord-
ingly. So far as railway service is concerned, the practical choice
lies between competition on the one hand, with the inevitable out-
come of discriminations which favor the few at the expense of the
many, or like charges for like service, which can be realized only
by permitting and encouraging co-operative action by rival roads.
The power to compete is the power to discriminate, and it is sim-
ply out of the question to have at once tha absence of discrimina-
tion and the presence of competition.
For these reasons I regard as fundamental and of the greatest
practical importance the distinction I have endeavored to draw.
H. T. KEWCOMB.
United States Census Office.
Before beginning an examination of the nature and results of
railway combinations it is desirable to consider some of the facts
that differentiate combinations in transportation from combina-
tions in manufactures and trade.
First in point of time : A strong tendency toward the combi-
nation of originally separate corporations has characterized the
railway industry during its entire history; in manufactures and
in trade such combinations were practically unknown prior to
1870.
Again, one of the methods of railway combination, formerly
most effective I allude to the practice popularly known as "pool-
ing" has been illegal, so far as interstate traffic is concerned,
since 1887, and even agreements to maintain reasonable rates
were forbidden by the anti-trust law of 1890 which does not
appear to have been applied successfully to any other industry.
237
The years subsequent to 1887 have witnessed a stronger move-
ment toward the consolidation of manufacturing and trading
establishments than was ever previously known.
Further, combinations among railways can directly affect
rates on but a portion of the transportation furnished to the pub-
lic, for there are comparatively few points served by more than a
single railway and a large portion of the aggregate traffic must
traverse a particular route or it cannot be moved; manufacturing
and trading combinations, if they affect prices at all, must affect
those on the entire output of the establishments combined.
Eailway combination has assumed three distinct forms. The
first involves the actual merger of several properties through cor-
porate consolidation or practically perpetual leases. Nearly
every great railway in the country is a result of this process. The
line of the New York Central from Albany to Buffalo is formed
of ten originally separate roads, the Atchison, Topeka and Santa
Fe railroad, which terminates in this city, operates lines that
were formerly the property of more than one hundred distinct
corporations. Such consolidations have been welcomed by the
wiser section of the public, for they have improved the service
and lessened the cost and difficulty of travel and of moving
freight.
Another form of combination is effected by the purchase of
the control of separate corporations in a common interest. Com-
binations of this character do not affect the corporate organiza-
tions which remain legally separate, and they may be brought
about without publicity. Until recently the only connection
among the lines composing the great Vanderbilt system was of
this character and at present most of the lines in that system are
held in this manner. The svstem controlled by the bank-
ing establishment which is headed by Mr. J. Pierpont Mor-
gan has no other connection and probably very few individuals
outside of the firm know exactly what properties compose the
system.
The third form of combination is by agreements between cor-
porations which remain legally separate and continue to exercise
most of their functions independently. Such agreements may
provide for through tickets, the forwarding of baggage, through
billing of freight, interchange of cars, and many other incidents
of modern methods of operation that are essential to the efficient
organization of transportation. Without them the production of
utilities of place would be much more difficult and costly and
territorial division of labor, which permits the assignment to
each locality of the particular industrial function to which it is
238
best adapted by natural resources, climate, and location, could
not exist in its present state of development.
Another form of combination by agreements among otherwise
independent railway corporations has probably furnished the
occasion for more debate and has been less understood by the gen-
eral public than any other incident of railway development -I
refer to agreements concerning the rates to be charged on traffic
for which two or more routes are available.
As soon as the. railway system of the United States had
reached the point of development at which tfee same localities
were connected by rival and competing lines, some peculiarities
incidental to rate-making began to attract attention. The busi-
ness of railway transportation is not and can not be competitive,
in the ordinary sense, at more than a few points and with regard to
but a small portion of the aggregate traffic Railways cannot be, in
many instances or for long distances, exactly parallel. At points
not served by more than one railway or possessing facilities for
transportation by water railway business is from its nature a
monopoly. The business of such points can often be made to pay
the entire fixed charges and a large proportion of the operating
expenses and the railway is left free to accept traffic at the com-
peting points at rates that barely pay train-expenses. In the
absence of express or tacit agreements concerning such charges
this result was found to occur very frequently. It involved dis-
criminations, apparently unjust, against traffic from and to local
points which artificially accentuated the tendency toward the con-
centration of population and industry at large cities.
But the case was even worse than this. Competition in this
form practically placed the rate-making power in the hands of the
most reckless, incapable, or unscrupulous officials connected with
any line. Such an official could force rival lines to meet rates
far below the remunerative point or to witness the possibly per-
manent diversion of important traffic to the lines of their com-
petitors. He could bankrupt his own road or that of his. rivals
and at the same time profit greatly by the manipulation of the
securities affected in the stock market. The competition of rival
routes seeking to secure the same traffic therefore produced um'u^t
discrimination in rates, artificially stimulated the tendency
toward concentration of population in cities, and was an effective
and dangerous instrument in the hands of railway-wreckers.
Few have failed to recognize these facts, but many have supposed
that such competition has resulted in lower railway charsres.
An argument in favor of this contention can be plausibly sup-
ported by the common assumption, that too frequently passes
undetected, that coincidence of time and place prove a relation-
ship as between cause and effect. The decline in railway charges
in the United States has been continuous and extensive. The
average rate per ton of freight carried one mile, measured in gold,
has declined from nearly two cents in 1867 to less than eight
mills in 1898, the last year covered by the reports of the statis-
tician to the Interstate Commerce Commission. The price of
wheat at the port of iSTew York during 1867 would pay for the
transportation of but 2.84 bushels of wheat, from Chicago to iSTew
York at the rates of that year; in 1897 the price, though consid-
erably lower than in 1867, would pay for moving six bushels. In
. other words, the decline in the railway rate from Chicago to New
York was twice as great as the decline in the price of wheat.
The decline in passenger rates from 1871 to 1898 amounts
apparently to 25 per cent; but, unlike that in freight rates, is
not susceptible of satisfactory statistical presentation. The sub-
stantial identity of the service necessary to permit the use of the
statistical method, has not, however, been preserved. The dollar
that purchases transportation in a modern train, provided with
automatic couplers and air brakes, traversing at sixty miles per
hour, a track composed of Bessemer steel rails weighing 100
pounds to the yard, and guarded by block signaling apparatus,
purchases vastly more than did the dollar paid for personal
transportation a few decades ago, even though the distance trav-
ersed be but little greater at present. The public has preferred
to have improved accommodations and better service rather than
very much lower charges and, as usual in America, has had its
way. The same rise in the standard of living that has given the
American farmer his top-buggy, his piano in the parlor, his Sun-
day suit, and Brussels carpet, has given him the luxurious coaches
and well-ballasted roadbeds, the safety and the speed of modern
passenger service.
But has the competition of rival routes produced these reduc-
tions. in rates and improvements in the quality of service? I
think not.
Such competition has caused numerous extravagant expenses
it has made railway business unnecessarily costly, and some
one must have paid the bills. Let us examine some of these
expenses, though it is not easy to secure authentic statistics, and
those available serve to suggest, only, the possible aggregates.
The Interstate Commerce Commission has reported that nine
roads paid out an aggregate sum of more than one million dollars
in a single year as commissions for securing competitive passenger
business, and it is known that ^ much as $20.70 has been paid
240
to secure a single second-class passenger from this city to San
Francisco. The multitude of outside agencies and traveling
agents maintained solely for the purpose of securing business for
their respective lines that might otherwise traverse those of their
competitors involves an expenditure so great, even during periods
of comparative harmony, that it has heen deemed necessary to
restrict their numher by contract. An agreement in force for a
considerable time limited to eight the number of agencies that
might be maintained in New York City by each of the nine roads
competing for westward bound traffic from that city. As it is a
fact of ordinary observation that such agencies always cluster in
particular regions and around particular corners, it is obvious
that a system of joint agencies would afford the public equal
accommodation at lower cost.
During the periods of unbridled competition, popularly known
as "rate wars," each participating carrier sends its freight and
passenger agents to every important city in the country at a total
expense for rents, clerk hire, advertising, etc., that must be
enormous. Four roads operating westward from Chicago are
known to have expended $1,283,585 for outside agencies and
advertising in a single year, during which rates were fairly main-
tained, while during an equal period one road terminating at New
York City expended $871,291 for similar purposes.
The competition of long circuitous and commercially illegiti-
mate routes for traffic that would naturally traverse cheaper and
more direct lines is another gross extravagance too frequently
observed. The president of an important line has said :
"Illegitimate business is always the pride of the average
traffic manager. To secure a share of some competitive business
not naturally or fairly belonging to a carrying line, always appears
to inspire heroic efforts and to be regarded as meriting special
commendation."
Illustrations are numerous. Between Chicago and St. Paul
traffic is regularly forwarded over a route practically double the
length of the shortest; from this city to New York there are
twenty-one routes varying from 912 to 1,376 miles in length;
from New York to New Orleans, beside many water carriers, there
are more than ninety all-rail routes, one of which involves carry-
ing the freight nearly to this city. As an example of the waste
of competitive train service, it is not necessary to add to the bare
statement that forty-four trains leave this city every day for New
York and that practically similar duplication of service exists
wherever the same cities are connected by competing railways.
The construction of unnecessary lines is another gross
241
extravagance involving an expenditure from the store of energy
available for the satisfaction of human wants that produces no
good result. The West Shore, the Nickel-Plate, and many other
wholly superfluous routes will occur readily to any one as illus-
trations.
If competition, while involving these wastes, has still reduced
railway charges, these extravagant expenditures must have been
met by investors in railway property. If this were the case
would it have been possible to secure the capital necessary for the
rapid development of the American railway system, for the new
construction that has gone on during the years subsequent to
1870?
But the arguments are by no means all of a negative character.
The decline in rates has affected those from and to points served
by single carriers as well as those served by one or more. There
is no important point and no article of traffic that moves in con-
siderable volume that has not felt the effects of reduced charges.
A little thought will suggest a cause that may have produced
the decline, in spite of, though somewhat hindered by, the wastes
just discussed.
For lack of a better phrase this cause may be designated as
the competition among producers for the privilege of selling in
the dearest markets and that of consumers for the privilege of
purchasing in the cheapest markets. This needs to be qualified
by the suggestion that railways must be considered as producers
for the reason that the productive process cannot be regarded as
complete, in connection with a particular article, until that article
is available for consumption. In more technical words, that are
however perfectly clear in their meaning, production consists of
the creation of utilities of place as well as of utilities of form.
Eailways, therefore, are partners in the production of the
commodities that they carry. Partners with whom ? The answer
is with every separate productive establishment, farm, or factory,
workshop or mine that exists along their lines and furnishes
traffic for their trains. Each railway forms in effect a separate
combination (the word combination is here used in a clearly
innocuous sense) with each separate productive establishment
and, as either place or form utilities might be useless without the
other, these combination? are essentialto the completion of the
productive process. Obviously, any railway may participate in
many such combinations which produce the'sameVrticle. These
combinations may compete among themselves and as most pro-
ducers of form utilities have a definite cost of production per unit
of product while most of the costs of producing transportation
242
cannot be assigned to particular services it is not difficult to
force railways to assume the greater shares in the sacrifices which
such competition involves. There is no other possible explana-
tion of the decline in rates that will account for the fact that
while railway mileage is now three times as great as in 1871 the
aggregate amount of dividends paid on railway stock has been
lower during every year of the present decade than it was in that
} r ear.
The student who will carefully and impartially investigate the
circumstances attending the decline in railway charges, its rela-
tion to prices and cost of production, its effect on the competi-
tion among the producers of form utilities, and its consequences
as expressed in rates of interest and dividends, will find convinc-
ing evidence that competition of railways as partners in the busi-
ness of production is always powerful enough to force railway
rates to the lowest point at which the revenue derived from them
will pay operating expenses, under whatever methods of opera-
tion are for the time being in force, and afford the lowest return
to the capital invested which in a developing country will induce
capitalists to provide the additional facilities from time to time
required and to maintain those existing in a state of satisfactory
efficiency.
The foregoing analysis shows that the substitution of effective
agreements in regard to rates for the competition of rival routes
prevents unjust discriminations in charges, and permits econo-
mies in operation which inevitably accrue in the form of reduced
rates to the benefit of shippers and travelers.
I say "effective agreements" for experience has shown that
such arrangements are frequently of little use. How can such
agreements be made effective? Tbe history of American railwav
practice affords a ready answer. To give effectiveness to such
arrangements has been the aim of nearly every practical railway
manager since, at least, the year 1870, but no scheme ever devised
has been even moderately successful unless it has provided for the
distribution of traffic between points connected by two or more
routes in shares fixed in the agreement or determined in accord-
ance with its terms. Popular will has attached to such arrange-
ments the name "pool," and though it is in manv respects inac-
curate and misleading, not much can be gained by nunrreling
with an accepted designation. "We sha]l not be terrified by the
name for we have discovered that the thing to which it refers is
nothing more than a device for giving effect to agreements which
are in themselves wise and beneficial, which tend t'o secure justice
243
in the distribution of the cost of transportation and also to reduce
its aggregate.
Those who are only superficially acquainted with the history
of railway administration in the United States will inquire how
it happened that so beneficent a practice was prohibited by con-
gressional enactment. The interstate commerce law was intended
to prevent unjust discrimination in railway charges, yet it was
weighted down and some of its most salutary features rendered
nugatory by the anti-pooling clause which is in irreconcible con-
flict with every other substantial provision that it contains. The
''power to compete," in the words of the statesmanlike chairman of
the Interstate Commerce Commission, who is an honored member
of this conference, "is the power to discriminate." Why, then,
did Congress attempt to perpetuate competition while endeavor-
ing to prevent its natural results? One might answer, not incor-
rectly, that this action was in obedience to a "Texas idea" not
unlike that which refuses here to consider the nature and conse-
quence of industrial combinations while vehemently demanding
their statutory condemnation and prohibition, for the anti-pool-
ing clause was actually forced into the interstate commerce law
by a faction led by a member of the House of Representatives
from the state of Texas and against the judgment of the most
enlightened members of both houses of Congress; the alternative
presented being the defeat of the measure under consideration
and the indefinite postponement of all regulative legislation.
When the committee on Interstate Commerce of the United
States Senate conducted the exhaustive investigation which pre-
ceded the passage of the act to regulate commerce, pooling had
been an important feature of American railway practice for at
least fifteen years. Yet objections to the system are infrequently
found among the large number of opinions gathered in the public
hearings and explicit expressions of approval are numerous.
Students of transportation and public officers charged with the
duty of studying railway methods had previously declared in
favor of agreements for the division of traffic. A member of this
conference, Dr. Joseph ISTimmo, Jr., who was for many years at
the head of the Bureau of Statistics of the United States Treas-
ury Department, declared in the course of an official report pub-
lished in 1879 that railway pooling was then favored by the gen-
eral public because it had proved to be the means of "arresting
discriminations" and the Iowa Eailroad Commission in its report
for 1878 expressed the same opinion by declaring that it consid-
ered "the pool as the only agency that can compel the through
244
traffic to bear, as it should, its proportion of the interest on the
cost and expenses of maintaining and operating the roads."
Whatever public condemnation the pooling system received
aside from that inspired by the irresponsible utterances of dema-
gogues, who found attacks. upon railway corporations,, just as
their prototypes a few decades earlier had found the enthusiasm
for railway construction, an easy and convenient means of attain-
ing office, was due to the fact that those arrangements were never
permanent and in consequence never wholly eradicated the evils
they were intended to correct.
Indeed at almost the same time that the officials referred to
gave their approval of the pooling system, Mr. Albert Fink, the
originator, organizer, and official head of the most complete pool-
ing association ever established, was complaining of their lack of
permanence and stability and urging the necessity of legislation
that would give them legal sanction and effect.
In fact all railway pools in the United States were extra-legal
arrangements dependent for their execution upon the good faith
of the parties, upon the violation of which none of them would
venture to appeal to the courts for redress. So lacking were
these arrangements in the necessary cohesive qualities that each
railway considered their abrogation an inevitable incident, pend-
ing w'hich constant vigilance was necessary in order that the day
of dissolution should not find it an unready or tardy contestant in
the struggle for traffic. The period during which a pooling con-
tract was in force was consequently one of armed neutrality, and,
as in many cases between nations, that relation was regularly dis-
turbed by the depredations of irresponsible members of the rival
forces. As the apportionment of business in any pool which
should follow a period of warfare would probably be based upon
the proportion offered (if a tonnage pool) or carried (if a money
pool) prior to the disruption of such an agreement, there was a
strong incentive to take advantage of every opportunity to gain
traffic by its violation which promised immunity from detection.
Thus there was never an entire abandonment of the baneful
practices of competition, there were always discriminations in
favor of competitive traffic, and there were frequent periods dur-
ing which all the evils of unjust discrimination operated to their
fullest extent. Nevertheless, as indicated in the quotation from
the Iowa Eailroad Commission, the evils of excessive competition
were in some degree mitigated and the pooling arrangements,
unstable and unsatisfactory as they too frequently were, indi-
cated a means of securing, in a large measure, that substantial
245
identity among the interests of the carrying corporations which
is a prerequisite to the lowest and most equitably adjusted rates.
When the interstate commerce law became effective all pool-
ing contracts were discontinued and there is evidence that the
railways 'generally sought in good faith to observe its provisions.
Eailway associations were formed which announced as their
objects the maintenance of reasonable rates and the enforcement
of the regulative provisions of the law. The co-operation of the
weaker lines was in many instances purchased by permission to
charge slightly lower rates than those collected by their stronger
rivals. Subsequently other efforts were made to effect the satis-
factory division of traffic without its actual transfer from one line
to the other after consignment and without resorting to the
methods technically characteristic of tonnage pools. The prac-
tical failure of these measures is generally recognized, and most
railway patrons now agree with railway owners and managers in
urging a modification of the interstate commerce law that will
permit agreements for the apportionment of traffic; operations
thereunder to be conducted under the supervision of federal
authorities.
This change has been recommended by several annual conven-
tions of national and state railway commissioners, by the National
Board of Trade, by a conference of representatives of boards of
trade and other commercial organizations of the principal cities of
this country; it has been approved by members of the Interstate
Commerce Commission and by the author of the anti-pooling sec-
tion of the present law. A bill embodying it and including also
several very desirable amendments to the interstate commerce law
which had been strongly urged by the Commission passed the
House of Representatives during the last session of the Fifty-
third Congress, and would unquestionably have received the sup-
port of a large majority of the Senate had not the rules of that
body and the early approach of the end of the session, combined
with the obstructive tactics of a numerically insignificant minor-
ity, made it impossible to secure a vote upon its passage.
It should be observed that whatever pooling measure may
finally be adopted by Congress, operations under it will certainly
be free from objections such as those growing out of the instabil-
ity which characterized pooling arrangements prior to 1887.
The contracts permitted will have the express sanction of a
federal statute and any railway corporation that may be injured by
the failure of another to observe the terms of a pooling agreement
to which both are parties may invoke judicial aid in securing
the particular redress that is found to be adequate and suitable.
246
Such agreements will naturally provide for a definite period of
operation, with possibly continuance thereafter subject to notice
of the intention of any party to withdraw. The possibility of
unjust personal discriminations will, it may reasonably be boped,
be minimized by the discontinuance of separate soliciting for
traffic, and the substitution of joint for independent ticket and
freight agencies.
Mr. President, I believe it only reasonable to assert that the
facts to which I have directed your attention establish the exist-
ence of a natural tendency toward combination in the railway
industry, that they demonstrate the futility and the fatuity of
legislation intended to prevent such combinations, and establish
beyond controversy the advisability of restoring the pooling privi-
lege with federal supervision and legal effect and sanction added.
It would be almost superfluous to introduce evidence, as would
be easily practicable, that the probibition of pooling such pro-
hibition being itself a restriction upon freedom of contract arti-
ficially stimulates Ihe tendency toward other forms of combina-
tion. All are familiar with the facts which amply prove this to
have been the case since 1887.
It remains to consider the relation between railway combina-
tions and combinations in other lines of industry. Nearly every
one who has addressed this conference has alluded to discrimina-
tions in railway rates as one of the causes of industrial combina-
tions and perhaps the most important public contribution made
by this body will, when in the lapse of time its results can ade-
quately be summarized, be found to be the classification of com-
binations with regard to whether they are the result of superior
efficiency in production, whether of machinery or organization;
or of special privileges at the hands of government or the agents
of government.
Whatever may be held as to the consequences of the first class
there can be no doubt that those combinations that are dependent
upon special favors of any kind are harmful in the extreme.
Railway corporations are agents of government in the sense
that they are empowered thereby to exercise functions usually and
properly regarded as governmental. If these agencies unjustly
discriminate among their patrons those receiving unfair advan-
tage may be able to dominate markets and destroy competition.
In the words of the present chairman of the Interstate Commerce
Commission, whose clear and vigorous English is always quotable :
"The ultimate effect of preferential rates is to concentrate
the commerce of the country in a few hands. The favored
shipper, who is usually the large shipper, is furnished with a
247
weapon against which skill, energy and experience are alike
unavailing. When the natural advantages of capital are aug-
mented by exemptions from charges commonly imposed it be-
comes powerful enough to force all rivals from the field/'
We have found, therefore, in unjustly discriminating rates a
primary cause of a dangerous and harmful industrial growth.
Wise statecraft will seek to remove the cause. But how? Can
this be accomplished by making it a felony to grant special rates
as suggested by the great orator from New York (Hon. Bourke
Cochran) who has preceded me in indicating this cause of indus-
trial combination? Apparently not, for it is now nearly a decade
since the interstate commerce law was so amended as to provide
the penalty of imprisonment, not only for the railway official who
makes, but for the shipper who accepts any concession from the
open published rates. Nothing could be more drastic, yet dis-
criminations so accomplished have been a conspicuous feature of
the railway situation during nearly the entire subsequent period,
the existence of the evil has attained public notoriety and its mag-
nitude has alarmed and amazed the nation, yet no prison door has
ever opened to receive an individual convicted of violating the
statute.
These practices are not contrary to the ethics of modern busi-
ness; selling or buying at lower than the usual prices, or giving
or accepting special rates are not recognized evidences of deprav-
ity, the methods of making concessions are easily hidden, and
those interested in their detection are, as compared with their
beneficiaries, too frequently inexperienced and powerless.
A little while ago I endeavored to show that discrimination is
the natural result of competition among railways seeking the
same traffic. These concessions are not voluntarily granted by
railway officials, but are wrung from them through fear of losing
important traffic; they are grudgingly and reluctantly given to
those who control traffic that is vitally important. To quote
Chairman Knapp once more:
* * it is simply out of the question to have at once
the absence of discrimination and the presence of competition."
And:
the choice lies between competition on the* one
hand, with the inevitable outcome of discriminations which favor
the few at the expense of the many, or like charge? for like ser-
vice, which can be realized only by permitting and encouraging
co-operative action by rival railroads."
Mr. President, I can add nothing to this extract from one who
has been for years charged with the duty of attempting to enforce
248
a statute that in its present shape is unenforceable. To prevent
railway discrimination, to destroy many of that evil class of com-
binations which is based upon illegitimate advantages, it is neces-
sary to restore to railway corporations under 1'ederal supervision,
the power to divide competitive business. Then the possibility
of unjust personal discrimination will, it may reasonably be
hoped, be minimized by the discontinuance of separate soliciting
for traffic, and the substitution of joint for independent ticket
agencies. The temporarily divergent interests of separate bodies
of stock and bondholders will be subordinated to the general
interest of all the carriers in the satisfactory adjustment of the
railway system to the ends for which it exists, and the latter will
constitute a powerful agency for the elimination of unjust dis-
criminations including those among competing localities and
communities. Whenever the exact proportion of competitive
traffic which will fall to each particular route is as certain as that it
will receive all of the non-competitive traffic, both will be treated
with equity, for there will be no reason for favoring localities
served by more than one railway. The selfish interests of carriers
will then make powerfully for justice, while such regulative
instrumentalities as may be established by the public, will have
the advantage of dealing with a railway sj^stem that has become
practically unified. Until then the existence of unjust discrimi-
nations must not be charged against railway corporations or
railway officials, but against the public agencies, legislative or
otherwise, which have insisted upon the continuance of the un-
economic, wasteful and socially detrimental form of railway
competition.
PAUL MOKTOK
fThird Vice-President A., T. & S. F. R. R.
Industrial combinations or trusts are very similar to other
commercial enterprises. Some will fail, others will succeed.
Success or failure depends, first, on whether they are constructed
on a good foundation, or whether they are built upon sand and
inflated with wind and water. Second, whether they are intelli-
gently managed or not.
In most instances, the efficient men are being retained by the
trusts which have been recently formed. This augurs well.
Upon intelligent management depends the question of prices
which should be quite reasonable at all times. No citizen denies
the right of the manufacturer or producer to make a reasonable
profit, and it is manifestly best for the welfare of the community
at large that the nation's commerce should make a fair return to
those engaged in it, for capital, time, brains and labor employed.
I am one of those who "believe that the United States possesses
great advantages over most other countries of the world. TVe
raise our own food products, and yet have much to spare for ex-
port. There is no such fertility of soil under cultivation in the
universe as that found from the Atlantic coast extending west to
the Rocky Mountains.
In addition to the cheap food supply, there are districts here
and there immensely rich in coal, timber, oil, natural gas, iron
and other metals. In the Rocky Mountains themselves, which
have as yet been barely scratched, are gold, silver, lead and cop-
per. "West of the Rocky Mountains is California with its^ wonder-
ful climate and soil that is capable of producing anything that
Italy does. One is not startled at the wonderful production of
this Pacific coast state until it is learned that in one season Cali-
fornia has shipped 15,000 car loads of oranges, over 10,000 cars
of deciduous fruits, 5,000 cars of raisins, and 6,000 cars of prunes.
For a long time we have been the granary of the globe, and
we are now ambitious to become the factory of the world. The
raw material, the inventive genius and the business ability are
here and it seems to me that with these colossal industrial institu-
tions the opportunity for trade expansion is to be grasped.
Through the agency of these much condemned combinations, I
believe the control of the markets of the world will be much more
easily and quickly secured, and by their operations we will make
such rapid strides in the next twenty years that we will all look
back and wonder why the wisdom of their incubation was ever
questioned.
The new trusts are largely organized with ample working
capital, and can afford to employ the best salesmen to explore and
capture the far-away markets. Small firms or industries cannot
do this. It requires a great deal of money to work up a foreign
trade. One of the chief reasons why the merchants of Mexico
and South America do not trade here, is because they are given
twelve month?' credit or longer by French, German and English
traders. It will be an easy matter for our new industrial institu-
. tions to meet this kind of competition, but private industries and
corporations could not do so.
Some of us that are very much in touch with the railroads are
very earnest in the belief that the railroad service of the country
could be very much improved and cheapened, provided the trans-
portation lines of the country were permitted by law to contract
with each other for a division of business.
250
It is without doubt the aim and intention of all those in favor
of or opposed to railroad pooling that there should be no preferen-
tial rates in favor of large shippers as against small ones; that
there should be no discrimination in transportation charges as
between individuals or communities and that, generally speaking,
there should be stability in freight rates.
I contend that the present interstate commerce law, which
without doubt was conceived with the idea of no discriminations
of any character to any one, prevents by its anti-pooling clause,
precisely what it seeks to attain.
The transportation of the country is a public service and a
tax upon its inhabitants. None escapes from it. It is with many
indirect and invisible, but even to a greater extent than a protec-
tive tariff, it is always with us. This tax should be levied with
the greatest care, and should neither favor the largest shipper nor
the greatest city. The small shipper and infant industry and the
village should have every reasonable opportunity to grow. Even
though it be of great consequence in the operation of a railroad
whether it handles one thousand car loads of freight for one man,
or for one hundred men, it is the inherent right of the small
shipper and the small village that they should be treated with
justice. Certainly the railroads can better serve one hundred
customers shipping ten cars each at tariff rates, than to serve the
one thousand car man at a cut rate. There should be no injustice
or unreasonable discrimination in rates.
Distribution is the handmaid of production, and the greatest
prosperity will come from the most perfect stability in transporta-
tion charges. Eates should be so fairly adjusted as between
shippers and between localities as to work no injustice. They
ought to be so adjusted that the small shipper in the small town
will have the same relative right and opportunity that the big
shipper in a metropolitan city possesses. I believe the price of
railroad charges should be as unfluctuating as the price of postage
stamps. How would a Chicago or a Kansas City merchant feel if
his New York competitors were buying postage stamps at a lower
price than he? How would interior merchants take it if it was
generally understood that business houses in cities located on the
sea coast were obtaining lower import duties? Would they not
be indignant and resent such a condition with all the vigor and
energy that they could muster, and yet the price of postage stamps
and the import duties of the country cut a very small figure in
the commerce of our country, when compared with its transporta-
tion.
I believe that railroads should be authorized by law to com-
251
bine under proper supervision of the Interstate Commerce Com-
mission, and I think that this is more desirable and will bring
more prosperity and satisfaction to the country at large than
unrestricted competition. Unrestricted competition is sure to
lower wages and beget inferior service.
One-fifth of the wealth in the United States is invested in
railroad properties. The transportation lines are the greatest
purchasing power in existence. When they are doing well and
freely buying goods at fair prices, the country is prosperous
Destroy that purchasing power by unrestricted competition and
you at the same time strike a blow to the industry of the country
that will stagger it.
There have already been great consolidations of railroad
properties in this country. What has been the effect? Are wages
any lower, or rates of freight any higher? Is not the service
rendered the highest type produced in the world? Statistics will
show that the large roads of the country pay higher wages than
the small ones do, and they generally receive less pay for the
services rendered than the small ones do.
Rates of transportation in the United States are much lower
than anywhere else in the world. The fact is playing no small
part in the position that this country is now assuming in the com-
merce of the world. The true interest of the United States is in
properly protecting its transportation lines, and one of the things
that should be clone in this direction is to enact a law legalizing
pooling. Much has been said about the tnists keeping down the
young man without capital, it being claimed that under these
colossal industrial combinations, the poor young man will have
no opportunity to advance. I take the other view of the case.
The more colossal the combination, the more requirement there
is for brains and the higher the compensation that is offered for
it. Big railroads and large combinations of industry are always
on the lookout for good men. It is often claimed that eighty men
out of every hundred that go into business for themselves make
failures of it. If this is true, will not the twenty men who have
succeeded heretofore be in much greater demand as executive
officers of these large institutions and at greater remuneration
than heretofore? Will not the other eighty be happier in finding
employment at good wages where they do not have to risk their
capital? I do not think that any radical regulation of trusts is
necessary. I believe that when securities are offered for sale to
the public, too much publicity cannot be given by the officers of
the company selling the securities, although people who buy in-
252
dustrial or other stocks without careful investigation before pur-
chasing, are not entitled to much sympathy.
I believe that trusts will regulate themselves. Any attempt
to keep prices higher than they ought to be is a direct bid for
competition, and capital always stands ready for new industries
to manufacture products which can be sold at abnormally high
prices. Many of those who have tried it, say they like nothing
better than to compete with a combination that is trying to get
unreasonable profits.
^ Permit the railroads to pool their earnings under the super-
vision of the Interstate Commerce Commission, or some other
similar body, and you will take a long step toward doing away
with preferential rates in favor of a select few, and this is the
one reform that all the speakers at this trust conference are em-
phatically united in saying is an evil that should at once be
stopped.
BENJAMIN R. TUCKEE.
Editor New York Liberty.
A warm reception was extended to Benjamin R. Tucker of
New York, who, speaking on "The Attitude of Anarchism To-
ward Industrial Combinations," said:
Having to deal very briefly with the problem with which the
so-called trusts confront us, I go at once to the heart of the
subject, taking my stand on these propositions : That the right
to co-operate is as unquestionable as the right to compete; that
the right to compete involves the right to refrain from competi-
tion; that co-operation is often a method of competition, and that
competition is always, in the larger view, a method of co-opera-
tion; that each is a legitimate, orderly, non-invasive exercise of
the individual will under the social law of equal liberty; and that
any man or institution attempting to prohibit or restrict either,
by legislative enactment or by any form of invasive force, is,
in so far as such man or institution may fairly be judged by such
attempt, an enemy of liberty, an enemy of progress, an enemy of
society, and an enemy of the human race.
Viewed in the light of these irrefutable propositions, the trust,
then, like every other industrial combination endeavoring to do
collectively nothing but what each member of the combination
rightfully may endeavor to do individually, is, per sc, an unim-
peachable institution. To assail or control or deny this form of
253
co-operation on the ground that it is itself a denial of competi-
tion is an absurdity. It is an absurdity, because it proves too
much. The trust is a denial of competition in no-other sense than
that in which competition itself is a denial of competition. The
trust denies competition only by producing and selling more
cheaply than those outside of the trust can produce and sell; but
in that sense every successful individual competitor also denies
competition. And if the trust is to be suppressed for such denial
of competition, then the very competition in the name of which
the trust is to be suppressed must itself be suppressed also. I
repeat: the argument proves too much. The fact is that there
is one denial of competition which is the right of all, and that
there is another denial of competition which is the right of none.
All of us, whether out of a trust or in it, have a right to deny
competition by competing, but none of us, whether in a trust
or out of it. have a right to deny competition by arbitrary decree,
by interference with voluntary .effort, by forcible suppression of
initiative.
Again: To claim that the trust should be abolished or con-
trolled because the great resources and consequent power of en-
durance which it acquires by combination give it an undue ad-
vantage, and thereby enable it to crush comnetition, is equally
an argument that proves too much. If John D. "Rockefeller were
to start a grocery store in his individual capacity, we should not
think of suppressing or restricting or hampering his enterprise
simply because, with his five hundred millions, he could aflord to
sell groceries at less than cost until the day when the accumu-
lated ruins of all other grocery stores should afford him a sure
foundation for a profitable business. But, if Kockefeller's pos-
session of five hundred millions is not a good ground for the sup-
pression of his grocerv store, no better ground is the control of
still greater wealth for the suppression of his oil trust. It is
true that these vast accumulations under one control are abnormal
and dangerous, but the reasons for them lie outside of and behind
and beneath all trusts and industrial combinations reasons
which I shall come to presently, reasons which are all, in some
form or other, an arbitrarv denial of libertv: and but for these
reasons, but for these denials of liberty. John D. Rockefeller never
could have acquired five hundred millions, nor would anv com-
bination of men be able to control an aggregation of wealth that
could not be easily and successfully met by some other combina-
tion of men.
Again: There is no warrant in reason for deriving a right to
control trusts from the state grnnt of corporate privileges under
254
which they are organized. In the first place, it heing pure usurpa-
tion to presume to endow any body of men with rights and ex-
emptions that are not theirs already under the social law of equal
liberty, corporate privileges are in themselves a wrong; and one
wrong is not to be undone by attempting to offset it with an-
other. But, even admitting the justice of corporation charters,
the avowed purpose in granting them is to encourage co-operation,
and thus stimulate industrial and commercial development for
the benefit of the community. Now, to make this encouragement
an excuse for its own nullification by a proportionate restriction
of co-operation would be to add one more to those interminable
imitations of the task of Sisyphus for which that stupid institu-
tion which we call the state has ever been notorious.
Of somewhat the .same nature, but rather more plausible at
first blush, is the proposition to cripple the trusts by stripping
them of those law-created privileges and monopolies which are
conferred, not upon trusts as corporate bodies, but upon sundry
individuals and interests, ostensibly for protection of the pro-
ducer and inventor, but really for purposes of plunder, and which
most trusts acquire in the process of merging the original capitals
of their constituent members. I refer, of course, to tariffs, pat-
ents, and copyrights. Now, tariffs, patents, and copyrights either
have their foundations in justice, or they have not their founda-
tions in justice. If they have their foundations in justice, why
should men guilty of nothing but a legitimate act of co-operation
and partnership be punished therefor by having their just rights
taken from them? If they have not their foundations in justice,
why should men who refrain from co-operation be left in posses-
sion of unjust privileges that are denied to men who co-operate?
If tariffs are unjust, they should not be levied at all. If patents
and copyrights are unjust, they should not be granted to any-
one whomsoever. But, if tariffs and patents and copyrights are
just, they should be levied or granted in the interest of all who
are entitled to their benefits from the viewpoint of the motives in
which these privileges have their origin, and to make such levy
or grant dependent upon any foreign motive, such, for instance,
as willingness to refrain from co-operation, would be sheer im-
pertinence.
Nevertheless, at this point in the hunt for the solution of the
trust problem, the discerning student may begin to realize that
he is hot on the trail. The thought arises that the trusts, instead
of growing out of competition, as is so generally supposed, have
been made possible only by the absence of competition, only by
the difficulty of competition, only by the obstacles placed in the
255
way of competition only, in short, by those arbitrary limitations
of competition which we find in those law-created privileges and
monopolies of which I have just spoken, and in one or two others,
less direct, but still more far-reaching and deadly in their de-
structive influence upon enterprise. And it is with this thought
that anarchism, the doctrine that in all matters there should be
the greatest amount of individual liberty compatible with equality
of liberty, approaches the case in hand, and offers its diagnosis
and its remedy.
The first and great fact to be noted in the case, I have already
hinted at. It is the fact that the trusts owe their power to vast
accumulation and concentration of wealth, unmatched, and, un-
der present conditions, unmatchable, by any equal accumulation
of wealth, and that this accumulation has been effected by the
combination of separate accumulations only less vast and in them-
selves already gigantic, each of which owed its existence to one
or more of the only means by which large fortunes can be rolled
up, interest, rent, and monopolistic profit. But for interest, rent,
and monopolistic profit, therefore, trusts would be impossible.
Now, what causes interest, rent, and monopolistic profit? For
all three there is but one cause the denial of liberty, the suppres-
sion of restriction of competition, the legal creation of monop-
olies.
This single cause, however, takes various shapes.
Monopolistic profit is due to that denial of liberty which
takes the shape of patent, copyright, and tariff legislation, patent
and copyright laws directly forbidding competition, and tariff
laws placing competition at a fatal disadvantage.
Eent is due to that denial of liberty which takes the shape of
land monopoly, vesting titles to land in individuals and associa-
tions which do not use it, and thereby compelling the non-owning
users to pay tribute to the non-using owners as a condition of
admission to the competitive market.
Interest is due to that denial of liberty which takes the shape
of money monopoly, depriving all individuals and associations,
save foich as Isold a certain kind of property, of the right to issue
promissory notes as currency, and thereby compelling all holders
of property, other than the kind thus privileged, as well as all
non-proprietors, to pay tribute to the holders of the privileged
property for the use of a circulating medium and instrument of
credit which, in the complex stage that industry and commerce
have now reached, has become the chief e a =ontial of a competitive
market.
Now, anarchism, which, as I have said, is the doctrine that
m all matters there should be the greatest amount of individual
liberty compatible with equality of liberty, finds that none of
these denials of liberty are necessary to the maintenance of equal-
ity of liberty, but that each and every one of them, on the con-
trary, is destructive of equality of liberty. Therefore it declares
them unnecessary, arbitrary, oppressive, and unjust, and demands
their immediate cessation.
Of these four monopolies the banking monopoly, the land
monopoly, the tariff monopoly, and the patent and copyright
monopoly the injustice of all but the last-named is manifest
even to a child. The right of the individual to buy and sell with-
out being held up by a highwayman whenever he crosses an im-
aginary line called a frontier; the right of the individual to take
possession of unoccupied land as freely as he takes possession
of unoccupied water or unoccupied air; the right of the indi-
vidual to give his I. 0. TL, in any shape whatsoever, under any
guarantee whatsoever, or under no guarantee at all, to anyone
willing to accept it in exchange for something else all these
rights are too clear for argument, and anyone presuming to dis-
pute them simply declares thereby his despotic and imperialistic
instincts.
For the fourth of these monopolies, however, the patent and
copyright monopoly a more plausible case can be presented, for
the question of property in ideas is a very subtle one. The de-
fenders of such property set up an analogy between the pro-
duction of material things and the production of abstractions,
and on the strength of "it declare that the manufacturer of mental
products, no less than the manufacturer of material products, is
a laborer worthy of his hire. So far, so good. But, to make out
their case, they are obliged to go further, and to claim, in viola-
tion of their own analogy, that the laborer who creates mental
products, unlike the laborer who creates material products, is
entitled to exemption from competition. Because the Lord, in
his wisdom, or the devil, in his malice, has so arranged matters
that the inventor and the author produce naturally at a disad-
vantage, man, in his might, proposes to supply the divine or
diabolic deficiency by an artificial arrangement that shall not
only destroy this disadvantage, but actually give the inventor
and author an advantage that no other laborer enjoys an advan-
tage, moreover, which, in practice, goes, not to the inventor and
the author, but to the promoter and the publisher and the trust.
Convincing as the argument for property in ideas may seem
at first hearing, if you think about it long enough, you will begin
to be suspicious. The first thing, perhaps, to arouse your sus-
257
picion, will be the fact that none of the champions of such prop-
erty propose the punishment of those who violate it, contenting
themselves with subjecting the offenders to the risk of damage
suits, and that nearly all of them are willing that even the risk of
suit shall disappear when the proprietor has enjoyed his right
for a certain number of years. Now, if, as the French writer,
Alphonse Karr, remarked, property in ideas is a property like any
other property, then its violation, like the violation of any other
property, deserves criminal punishment, ''and its life, like that
of any other property, should be secure in right against the lapse
of time. And, this not being claimed by the upholders of prop-
erty in ideas, the suspicion arises that such a lack of the courage
of their convictions may be due to an instinctive feeling that they
are wrong.
The necessity of being brief prevents me from examining this
phase of my subject in detail. Therefore I must content myself
with developing a single consideration, which, I hope, will prove
suggestive.
I take it that, if it were possible, and if it had always been
possible, for an unlimited number of individuals to use to an
unlimited extent and in an unlimited number of places, the same
concrete things at the same time, there never would have been
any such thing as the institution of property. Under those cir-
cumstances, the idea of property would never have entered the
human mind, or, at any rate, if it had, would have been sum-
marily dismissed as too gross an absurdity to be seriously enter-
tained for a moment. Had it been possible for the concrete crea-
tion of adaptation resulting from the efforts of a single individual
to be used contemporaneously by all individuals, including the
creator or adapter, the realization, or impending realization, of
this possibility, far from being seized upon as an excuse for a law
to prevent the use of this concrete thing without the consent of
its creator or adapter, and far from being guarded against as an
injury to one, would have been welcomed as a blessing to all
in short, would have been viewed as a most fortunate element in
the nature of things. Tjie raison d'etre of property is found in
the very fact that there is no such possibility in the fact that
it is impossible in the nature of things for concrete objects to be
used in different places at the same time. This fact existing, no
person can remove from another's possession and take to his own
uso another's concrete creation without thereby depriving that
other of all opportunity to use that which he created, and for this
reason it became socially necessary, since successful society rests
on individual initiative, to protect the individual creator in the
268
Use of his concrete creations by forbidding others to use them
without his consent. In other words, it became necessary to insti-
tute property in concrete things.
But all this happened so long ago that we of to-day have en-
tirely forgotten why it happened. In fact, it is very doubtful
whether, at the time of the institution of property, those who
effected it thoroughly realized and understood the motive of their
course. Men sometimes do by instinct and without analysis that
which conforms to right reason. The institutors of property may
have been governed by circumstances- inhering in the nature of
things, without realizing that, had the nature of things been the
opposite, they would not have instituted property. But be that
as it may, even supposing that they thoroughly understood their
course, we, at any rate, have pretty nearly forgotten their under-
standing. And so it has come about that we have made of prop-
erty a fetich ; that we consider it a sacred thing ; that we have set
up the god of property on an altar as an object of idol-worship;
and that most of us are not only doing what we can to strengthen
and perpetuate his reign within the proper and original limits
of his sovereignty, but also are mistakenly endeavoring to extend
his dominion over things and under circumstances which, in their
pivotal characteristic, are precisely the opposite of those out of
which his power developed.
All of which is to say, in briefer compass, that from the
justice and social necessity of property in concrete things we have
erroneously assumed the justice and social necessity of property
in abstract things that is, of property in ideas with the result
of nullifying to a large and lamentable extent that fortunate ele-
ment in the nature of things, in this case not hypothetical, but
real namely, the immeasurably fruitful possibility of the use
of abstract things by any number of individuals in any number
of places at precisely the same time, without in the slightest de-
gree impairing the use thereof by any single individual. Thus
we have hastily and stupidly jumped to the conclusion that prop-
erty in concrete things logically implies property in abstract
things, whereas, if we had had the care and the keenness to ac-
curately analyze, we should have found that the very reason which
dictates the advisability of property in concrete things denies
the advisability of property in abstract things. We see here a
curious instance of that frequent mental phenomenon the pre-
cise inversion of the truth by a superficial view.
Furthermore, even were the conditions the same in both
cases, and concrete things capable of use by different persons in
259
different places at the same time, even then, I say, the institu-
tion of property in concrete things, though under those condi-
tions manifestly absurd, would be infinitely less destructive of
individual opportunities, and therefore infinitely less dangerous
and detrimental to human welfare, than is the institution of prop-
erty in abstract things. For it is easy to see that, even should we
accept the rather startling hypothesis that a single ear of corn is
continually and permanently consumable, or rather inconsuma-
ble, by an indefinite number of persons scattered over the surface
of the earth, still the legal institution of property in concrete
things that would secure to the sower of a grain of corn the ex-
clusive use of the resultant ear would not, in so doing, deprive
other persons of the right to sow other grains of corn and become
exclusive users of their respective harvests; whereas the legal
institution of property in abstract things not only secures to the
inventor, say, of the stearn engine, the exclusive use of the engines
which he actually makes, but at the same time deprives all other
persons of the right to make for themselves other engines involv-
ing any of the same ideas. Perpetual property in ideas, then,
which is the logical outcome of any theory of property in abstract
things, would, had it been in force in the lifetime of James Watt,
have made his direct heirs the owners of at least nine-tenths of the
now existing wealth of the world ; and, had it been in force in the
lifetime of the inventor of the Roman alphabet, nearly all the
highly civilized peoples of the earth would be to-day the virtual
slaves of that inventor's heirs, which is but another way of say-
ing that, instead of becoming highly civilized, they would have
remained in a state of semi-barbarism. It seems to me that these
two statements, which in my view are incontrovertible, are in
themselves sufficient to condemn property in ideas forever.
If, then, the four monopolies to which I have referred are un-
necessary denials of liberty, and therefore unjust denials of liber-
ty, and if they are the sustaining causes of interest, rent, and
monopolistic profit, and if, in turn, this usurious trinity
is the cause of all vast accumulations of wealth for fur-
ther proof of which propositions I must, because of the limita-
tion of my time, refer you to the economic writings of the anarch-
istic school it clearly follows that the adequate solution of the
problem with which the trusts confront us is to be found only in
abolition of these monopolies and the consequent guarantee of
perfectly free competition.
The most serious of these four monopolies is unquestionably
the money monopoly, and I believe that perfect freedom in finance
260
alone would wipe out nearly all the trusts., or at least render them
harmless, and perhaps helpful. Mr. Bryan told a very important
truth when he declared that the destruction of the money trust
would at the same time kill all the other trusts. Unhappily, Mr.
Bryan does not propose to destroy the money trust. He wishes
simply to transform it from a gold trust into a gold and silver
trust. The money trust cannot he destroyed hy the remonetiza-
tion of silver. That would be only a mitigation of the monop-
oly, not the abolishment of it. It can be abolished only by
monetizing all wealth that has a market value that is, by giv-
ing to all wealth the right of representation by currency, and to
all currency the right to circulate wherever it can on its own
merits. And this is not only a solution of the trust question, but
the first step that should be taken, and the greatest single step
that can be taken, in economic and social reform.
I have tried, in the few minutes allotted to me, to state con-
cisely the attitude of anarchism toward industrial combinations.
It discountenances all direct attacks on them, all interference
with them, all anti-trust legislation whatsoever. In fact, it re-
gards industrial combinations as very useful whenever they spring
into existence in response to demand created in a healthy social
body. If at present they are baneful, it is because they are symp-
toms of a social disease originally caused and persistently aggra-
vated by a regimen of tyranny and quackery. Anarchism wants
to call off the quacks, and give liberty, nature's great cure-all, a
chance to do its perfect work.
Free access to the world of matter, abolishing land monopoly;
free access to the world of mind, abolishing idea monopoly; free
access to an untaxed and unprivileged market, abolishing tariff
monopoly and money monopoly secure these and all the rest
shall be added unto you. For liberty is the remedy of every social
evil, and to anarchy the world must look at last for any enduring
guarantee of social order.
The announcement of the chairman that the remainder of the
afternoon would be devoted to five-minute talks in open discus-
sion of the day's papers was met with calls on Governor Pingree
for a "speech." After several minutes of applause, the governor
stepped forward and said:
"Most of you know where I stand in regard to trusts. I
am opposed to them; always have been. I claim it is a cow-
ardly way of doing business. If you cannot do business
261
without being in a trust, I haven't any use for you. Get out. I
will be here this evening, and I have a short -oaper I will be
pleased to read to you. I want to thank you for this invitation
right now."
The conference took a recess until 8 o'clock.
EVENING SESSION, SEPTEMBER 14.
Third Vice-Chairman Corliss called the session to order at
8:05 o'clock, and Secretary Easley read the nominations for
membership on the Committee on Eesolutions as follows:
ALABAMA. Eyre Damar. NEBRASKA. Edward Rosewater.
ARIZONA. W. C. Campbell. NEVADA. Francis G. Newlands.
ARKANSAS. B. J. Brown. NEW HAMPSHIRE. Henry W.
CALIFORNIA. C. D. Willard. Blair.
COLORADO. Henry V. Johnson. NEW JERSEY. Edward Quinton
DISTRICT OF COLUMBIA. H. T. Keasbey.
Newcomb. NEW MEXICO. C. J. Gavin.
DELAWARE. Henry Allaway. NEW YORK. Albert Shaw.
FLORIDA. John F. Forbes. NORTH DAKOTA. Wm. T. Per-
IDAHO. Judge Claggett. kins.
ILLINOIS. W. R. Jewell. OHIO. I. F. Mack.
INDIANA. A. P. Kent. OREGON. E. Hofer.
IOWA. Geo. E. Clark. PENNSYLVANIA. W. P. Potter.
KANSAS. W. J. Bailey. SOUTH CAROLINA. A. C. Kauf-
KENTUCKY. P. W. Hardin. man.
LOUISIANA. W. W. Howe. SOUTH DAKOTA. Freeman
MAINE. A. E. Rogers. Knowles.
MARYLAND. Geo. R. Gaither, Jr. TENNESSEE.- C. E. Snodgrass.
MASSACHUSETTS. John Graham TEXAS. Cecil Smith.
Brooks. UTAH. George W. Bartch.
MICHIGAN. Cyrus G. Luce. WEST VIRGINIA. Geo. W. Atkin-
MINNESOTA. W. B. Douglas. son.
MISSISSIPPI. J. W. Cutrer. WISCONSIN. John Nagle.
MISSOURI. E. C. Crow. WYOMING. J. Dana Adams.
MONTANA. H. H. Swain.
NATIONAL ASSOCIATION OF MANUFACTURERS. Theodore C. Search,
President.
NORTHWESTERN TRAVELING MEN'S ASSOCIATION. D. K. Clink, Secretary
and Treasurer.
AMERICAN FEDERATION OF LABOR. Samuel Gompers, President.
BROTHERHOOD OF RAILROAD TRAINMEN. P. H. Morrissey, Grand Master.
UNITED GARMENT WORKERS OF AMERICA. Henry White, General Secre-
tary.
SINGLE TAX LEAGUE OF THE UNITED STATES. Louis F. Post.
ORDER OF RAILWAY CONDUCTORS. E. E. Clark, Grand Chief Conductor.
BROTHERHOOD OF LOCOMOTIVE FIREMEN. W. S. Carter.
262
NATIONAL GRANGE PATRONS OF HUSBANDRY. -S. H. Ellis.
ILLINOIS COMMERCIAL MEN'S ASSOCIATION. R. A. Cavenaugh.
NEW ENGLAND FREE TRADE LEAGUE. Byron W. Holt.
AMERICAN ACADEMY OF POLITICAL AND SOCIAL SCIENCE. John H. Gray.
NATIONAL ALLIANCE THEATRICAL STAGE EMPLOYES. Lee M. Hart, Gen-
eral Secretary and Treasurer.
NATIONAL BUSINESS MEN'S LEAGUE. John W. Ela.
AMERICAN ANTI-TRUST LEAGUE. M. L. Lockwood, President.
KNIGHTS OF LABOR. J. G. Schonfarber.
UNITED STATES EXPORT ASSOCIATION. Francis B. Thurber, President.
COMMERCIAL TRAVELERS' NATIONAL LEAGUE. P. E. Dowe, President.
NATIONAL GRAIN GROWERS' ASSOCIATION. S. H. Greeley.
NATIONAL FARMERS' ALLIANCE AND INDUSTRIAL UNION OF AMERICA
John Hill, Jr.
NATIONAL TAX LEAGUE. Lawson Purdy.
NATIONAL SOCIALISTS' LEAGUE. Thomas J. Morgan.
BRICKLAYERS' AND MASONS' UNION OF AMERICA. M. R. Grady.
MILLERS' NATIONAL ASSOCIATION. F. H. Magdeburg.
FARMERS' NATIONAL CONGRESS. B. F. Clayton.
ASSOCIATION OF WESTERN MANUFACTURERS. Walter Fieldhouse.
AMERICAN SOCIAL SCIENCE ASSOCIATION. C. R. Henderson.
INTERNATIONAL TYPOGRAPHICAL UNION. Samuel B. Donnelly, President.
TRAVELING MEN'S PROTECTIVE ASSOCIATION. M. W. Phalen, President.
Ex-OFFicio. Franklin H. Head, President Civic Federation of Chicago.
Ralph M. Easley, Secretary Civic Federation of Chicago.
A motion was made by P. E. Dowe of New York that the
names of all persons who had been admitted to the floor since
the organization was effected be stricken from the rolls. There
was" no second, and on calls for the regular order of business
Chairman Corliss introduced as the first speaker of the evening,
Governor Hazen S. Pingree of Michigan, who was obliged to wait
several minutes for the applause to subside before he could speak.
His subject was,
"The Effect of Trusts on Our National Life and Citizenship" :
HAZE1ST S. PINGEEE.
Governor of Michigan.
In all that has been said about trusts, scarcely a word has
been written or spoken from the standpoint of their effect on
society.
In this busy, rushing, feverish world, everything is ruled by
the commercial spirit. The dollar seems to be the standard for
measuring all things.
In gathering material for the use of this conference, the Civic
263
Federation of Chicago sent out circulars containing in all sixty-
nine questions. These inquiries were addressed to trusts, whole-
sale dealers, commercial travelers' organizations, railroads, labor
associations, contractors, manufacturers, economists, financiers,
and public men.
Only one of these sixty-nine questions related in any way to
the effect of trusts upon society. I do not call attention to this
in order to criticise the Civic Federation.
I do so for the purpose of showing that in all the discussion
of trusts, there is no indication that any thought whatever has
been given to their effect upon our national life, upon our citi-
zenship, and upon the lives and characters of the men and women
who are the real strength of our republic.
I think that thig is the most important consideration of all.
Everybody has been asking whether more money can be made
by trusts than by small corporations and individuals whether
cost of production will be increased or decreased whether in-
vestors will be benefited or injured whether the financial system
of the country will be endangered whether we can better com-
pete for the world's trade with large combinations or trusts
whether prices will be raised or lowered whether men will be
thrown out of employment whether wages will be higher or
lower whether stricter economy can be enforced, and so on.
In other words, the only idea nowadays seems to be to find
out how business or commerce will be affected by trusts. The
"Almighty Dollar' is the sole consideration.
I believe that all these things are minor considerations. I
think that it is of far greater importance to inquire whether the
control of the world's trade, or anv of the other commercial ad-
vantages claimed for the trust, are worth the price we pav for
them.
Will it pay us either as individuals or as a nation to encourage
trusts?
Instead of discussing the question from the standpoint of
commercial gam, let us view it as patriots.
I believe that a conference of this kind should not attempt
to judge a question so important to our national welfare as this,
by the selfish standard of commercial greed_ I think that loftier
motives should rule us in this discussion.
The commercial and financial aspects of the trust problem are
important. I believe, however, that there are considerations more
important to us as a nation.
In this republic of ours we are fond of saying that there are
GEORGE R. GAITHER, JR.
EDWARD W. BEMIS
GEORGE GUNTOX
JOHN W. HAYES
LOUIS F. POST
JEFFERSOX DAVIS
no classes. In fact, we boast of it. We say that classes belong
to monarchies, not to republics.
Nevertheless, none of us can dispute the fact that our society
is divided into classes, and well denned ones, too. They are not
distinguished by differences of social standing. That is, we
have no aristocratic titles, no nobility.
The distinction with us is based upon wealth. The man is
rated by the property he owns. Our social and political leaders
and speakers deny this. In doing so, however, they ignore actual
conditions. They discuss what ought to be under our form of
government not what is.
The strength of our republic has always been in what is called
our middle class. This is made up of manufacturers, jobbers,
middle men, retail and wholesale merchants, commercial trav-
elers and business men generally. It would be little short of
calamity to encourage any industrial development that would
affect unfavorably this important class of our citizens.
Close to them as a strong element of our people are the skilled
mechanics and artisans. They are the sinew and strength of the
nation.
While the business of the country has been conducted by per-
sons and firms, the skilled employee has held close and sympa-
thetic relations with his employer.
He has been something more than a mere machine. He has
felt the stimulus and ambition which goes with equality of oppor-
tunity. These have contributed- to make him a good citizen.
Take away that stimulus and ambition, and we lower the stand-
ard of our citizenship. Without good citzenship our national
life is in danger.
It seems to me, therefore, that the vital consideration con-
nected with this problem of the trust is its effect upon our mid-
dle class the independent, individual business man and the
skilled artisan and mechanic.
How does the trust affect them? It is admitted by the apol-
ogist for the trust that it makes it impossible for the individual
or firm to do business on a small scale.
It tends to concentrate the ownership and management of all
lines of business activity into the hands of a very few. No one
denies this.
This being so, it follows that the independent, individual busi-
ness man, must enter the employment of the trust. Self-preserva-
tion compels it. Duty to his family forces him to it.
He becomes an employee instead of an employer. His trusted
foremen and his employees must follow him.
265
They have been in close and daily association with him. The
new order of things compels them to separate. They are both to
become a part of a vast industrial army with no hopes and no as-
pirations a daily task to perform and no personal interest and
perhaps no pride in the success of their work.
Their personal identity is lost. They become cogs and little
wheels in a great complicated machine. There is no real advance
for them.
They may perhaps become larger cogs or larger wheels, but
they can never look forward to a life of business freedom.
A very select few may become heads of trusts, but such oppor-
tunities will be rare indeed. They will, therefore, be entirely
useless as incentives to the ambition of the army of those em-
ployed by the trusts. As a result of the ceaseless and heartless
grind of the trusts, in the almost insane desire to control trade,
ambition, and perhaps inventive genius, will be deadened and
killed.
The middle class of which I speak will lose their sense of inde-
pendence. They are already being deprived of that equality of op-
portunity which has made this nation what it is. It is equality of
opportunity which has attracted to this country the millions of
people of other nations who have helped make American citizen-
ship and American institutions the greatest and besj;-in the world.
The trust is therefore the forerunner, or rather the creator of
industrial slavery.
The master is the trust manager or director. It is his duty to
serve the soulless and nameless being called the stockholder. To
the latter the dividend is more important than the happiness or
prosperity of any one.
The slave is the former merchant and "business man, and the
artisan and mechanic, who once cherished the hope that they
might sometime reach the happy position of independent owner-
ship of a business.
Commercial feudalism is the logical outcome of the trust. The
trust manager is the feudal baron.
These may perhaps be harsh characterizations, but who can
deny their truth? Honesty to ourselves and loyalty to our coun-
try and its free institutions compel us to face and recognize the
situation.
We cannot be true to our republic by ignoring these things.
We cannot be honest to the people, either at this conference or in
our legislative assemblies by confining our deliberations to the
commercial advantages and disadvantages of the trust.
It is better to be forever poor, but independent and happy as
266
individuals, than to lay the foundations for industrial tyranny
and slavery.
Personal liberty is -rather to be chosen than great riches.
Equality of opportunity to all men is better than the control
of the world's trade.
The effect of the trust upon our national life and our citizen-
ship will not be sudden perhaps. It will rather be a silent and
gradual change. It may not be .observed, at once, but its in-
fluence will nevertheless be felt.
The warning with which the history of the decadence and
downfall of other nations furnishes us may not be heeded now.
If not, we may pay the usual penalty of slavery to commercial
avarice and greed.
Increase of the wealth of the country is greatly to be desired,
but if the people are to be degraded to industrial slaves, wealth
under such conditions is a curse.
If our independent and intelligent business men and artisans
are to be crowded out of existence as a class by the trust, there is
no remedy too drastic for the trust.
Some may think it is too early to sound a note of warning of
this kind, but the time to check an evil tendency is when it first
shows itself.
We have given the private' corporation "too much rope."
Some say give it more rope and it will hang itself. In other
words they claim that the trust problem, if left alone, will work
out its own solution.
I do not believe in such a policy. There is too much at stake.
The most important element of our citizenship is in the bal-
ance. We cannot afford to san the strength of our democracy in
order to forward an experiment.
I favor complete and prompt annihilation of the trust, with
due regard for property rights, of course.
I care more for the independence and manliness of the Amer-
ican citizen than for all the gold or silver on or in the world. It
is better to cherish the happiness of the American home than -to
control the commerce of the globe.
The degrading process of the trust means much to the future
of a republic founded upon democratic principles. A democratic
republic cannot survive the disappearance of a democratic popu-
lation.
267
CHARLES FOSTER.
Ex-Governor of Ohio.
Speaking on "The Desirability of Trusts/' ex-Governor
Charles Foster of Ohio said :
This conference, so unique in its conception, responded to so
universally, resulting in a gathering of distinguished representa-
tives of all the states of the nation, attests the deep concern of the
people in the subject, which we have voluntarily consented to de-
liberate upon.
An intelligent and imposing body of men are here assembled ;
and it may also be said that no economic subject of such far
reaching importance, was ever before deliberated upon. How very
important that "our deliberations should eventuate in a line of
suggestion (we can only advise) that will, when sanctioned by law,
conserve the greatest and best interests of the greatest country on
earth.
We are considering the great question of the combination of
capital as it relates to, and effects all of the interests of the coun-
try great and small. These combinations are popularly known as
trusts, and by a common impulse, the whole country has assumed
the position of antagonism to them.
The gentleman from Texas who so eloquently entertained us
yesterday,' stated that his state had no industrial development,
that they sold raw material, and bought their supplies, as the
reason for their fierce opposition to trusts.
He also eloquently portrayed the superiority of manhood over
money.
It strikes me that if the Texas neople had sufficient enterprise
to establish industries, to consume their cotton, wool and other
raw material, their manhood would not deteriorate, their opposi-
tion to trusts would be less vehement, and they would have more
money.
The evolution in business from the individual to the partner-
ship, and from the partnership to the corporation was no more
natural and necessary than is the evolution from the corporation
to the trust. Let us look the situation squarely in the face.
Denounce it as we may, it has come to stay. Why? Because
the gigantic business operations of the present and future cannot
be carried on without it.
Through the trust, the enormous waste that is entailed upon
business operations by competition, is saved ; the product and the
service performed is cheapened. Labor will have the better op-
portunity to enhance wages and shorten the hours of toil, as is so
signally illustrated in the railroad service of the country.
Through the trust, the superior inventive genius of our peo-
ple (because of universal education) will ha\e improved oppor-
tunity.
It is a gratifying fact that we are making rapid progress in
securing the markets of the world for our manufactured products.
For this, we are first indebted to our economic policy of protection
that gave the incentive to an enterprising people; and secondly,
to the much abused trust. With a settled policy in relation to
them, it is not a wild prophecy to make that in the near future
our foreign trade will be largely increased, and that in less time
than many of us imagine, this country will become the money
center of the world. Not only will our foreign trade be greatly
enhanced, but the greater consumptive power of our people will
largely increase our home business.
The enormous increase of wealth in this country has already
lowered the rate of interest, and the end in this direction has not
been reached.
When the trusts shall have been properly safeguarded by law
their securities will furnish a means of safe investment, at a some-
what higher rate of interest than will be paid by government,
state, or municipal bonds, thus affording the opportunity for in-
vestment for savings banks and people of moderate means.
It is certain that the amount of idle money in the hands of our
people will be very great. How valuable, then, will be the oppor-
tunity to safely invest it, even at moderate rates.
We must not neglect to take note of the fact that the history
of this country has been that of great growth territorially; of great
expansion, if you please. Up to the present, every addition to our
territory, however much misguided people have opposed these
additions, has proved to be a blessing in added power, glory and
manhood.
So now, whether the present large acquisitions shall prove to
be blessings (as they will be, even greater than some of the ac-
quisitions of the past) or not, it is clear that by an energetic
appreciation of the new conditions, we shall add greatly to our
material interests without any deterioration of the manhood of
our people:
The isthmus canal is certain to be constructed, and then, with
naval stations at Honolulu, in the Ladrones, and in the Philip-
pines, with the powerful aid of the trusts, who can match us in
269
facilities for conducting the commerce with seven hundred mill-
ions, or more, of people on the other side of the Pacific ocean?
Seward's dream that the Pacific side of our country was likely
to become the most important, may prove to be a reality.
The trusts will prove to be the great reliance of our country
in successfully conducting the great industries that are to supply
the greatly enhanced foreign commerce, that the opportunities
of the near future are opening to us.
Have no fear that the trusts will seriously impose upon the
people in the prices that will have to be paid for their products.
The germs of death are in them and their only method to prevent
an early demise, is to avoid extortion.
It may be a debatable question as to whether the Standard Oil
Company has been, and is a blessing to the country or not. Cer-
tain it is, however, that it has developed an industry in something
more than thirty years, from practically nothing, to an annual
volume of perhaps more than $150,000,000, of which it retains
about $25,000,000 and gives $125,000,000 to. the people of the
country. It has greatly lessened the cost of light; it is paying
more than a hundred millions of dollars annually for oil and labor,
and pays labor more than any other employees receive.
It has added more than one thousand millions to the wealth
of the country, and contributes sixtv millions a year to our credit
in its exports.
But there are reasons for the control of trusts by law. Over-
capitalization must be guarded against.
While I have always been, and am yet, a thorough believer in
the protective policy, I regard the appropriation of the tariff to
enhance the price of any product of the country, as a misuse of
the purpose intended. "When any trust shall avail itself of a tax
upon imports to enhance the price of the product, then the tax
should be modified or wholly removed.
A bureau of government, or a board, similar to the interstate
commerce commission, should be established, to whom all trusts
shall apply for license, after being incorporated, and to whom
reports as exhaustive as is required of the national banks, should
be made. The terms of the license should not be illiberal, but
it certainly should provide against overcapitalization.
All profits beyond 6 per cent should be taxed for the benefit of
the government.
As probably the power does not exist in Congress to make the
requirements suggested, it seems then, that it is the plain duty of
this conference to request Congress to submit amendments to
the Constitution, giving it necessary power, not only to control
270
the trusts, but as the suggestion is made to tax their profits, also
to provide for an income tax.
It is evident now, that the country hereafter must rely upon
internal taxation for revenue to support the government. An
income tax is the most equitable form of taxation and can be paid
with less hardship than any other. It is objected to on the ground
that it exposes the secrets of business, and because it is generally
evaded. If the return is honorably made, I apprehend there will
be little ground for this objection.
It may be that our powers do not give us jurisdiction over the
latter subject.
If this view should be taken, then let us appeal to the wealthy
people of the country to take it up and move for its adoption. It
is certain they could not render themselves a better service.
It seems to me that as both those who oppose, and those who
favor trusts are in accord in favoring the assertion of a power
strong enough to either destroy or regulate them, that we ought to
be able to get together on the proposition to amend the Constitu-
tion of the United States.
I apprehend but for the inherent support of the doctrine of
state rights by our Southern friends the proposition would be
readily agreed to. It is evident that the states acting independ-
ently cannot successfully deal with this great question.
As the country expands the weakness of state control of great
questions becomes more apparent, and the need of the use of fed-
eral power becomes greater.
The law of this country has been one of expansion and growth,
and I may appropriately say, that when we cease to grow our de-
cline will begin.
I believe the great mission designed by Providence for this
country has only begun ; that it will go on evangelizing and civ-
ilizing the world until all lands and all peoples will be in the full
enjoyment of free institutions.
JEFFERSON DAVIS.
Attorney-General of Arkansas.
Following Mr. Foster, Attorney-General Jefferson Davis of
Arkansas spoke extemporaneously on "Arkansas Anti-Trust
Law," saying:
Coming as I do from a land that lies to the South, it is with
great gratification that I accepted your invitation and have come
here from the Southland to give you my ideas, crude as they are,
271
on the subject before this convention, one that is threatening to
sap the very life blood of our American institutions.
It is with a feeling of trepidation that I enter upon this dis-
cussion, and I was very glad indeed when I received notice from
your secretary that this meeting should not be political. Had it
been otherwise, I should not have attended, because beyond and
above all things else I hold and pride my democracy. If in this
discussion I should unwittingly say anything that would be im-
proper, or transcend the proprieties of this occasion, I ask that
you attribute it to my zeal, and not to a willful desire to infringe
on the proprieties of this convention.
The subject, ladies and gentlemen, that has been assigned to
me is "The Arkansas Law as Applied to Trusts."
Before entering upon that discussion, ladies and gentlemen,
permit me to say that I am surprised at some of the sentiments
expressed here to-night by the last gentleman who has taken
his seat upon the platform. He tells us that trusts have come
to stay. That may be true I doubt it sincerely. But if it be
true, ladies and gentlemen, that trusts have come to stay, and
if the withering blight of trusts is to overshadow our fair land,
then away with American liberty, American patriotism, the God
of the American people. Mr. Chairman, we all know at least
the legal fraternity who face me in this convention know that
any conspiracy to control prices and that is but an epitome of
trusts is a crime at the common law, and that wherever the
common law prevails in this broad land of ours, under that, with-
out federal interference and without any legislation, under the
common law alone, the crime of conspiracy to control prices may
be punished criminally. We know, ladies and gentlemen, that
the trust is but a conspiracy to control prices. What is the trust?
You have had it differently defined during the sitting of this
convention. I say to you, ladies and gentlemen, a trust is but
the ripened fruit of misused tariff legislation, as the robbery of
the people upon the silver question was. We know, ladies and
gentlemen and while I do not intend to invade the province
of politics, and while I never in my life prepared a speech for
any convention, perhaps you have observed that ere this I say
to you that a trust is but the ripened fruit. We know, ladies and
gentlemen, that money is the blood of commerce; we know, like
the blood that flows from the heart to the extremities and helps
the circulation, money should flow from the centers to the ex-
tremities and back again, to help the circulating commercial
life. But we know that by a system of tariff taxation, by repre-
sentations, that the money has flowed from the extremities to
272
the centers, and has not returned again, but it has been congealed
and it is only in the center. Not only that, but the money of
the constitution, the money of the people, the money of our
fathers, the money that we all love so well, not by law but by
precedent, has been taken from the people, and it, too, has con-
gealed in the east and in the north, and with this great mass
of wealth, fellow-citizens, you know full well that men are at-
tempting to-day, with this great mass of wealth they are attempt-
ing to control the price of products, and the trust is but the out-
growth, but the ripened fruit, as it were, the outgrowth of these
two gigantic evils and this distinguished gentleman tells us
it has come to stay! It means that its father and mother came
to stay, and it is but their offspring, ladies and gentlemen.
Now to the discussion that has been assigned to me. Applause
is always permissible at any part of this discussion, ladies and gen-
tlemen, and in the few brief moments for the discussion of one of
the best laws, I think, upon the statute books of any state in the
Union, I find in the few moments I will be unable to go over the
field as I would like, and point out to you, as I see it, one of the
best remedies on earth to destroy the thing which this gentleman
has told us came to stay. I say to you, ladies and gentlemen,
that we cannot destroy it successfully without federal interfer-
ence and state legislation in harmonious action. We do not
need so much legislation. It is not the legislative branch of our
government that in my brief experience as attorney of one of
the best states in the gralaxy of states that I have the honor to
represent here it is true we raise more corn and cotton and
pretty women in Arkansas than any place on earth it is not
of the legislation department of my state or this beautiful South-
land of which I would complain, but it is with another function
of government it is with the judicial department of this great
commonwealth of ours that I would complain to you to-night.
What! they say. You should not criticise the judiciary! There
isn't a man, fellow-citizens, in all this broad land of ours that would
pay greater tribute to the honorable, to the just, the upright
and conscientious judge, than I. But do you remember, ladies
and gentlemen, that Abraham Lincoln, one of the greatest patri-
ots this country has ever produced, in the Dred Scott decision
he criticises more severely than it is possible for me to do a de-
cision of the Supreme Court of this land of ours, and do you re-
member, ladies and gentlemen, just a short time ago, in the
income-tax decision to which my distinguished friend referred so
learnedly, that Justice Harlan criticises more severely than it
is possible for me to do the most infamous decision that has ever
273
been handed down by a court of last resort in any country or
time?
I have not lost my faith in God and man. The saddest fate
that can befall a human soul is when it loses its faith in God
and man, and had I lost that gem, though the thrones of this
world stood empty in my path, 1 would go wandering back to my
childhood in tears till I found it. It is not of the legislative de-
partment that I would complain, but of the judicial department.
I hold in my hand a copy of one of the best laws, in my judg-
ment, that was. ever enacted in a state upon the subject of trusts.
This law provides in a few words, "Any corporation organized
under the laws of this or any other state or country and transact-
ing or conducting any kind of business in this state, which sljall
create, enter into, or become a member of or a party to any pool
or trust or agreement to regulate or fix the price of any article
of mechanics or merchandise or any article or thing whatsoever,
shall be deemed and adjudged guiltv of a felony, and subject
to the penalties of this act." I come from a people that is in
no humor to temporize with one of the most monstrous evils that
has ever "come to stay." Gentlemen excuse me, but I have
been talking politics ladies and gentlemen, do you remember
in the 158 United States Supreme Court, the case of Hall against
Virginia, where the United States Supreme Court says that a
corporation is but a creature of the law, and that the creature
cannot control the creator? This law provides that a corpora-
tion so created cannot migrate to another sovereignty unless by
the consent of that sovereignty; and it goes further, and says
that that sovereignty may prescribe any condition upon which
it may enter its borders and transact its business. Now, taking
that as a basis, if a corporation is considered by the ultimate
authority, the government, but a creature of the law, then it
remains for you to say whether the creature shall control the cre-
ator, or whether the creator shall control the creature.
Now, ladies and gentlemen, the Federal Court of this land
has said that these creatures can only exist in the land of their
creation, and they can migrate to another sovereignty only upon
the will of that, sovereignty, no matter how cautious that will may
be. Now, fellow-citizens, we know that a trust is but a combina-
tion of wealth formed for the purpose of controlling prices; we
know, fellow-citizens, that it is a corporation; we know that it is
a creature of the law, and I am here to say to-night that the only
remedy, in my judgment, for its extermination because" exter-
minate it we must the only remedy for its extermination is to
bring upon it the strong hand of the law, and I am surprised to
274
hear the sentiment expressed before this vast and intelligent
audience that the trust is a good thing. I say to you, ladies and
gentlemen, that this is not a political subject it is a question
of economics. We have come to the divide of the waters; we
have come to the point, ladies and gentlemen, where we must
stand up like patriotic American citizens and meet the conditions
that confront us to-day.
Now, fellow-citizens, Arkansas started the agitation, but Texas
went us one better, and Texas has to-day possibly a better law than
that. Do you know, ladies and gentlemen, do you know that the
Supreme Court of the State of Missouri has decided, and that
decision has never been questioned by any lawyer of ability
the Supreme Court of Missouri has absolutely decided that you
cannot collect a bill rendered for trust goods? Then if that is
true, fellow-citizens, if that is true, ladies and gentlemen, then
you see that this trust is an outlaw in the land. And, gentlemen,
when I speak the word "trust" I use it as it is known to-day
they ought to have called it "octopus," or something that sym-
bolized its character- but they have stolen the livery of heaven
to serve the devil in.
I find that my time, twenty minutes, has long since expired,
and I have just fairly started the discussion of the Arkansas
law as applied to trusts. Now, fellow-citizens, now I'll say why
I forget myself and call you fellow-citizens: I have been speak-
ing for the last sixty-five days in Arkansas on this very proposi-
tion, and I only caught the train by a forced drive to make the
train to come here, and hence you will excuse me when I greet
you as "fellow-citizens." I say, ladies and gentlemen, that I
find my time has expired, and of course I will not ask this intel-
ligent audience to bear with me' further, and I shall submit the
question with. just one other consideration. Ladies and gentle-
men, the only way to grapple with this matter, as I have stated
before, is by the strong arm of the laAV.
A Voice : State or national?
Mr. Davis: State and national combined, and in order to
carry to a successful issue, I am here to tell you, ladies and gen-
tlemen, that we have got to 'reconstruct our judiciary. I am
here to say, ladies and gentlemen, that if we ever have another
civil war and God grant we may not it will be brought about,
in my humble judgment, by judge-made law. I say to you,
ladies and gentlemen, that it is one of the great evils that threat-
ens this republic to-dav judge-made law the judiciary of the
country invading the province of the legislative department of
this country.
275
Now, fellow ladies and gentlemen, : f I have unwittingly in
these few scattering remarks said anything, I am glad at least I
have furnished some amusement for this conference, and if you'll
just come down to Arkansas, the home of the red apple and the
pretty women, I'll treat you as nicely as I can.
GEOEGE GUNTON.
Publisher Cfunton's Magazine.
During the remarks of Professor George Gunton of New
York, who spoke on "The Public and the Trusts," the spectators '
became so demonstrative over the speaker's pro-trust views that
the chairman had to threaten to have the galleries cleared. Pro-
fessor Gunton's paper was as follows :
The trust question is only a new phase of an old problem, the
problem of free industrial enterprise. Notwithstanding that
everybody knows that the marvelous progress of the last three
quarters of a century is mainly due to the introduction of im-
proved methods of industry, every improvement since Wyatt's
spinning frame and Hargreaves' spinning jenny has had to fight
its way against the popular prejudice of the time. The hand loom
weavers marched through England and broke the power looms.
Hargreaves, Arkwright and Crompton were driven from their
homes for inventing new methods of spinning.
Now, after three quarters of a century's experience, in which
the fallacy of this policy has become notorious, we are face to face
with another movement of the same character. The present agi-
tation against trusts has all the characteristics of the anti-ma-
chinery riots of a century ago. It pervades the attitude of both
laborers and business men alike. Workingmen give about the
same reasons for opposing the introduction of new machines as
did the neighbors of Crompton and Arkwright for breaking their
spinning frames. The business men who twenty-five years ago
were among the hated organizers of corporations are now among
the agitators against trusts. And now the movement is taking on
a political form. Men of national repute and leaders of great po-
litical parties, candidates for the highest and most responsible
positions in the nation, are asking the people to reverse the policy
of industrial freedom and return to the doctrine of arbitrary pa-
ternalism, specifically to suppress large corporations. Are the
American people ready for such a step?
276
There is only one point of view from which this subject can
properly be considered the interest of the public; the public as
representing the consumers who are interested in superior com-
modities at low prices; the public as representing. the laborers
who are interested in permanent employment and good wages;
the public as representing the farmers who are interested in cheap
transportation and the advantages of the modern products of
science, art and literature. It is in these aspects of the subject,
and not in the confusing clamor and sensational subterfuge of
campaign oratory, that the American people are interested.
The question for this conference to ask, the question for the people
of the United States to ask, is : Are trusts inimical to public wel-
fare in all or any of these respects?
It must be remembered, first of all, that the trust, be it good
or bad, is only one among a large number of experiments in in-
dustrial organization, which the progress of the last fifty years
has evolved. One of the marked features of the economic de-
velopment of the century is the radical change that has taken
place in the character of competing units. Under the primitive
hand labor method, the competing unit was the individual. With
the development of factory methods, the individual as a com-
peting unit was superseded by partnerships, because they could
more economically employ the new methods. With the growth of
invention, partnerships were superseded by corporations. With
the growing completeness of machinery and magnitude of busi-
ness, corporations grew larger and larger, until the corporation
is now the prevailing form in the most advanced countries.
Nor is this limited to the capitalist side of industry. It is
equally characteristic of the labor side. The Competing unit in
the labor market is no longer the individual laborer, but the
group, the union. The factory system has made it impossible for
individual laborers to be competitors, because it is impossible for
them to make individual contracts. In all matters pertaining to
wages, hours of labor, conditions of work, whether by piece or
by the day, it is the group and not the individual that is con-
sidered. Each factory, and in most instances each industry, pays
uniform wages, works the same hours, and has substantially the
same conditions, and when they are altered for one they are
altered for all. In short, the progress during the nineteenth cen-
tury has irrevocably established the group as the competing unit ;
the union as the unit on the labor side, the corporation as the
unit on the capital side.
Now the trust was one of the experiments in the evolution of
this group unit. Numerous forms of organization and associa-
277
tion were tried. Corners, associations to fix prices, were tried.
But these were uneconomic and failed, usually wrecking some-
body in the collapse. The trust was another form. It differed
from these in that it was an attempt to integrate productive
forces. Corners and trade associations were mere manipulators
of prices, not producers. Trusts were bona fide producers.
The difference between the trust and the ordinary corpora-
tions was not economic, but legal. The trusts .are a formal merg-
ing of a number of corporations or" firms under one management,,
which holds the property in trust for its original owners, giving
certificates for their respective claims. There have been very
few bona fide trusts ; the Standard Oil trust, the sugar trust and
a few others. But through the intense popular opposition, re-
sulting in adverse legislation, these have all disappeared. They
have been disbanded and converted into simple -corporations,
with capital stock owned by whomsoever chooses to invest, and
governed by the majority vote of the stockholders. So that, if
there was anything peculiar or alarming in trusts, the evil has dis-
appeared, because the trust is gone.
In reality, then, Avhat we have are simply corporations. The
whole question which this conference is called to consider is:
What is the influence of large corporations upon public welfare?
First, then, what is the effect of large corporations upon the
quality and price of the community's supply of commodities?
This question is one of fact, and can only be adequately answered
by experience. The history of corporations on this point is al-
most too obvious to need reciting. The evidence abounds on every
hand. While experience differs in different industries, as it nec-
essarily must, the tendency is universal that with the growth of
large corporations the quality of the commodities improves, and
the prices fall. It was in obedience to this principle that cor-
porations came into existence. A long series of experiments
taught that under certain conditions large capital could be used
to greater advantage than small capital. It could produce more
at the same cost, give a larger aggregate r>rofit, by selling the
products at lower prices. As the experiments proved successful
they were increased, and so from small individual concerns to
partnerships, then to corporations, the process went on and on,
and if not arbitrarily interrupted will continue to go on just so
long as it will yield any advantage. Just so long as adding an-
other million to the plant will increase the earning capacity of
both the old and new capital, the additions will continue to be
made, and as soon as the point is reached where to increase the
size fails to increase the economy, it will stop. Clearly, the his-
278
tory of industrial growth and prosperity is the history of cor-
porate development. Without corporations productive efficiency
could not have progressed heyond the economic status of the
small individual concerns of the last century.
The era of corporations in this country is since the war. It
is during that period that our industrial expansion has been so
enormous and the great corporate interests have develoned. If
we take the groups of industry in which the commodities are pro-
duced by corporations, by individuals or small capitalists, we get
a fair view of the difference in the influence of the two types of
industrial effort upon prices and public welfare. These data
are easily found, already classified, from 1860 to 1891 in the Sen-
ate report on wholesale prices and wages, which is the most ex-
haustive collection of industrial data ever printed in any lan-
guage. In the table given in Part I (pp. 30 to 52) the prices of
over two hundred articles are given every year from 1860 to 1891.
Of these 58 had risen in price, some 100 per cent, and a very large
proportion from 30 to 70 per cent. "With one or two exceptions
these were all agricultural or raw material products, in which
little corporate capital was employed. On the other hand the
tables give 140 groups of manufactured nroducts, mostly pro-
duced by corporations, and some of them by very large cor-
porations, using most modern machinery, and in all these prices
had fallen varying from 6 to 40 per cent. At the same time wages
rose, chiefly in the manufacturing and mercantile industries, 68
per cent. That is to say, through the economies of corporate
methods, from 1860 to 1891, the purchasing power of the day's
work was increased over 72 per cent, which is equivalent to an
absolute increase in public welfare of-34Der cent every ten years.
While this is true of corporate industries in general, as com-
pared with non-corporate industries, it is most markedly true of
very large corporations. If we take the concerns where millions
are invested by a single corporation, like the Standard Oil Com-
pany, the American Sugar Kefining Companv. the great railroads,
the Carnegie Steel Company, we find that their products have
undergone the greatest improvement in quality and the greatest
reduction in price. Without the immensely large capitals in-
vested by these great corporations, many of the great improve-
ments accomplished during tbe last twenty years would have been
absolutely impossible. Take for instance the Carnegie Company.
Nothing short of tens of millions invested under one manage-
ment could have developed the extraordinary improvements
which have revolutionized both the quality and price of iron and
steel products. With small concerns of less than a million each,
279
that could not have been done. The same is true of our great rail-
road systems. No small or individual enterprise could have given
us the marvelous development in railroading of the last twenty-
five years, which has constantly improved the service and so
greatly reduced the cost to the public. In 1873 it cost 2.21 cents
a mile to transport a ton of freight. Through the increased in-
vestments and improved facilities, the price has been gradually
reduced year by year until now it only costs 75-hundredths of a
cent a mile per ton. The surface railroad systems throughout this
country are another illustration of what large corporations can
and do accomplish. It used to cost ten cents to ride a few blocks
in a dingy, dirty horse car, in every city in this country. With
the development of large corporations, electricity has superseded
horses, large, light and wholesome cars have replaced dingy boxes,
and fares have been reduced one-half, with transfers to nearly all
connecting lines, a result that could not have been accomplished
under small separate concerns.
The Standard Oil Company, the most hated of all large cor-
porations, is another conspicuous illustration of this fact. The
immense investment involved in thousands of miles of pipe line
and millions of gallons of storage capacity, which takes the oil
from the wells and delivers it at the seaboard without the touch
of human hand, and the immense sums expended in experimen-
tation for an improved quality of the product, which have resulted
in reducing the price of oil (in gold) 75 per cent since that cor-
poration was organized, required tens and even hundreds of mill-
ions of capital, which only a colossal corporation could furnish.
This corporation, by its immense capital, preserves the oil indus-
try to this country. But for it the American market for petrol-
eum would be supplied by Eussian producers. Eussia protects
its oil producers by a 200 per cent tariff; we put ours upon the
free list. Only the competition of the Standard Oil Company,
through the immense economies it has developed, of which the
smaller concerns now have the benefit, keeps Eussian oil out of
the American market. That company furnishes an unlimited
cash market for every barrel of petroleum that it produces in
this country. Moreover, it gives employment to 35,000 American
laborers, pays $100,000 a day in wages, and exports, in competi-
tion with Eussia, into Europe and Asia, nearly 1,000,000,000 gal-
lons of oil a year, bringing about $60,000,000 in gold into the
country. Here is an industry, all told, which furnishes employ-
ment to about 45,000 American laborers, paying about $125,000
a day in wages, bringing a balance of $60,000,000 of gold a year
into the country, all of which would be lost to this country but for
280
the economic energy and superiority of the Standard Oil Com-
pany. Small refineries, such as those now outside the Standard,
could not hold the American market a month in competition
with the Eussians. In short, it has preserved the industry to this
country, and at the same time improved the quality of the peo-
ple's light and reduced its price 75 per cent; and all this without
government aid, purely as a highly developed productive enter-
prise competing against the government-aided capital of Eussia.
I could go through the whole list of industries where great im-
provements have heen made and large reduction in prices ac-
crued, and substantially the same facts will he found.
Next, what is the influence of corporations upon the condi-
tions of labor? It is commonly asserted that large corporations
tend to destroy the laborer's liberty and individuality by making
him a part of a productive machine. Mr. Cleveland sounded
this note in his last message to Congress. A little touch of fact
would show this to be a pure phantom of the imagination. Noth-
ing could be more contrary to the whole history of wage labor.
If there were any truth in this, we might expect to find that labor-
ers had more freedom and greater individuality before the wage
system began. Yet everybody knows that then they had neither
liberty nor individuality; that it was not until long after the wage
system came that laborers acquired any liberty, political rights or
social individuality.
The laborer's freedom and individuality depend upon two
things permanence of employment and good wages. Wherever
the employment of labor is most permanent and wages are high-
est, there the laborer is most intelligent, has the greatest free-
dom and the strongest individual identity. Where do laborers
get these conditions? It is not where capital is small and em-
ployers are poor. On the contrary, it is where large corporations
prevail that wages are highest and employment most continuous,
and everybody knows it is there where the laborers are most
independent. It is notorious that large corporations have the
least influence over the opinions and individual conduct of their
laborers. Let it be known that a large corporation is trying to
influence the election of candidates for office, and that is the
signal for the working men to vote against them. Instead of be-
ing controlled by the corporations they act almost uniformly on
the rule of defying and opposing them.
Nor is there any loss of individual liberty in becoming a
fractional part of a large productive concern. What society wants
is not individuality as producers but individuality as citizens.
What we need is that the laborer should give less and less of his
281
personal energy to earning a living and more and more to his
social and individual improvement. A permanent stipulated in-
come is the first step toward real individual freedom for the labor-
ers. Nothing is so depressing to manhood, nothing makes the
wjeak so cowardly, as precariousness of income. The small busi-
ness man who does not know from quarter to quarter, and some-
times from month to month, whether he can meet his obligations,
is neither as brave, as intelligent nor as free a citizen as the wage
laborer in the safe employ of a large corporation. As a matter of
fact, the corporation and banker have far more influence over
the votes of small business men whom they have befriended or
patronized than they have over their own laborers. A laborer's
freedom does not depend upon the fact that he works for wages,
but on the amount of his wages. With high wages and permanent
employment the laborer's freedom and welfare is secured. The
laborer has not a single interest, social, economic or political, in
the existence of employers with small capital.
How do large corporations affect the interest of the farmers?
There is probably no class in the community who derive more
benefit from the economic improvements of large corporations
than do the farmers. All the great improvements in tools, archi-
tecture, sanitation, domestic appointments, art, literature and
general refinement, are the products of industrial centers where
large capitalistic enterprises abound. Every form of com-
modity outside of food which enters into the farmer's life has
been immensely improved and greatly cheapened by the efforts
of large corporations. Transportation, which is an important
item in the farmer's economy, has been reduced 50 per cent dur-
ing the last twenty-five years, as will be seen by the following
table :
Average rate per Average rate per
ten per mile. ton pr mile.
Year. (cents.) Year. (cents.)
1873-.. -.2.210 1886.- -.1.042
1874 - .2.040 1887 ..1.034
1875 1.810 1888 _. 0.977
1876... 1.855 1889. . 0.970
1877.. .-1.524 1890 0.927
1878.. 1.401 1891 0.929
1879 1.201 1892 0.941
1880 .. .1,348 1893 0.893
1881.. ..1.264 1894 0.864
1882 1.236 1895 0.839
1883... 1.224 1896 0.806
1884 1.125 1897 0.798
1885--. _ 1.036 1898 0.753
282
While the farmer has received all the advantages produced by
large corporations in lower prices of everything he buys, and
lower transportation., the price of what he sells has undergone
very little fall, and of many products no fall at all, and some
have even risen.
What is the influence of large corporations upon business
stability and prosperity? This is one of the most important fea-
tures of the subject. The- greatest menace to modern society is
business depressions, which usually are the result of ignorant
eagerness among competitors. A slight boom in business leads
to a rash increase of output. Without any general knowledge of
what is being done elsewhere each hopes to fill the new void, with
the result of an increase of output wholly disproportionate to the
demand. For instance, the Illinois farmer, when the price of
corn is high, will double his acreage for corn, and next year finds
that he can hardly sell the corn at any price, and is compelled
to use it for fuel. Large concerns tend to remedy this evil on
the same principle that they invest heavily in experimentation.
They take pains to gather accurate information of the condition
of their business throughout the world. They find it pays to be
informed as to what next year's demand is likely to be. Their
investments are so large. that they could not afford seriously to
miscalculate the demands of the market. With their compara-
tively accurate information, they adjust their production with
great precision to the present and probable future demand. As
a matter of fact, in lines of industry where the very largest con-
cerns are organized there is the least perturbation. If the rais-
ing of corn were in the hands of a few well informed corporations
instead of thousands of uninformed small farmers, the erratic
ups and downs in corn farming would be largely avoided. Indus-
trial depressions can never be eliminated until the relation of
productive enterprise to general consumption is reduced to some
degree of precision, which the small go-as-you-please producers
can never do.
Large corporations are superior to small concerns; first, be-
cause by the use of large capital and superior methods they im-
prove the quality and reduce the price of commodities; second,
they are more favorable than smaller concerns to high wages,
and individual freedom of laborers; third, by introducing
scientific precision into industry they tend to increase the per-
manence of employment and reduce the tendency to industrial
depressions, all of which are vital elements in the nation's pros-
perity and progress.
In studying the literature against large corporations one is
283
impressed by the marked absence of careful presentation of facts
and rational discussion of the case. There seems to be no at-
tempt "to apply economic principles or recognize the great law of
societary evolution. The only hint thus far of a policy to be
adopted is the proposition of Mr. Bryan, which is that Congress
pass a law forbidding all corporations to do business outside the -
state in which they are incorporated without a license from the
federal government. It is difficult to imagine a gentleman who
is about to be for the second time a candidate for the Presidency
of the United States, seriously making such a proposition. Yet
he recently presented this to the ISTebraska Democratic conven-
tion, and repeated it to this conference. This is so contrary to
the spirit and traditions of democracy, which is usually opposed
to any trade restrictions whatever, and so contrary to the Ameri-
can idea of free intercourse between the states, and so contrary
to Mr. Bryan's previous declarations, that one has difficulty in
taking him seriously. If this is really the best that his mind can
suggest on the subject, it is a depressing gauge of his states-
manship. It would hardly be possible to invent a proposition that
would be more fertile in creating corruption, injustice, favor-
itism and business demoralization. A license might be granted
by one administration and refused by another, for purely political
reasons, which would be equal to confiscating the property of the
corporation, since it would destroy its business value. There is
not a single aspect of this proposition which is not surcharged
with economic and political iniquity. It partakes neither of
economic sense, political wisdom, fair statesmanship, nor even
party shrewdness.
It is not to be assumed, however, that large corporations are
always wise, or good, or fair. They are born of the same spirit and
partake of the same attributes as the small business venders.
Their main ambition is to make profits. It is the duty of the
state, therefore, to see to it that the conditions shall be such as
to make dishonesty, unfairness, oppressive dealing, difficult and
as impossible as any other offenses against the welfare of the com-
munity. This cannot be accomplished, however, by the petty
nagging and corruption-creating license-granting proposed by
Mr. Bryan. The federal government if it acts at all should act
in exactly the other direction. It should surround industrial en-
terprise with the maximum freedom and the maximum protec-
tion to all, and no uneconomic privilege to any.
To this end it might be well for Congress to enact a law em-
powering the government to grant national charters to corpo-
rations, which should give them the right to do business over the
284
entire territory of the United States, against which no state should
have the right to interfere. This would he economic, in that it
would give the market of the entire country to every "business
enterprise. National charters could have the proper qualifica-
tions subjecting the corporations to a certain supervision and
compelling annual reports to be made. Second, it might also be
provided that companies using a public franchise, like railroads,
should not be permitted to make uneconomic discriminations in
their rates of traffic, that they should be subject to public. ac-
counting, and that all contracts with shippers should be ac-
cessible to all other shippers. The general influence of publicity
and inspection by the national government, coupled with the cor-
porations' protection in its right to do business throughout the
United States, would tend to create a wholesome influence around
corporate conduct. While affording corporations the full sup-
port of the national government in their business rights, it would
free them from the petty uneconomic nagging of partisan legisla-
tion in the different states. It would carry out the true idea of
protection that the American market should be open to every
American producer and that the interests of the laborers and the
public is safeguarded by the national government; at the same
time leaving the essential features of business to be determined
by the free action of economic forces, which are more perma-
nent, more sure and more equitable than the wisest statutory
enactment would ever be.
GEOKGE E. GAITHEE, JE.
Attorney-General of Maryland.
The day's program was closed by the reading of a paper by
Attorney-General George Gaither, Jr., of Maryland, on "Mary-
land and the Trusts," who said:
The phenomenal growth of trusts, as the consolidations of
great business interests into central corporations are currently
designated, has excited the deepest interest in the minds of the
people of this' country. The meaning of this tremendous change
in the economic relations of the nation is being earnestly con-
sidered by every thinking citizen, and some effective remedy for
the evils which the growth of this new system threatens to pro-
duce is eagerly looked for. It is peculiarly fortunate that this
new problem has developed so rapidly that it has not as yet been
complicated by political antagonisms, and no partisan spirit
285
should be allowed to enter into the present serious discussion of
the great question. The evils attendant upon the present and the
threatened development of these combinations in the manu-
facturing, producing and transportation interests of the country
are universally recognized. For four hundred years the Eng-
lish-speaking races have abhorred monopolies, and since the
reign of the Tudors every bill of rights has prohibited the sov-
ereign power from granting any privileges in trade or commerce
which were in their nature exclusive and preventive of com-
petition. There is scarcely a constitution of a state of the Union
which does not contain this prohibition, and in the constitution
of Maryland it is expressly stipulated "that monopolies are odious,
contrary to the spirit of a free government and the principles of
commerce, and ought not to be suffered." Abhorrence of
monopolies is therefore one of the most deep-seated convictions
of the English-speaking races. Our modern form of monopolies
differs, however, most radically from the form which our an-
cestors fought against. Ancient monopolies owed their existence
to the exclusive privileges with which they had been invested by
the royal prerogative. Modern monopolies or trusts claim no
protection from the law, on the contrary they simply ask that
they shall not be interfered with, reiving upon the crushing
power of the exclusive privileges, which their own control of great
aggregations of capital has obtained, for their flourishing ex-
istence. The old monopoly Avas a creature of the law, the mod-
ern trust seeks to establish itself without legislative assistance,
and in many instances in defiance of express enactments. It is
manifest, therefore, that present constitutional prohibitions
against monopolies do not touch the modern type of these dan-
gerous elements in the business Avorld that a prohibition on the
sovereign power from creating an exclusive privilege in business
cannot prevent such privileges from being exercised when ac-
quired by means independent of the sovereign itself. We must
consequently look for the machinery to properly deal with these
new creations of modern industrial life in neAV legislation ap-
plicable to the neAV phenomena, and not in any attempt at adapt-
ation of old principles Avhich Avere meant to apply to practically
opposite conditions.
Before considering the remedial legislation Avhich should be
applied to these new monopolies in business, it is of paramount
importance to determine Avhether the development of those com-
binations, in their colossal proportions, is due to sound economic
laAvs. Whether their growth is the result of the evolution of
modern business conditions, or of a mania for manipulating the
286
possible profits of a combination of conflicting interests so as to-
create an aggregation of fictitious wealth and unload its shares
upon a speculative public. If the latter view of the origin of
trusts is correct, the country need not concern itself much about
remedial legislation. The inexorable law of economics that values
must inevitably find their true level can be safely relied upon to
disintegrate and destroy the false combinations which have been
formed, and the creation of trusts may be regarded as only a
temporary disturbance of the business world.
But is the tendency of all economic undertakings, under the
well recognized laws of modern business affairs, toward a disin-
tegration of business enterprises into smaller establishments, or
to a concentration under greater and ever greater combinations?
A casual observation of the tendencies of business conditions
for the past forty years must convince everyone of the trend of
economic forces, and furnish unanswerable proofs of the sources
from which our modern colossal combinations have flowed. Be-
fore the late Civil War the tendency of the numerous small rail-
road corporations throughout the country to consolidate into
larger companies was manifest, and these corporations have since
that time been merged into a few great trunk lines, which lines
by traffic agreements and pools have practically been united in a
common undertaking. Then, too, manufacturing interests have
been concentrated and combined. Factories have been placed in
close proximity to the raw material which was to be used, until
the great corporations engaged in producing the finished prod-
ucts of industry have owned practically every factor entering
into their business. So, too, the shoe manufacturer and clothing
manufacturer have sought through their own stores to place their
products in the hands of the consumer without the intervention
of any third parties. The consolidation of gas companies, street
railways and electric companies in our municipalities, or their
agreement as to price or territory (which is practically the same
thing), are experiences with which we have been familiar for
many years. "Whilst the great department stores which have
developed in every city to their present proportions have dem-
onstrated the economies and conveniences which the public en-
joys from a concentration and consolidation of interests. The
savings in the cost of production by the cutting down of com-
peting expenditures, the economies of purchases in great bulk and
of transportation, are realized by everyone, and the saving in the
cost of the article to the consumer from these new channels of
trade is universally recognized. Such has been the tendency of
business methods for many years.
287
We have viewed consolidation and concentration in all of
these manifold phases of industrial and commercial life for many
years with co'mplacency, and in most instances with satisfaction.
It is only when the tendency reaches the acute stage, and a con-
solidation of the great businesses which deal in the necessaries of
life, and with the callings in which we are 'vitally interested,
threaten us with a great economic revolution, that the country
becomes aware of the dangers which are threatening. In the
first paroxysm of fear the cry is raised that this tendency of mod-
ern business life must be checked, that these combinations must
be destroyed, and men must be forced by legislation to return to
the business methods and ways which their intelligence has dis-
carded. As well might we attempt to turn back the forces of na-
ture as the forces of economic social conditions. It would be as
reasonable to endeavor by legislation to restore the days of the
stage-coach, or to prohibit electricity from usurping the sphere
of steam. The attempt of ignorant bigotry to compel Galileo to
recant his masterly exposition did not prevent the earth from
revolving about the sun. The truth is rapidly dawning upon
humanity that co-operation is the highest form of industrial activ-
ity that civilization can develop. When this great economic
axiom is being accepted by the capitalists of our nation, it is
imperative that the great working masses should not blindly op-
pose its adoption. Competition is no longer the life of trade,
it is a destroying force to those engaged in it. Then, too, the
country should profit economically from the great benefits which
these combinations and consolidations must confer. The favor-
able conditions under which the production of commodities will
take place must minimize the cost price of the finished article,
and enable the consumer to enjoy at least a percentage of the
saving. The use of the most approved machinery, and of the
most scientific methods which the best intelligence can devise,
necessarily minimize the amount of human labor which is to be
expended, and at the same time insure greater purity for the
product. The stability of business which will be the outcome
of the new order of things will be of lasting benefit to the country.
Under the competitive system men will sell to firms of doubtful
credit rather than be deprived of business, and the solvent mer-
chant is always at the mercy of a cut in prices by his recklessly
insolvent neighbor. Under the new system the thousands of
active country merchants, who cover every hamlet of our great
continent with their wonderful distributing facilities, will be
able to purchase their standard articles at a uniform price, and %
one which they can reasonably rely upon being maintained. The
advantages of such stability in business to the entire people will
in the near future prove enormous. Then, too, after the fictitious
capital in most of these combinations has been squeezed out by
receiverships and reorganizations, as must inevitably be the case
with many of them, the shares of these great industrial com-
binations will furnish as safe an investment for the savings of the
people as the standard railroad securities of the country now
afford. In this way co-operation in the industrial enterprises of
our nation will be practically established, and the grip of the great
capitalists upon every business enterprise will be, in practically
a brief period, permanently loosened. Shall all of these bene-
fits be given up, shall the attempt be made to reverse the great
tides of industrial and commercial development, simply because
the American people declare themselves otherwise unable to avert
the evils which the present system threatens to bring upon the
body politic? Shall we burn down the house in order to get rid
of the vermin which infest it? Must we destroy all modern de-
velopment by a wild and relentless crusade against the existence
of these so-called trusts? I would readily admit that if destruc-
tion was the only remedy for the threatened evils, then those
. evils are so injurious to the great masses of the people that such
a radical remedy would be justifiable, but I do not concede for a
moment that such extreme measures are necessary.
Every evil which is attendant upon the present development
of trusts can be restricted and finally eliminated by wise legisla-
tion under which the management and development of these
corporations can be controlled and directed. The control and
direction of such corporations can be affected with absolute cer-
tainty. The giant of capitalistic greed has bound himself with
thongs which cannot be loosened, the genius of monopoly has
placed itself in the bottle which has been tightly sealed. Experi-
ence has shown that old forms of trust, such as the Standard Oil
trust originally was, cannot exist for an indefinite period in an in-
corporeal stage, that pools and agreements are not sufficiently
binding or legal to be effective. The modern form of combina-
tions for every purpose is therefore the corporation. Such a form
is the only legal one, and in the form of a corporation nothing is
easier than control by the law. A defiance of the creator by its
creature, the corporation, can be followed with such penalties of
forfeiture and confiscation that every act of the trust can be ascer-
tained and directed by the law, and every officer compelled to do
his duty. It is only necessary to have an enactment of a law by
a competent body to compel its observance by the corporation,
and such has been the result of legislation in restraint of corporate
action even in this period when corporate wealth is so arrogant
and aggressive. The manner of obtaining that competent author-
ity will be discussed later, its use is now referred to. By this
legal control and direction all of the evils of trusts can be suc-
cessfully eliminated. The evil tendencies of these consolidations
may be considered under three heads : First, an unreasonable and
excessive increase of the price of the article or service, due to the
stifling of competition; secondly, a wholesale discharge of em-
ployees, whereby the opportunities of mankind to earn a. liveli-
hood are seriously diminished, and, thirdly, a fictitious creation of
capital values whereby the public are victimized. First as to the
excessive price. The propriety of a law regulating the price to be
charged for a commodity or a service, controlled by a trust, can-
not be questioned. For half a century the courts of this country
have been upholding the right of legislatures to regulate the rea-
sonable charges of railroad and express companies, and of gas,
water, electric light and street railway corporations. It is true
that this right has been sustained on the ground that these ser-
vices so regulated were of a quasi-public nature, but although this
is'the theory of the law, the basic principle is that the people are
at a disadvantage in dealing with the corporation, because they
must employ the company (it having practically a monopoly)
or go without the service, and therefore the sovereign power steps
in and makes a just regulation for their protection. It must be
remembered that this advance has been made by the courts under
existing constitutions and under present theories of industrial
relations. Assuredly if it is just and proper that the citizen
should be protected in the price that he should pay for the gas or
water which he consumes, or for his transportation on the street
car or railroad, how much more imperative that he should not be
required to pay an exorbitant price for the sugar, beef or flour
which his family consumes, or for the fuel or clothing which they
require. This regulation of prices should be intrusted by Con-
gress to commissions for each industry to be regulated, and such
commissions should be selected from the skilled and trained em-
ployees in the several businesses or vocations, who have been de-
prived of employment by the consolidation of enterprises. Sec-
ondly, as to the discharge by corporations of a trust character of a
number of its employees. Under the power to control and direct
it would be within the province of Congress or of the states to
vastly ameliorate the present semi-barbaric relationship between
great corporations and their employees. .If the resources and the
conditions of the corporation should warrant it, the hours of labor
might be shortened in a particular trade or business and thereby
290
the number to be employed increased. Then again an inspection
of the goods furnished, or the service rendered, so as to insure
their quality and adequacy would he a source of employment for a
number of those who have had experience in the particular indus-
try. Moreover, a system of compulsory arbitration could be
established, whereby the unfortunate strikes, which have been in
the main most prejudicial to the common interests of employer
and employee, might be permanently avoided. And again, by a
wise system of taxation, levied upon these new great aggregations
of wealth, a sufficient fund could be secured by the nation, and the
municipalities, to establish channels of public enterprise in which
everyone deprived of employment by the ever-changing condi-
tions of the economic world could secure temporary 'employment
until a footing could be obtained in another branch of industry.
As to the remaining evil, that of overcapitalization, taxation and
the weakness inherent in its organization would in a compara-
tively short time eliminate the inflation, or as it is now termed,
liquid capital, and through receiverships and reorganizations this
fault eventually would be cured. Through these methods, sim-
ply offered as suggestions, and which in practice would probably
be vastly amended from the imperfect outlines which have been
set forth, the system of trusts or combinations could be relieved
from all the dangers which are now apparent. There may be
other deleterious tendencies, but if so they are of a minor char-
acter, and can be successfully regulated and controlled.
We have so far considered the method of dealing with com-
binations or trusts which would appear to be most efficacious; the
remaining question is as to the machinery by which the necessary
control and direction of trusts can be made effective. The con-
.trol, regulation and direction of all trustSj whose business either
directly or indirectly is carried on in more than one state, should
be placed under the jurisdiction of Congress. A similar jurisdic-
tion over such combinations operating in a single state should be
reposed in the respective State Legislatures. It would be almost
suicidal to attempt such legislation under the present constitu-
tional limitations both of the nation and the states. Let us cut
the Gordian knot of endless constitutional discussion by adopting
immediately an amendment to the federal Constitution which will
confer the broadest power to deal with the subject upon Congress
and the states in their respective spheres. The decisions of the
Supreme Court in the Sugar Trust case, and in other cases,
demonstrate the inability of the federal government to deal with
the subject under the powers conferred by the interstate com-
merce clause of the Constitution. Every lawyer is familiar with
291
the tendency of the court to destroy the effect of all state legisla-
tion affecting business or commerce between the states, by invok-
ing the force of this same interstate commerce section. To allow
this most momentous subject, under either federal or state legisla-
tion, to be the victim of narrow legal construction or baffling
technicalities, or to be robbed of its efficacy by conflicting deci-
sions of numerous state and federal courts, would be a blunder
worse than the crimes which might be perpetrated under the
trust system. The amendment should be couched in the most
comprehensive terms. It should expressly confer adequate pow-
ers upon the states to legislate concerning trusts operating wholly
within their borders, so that there may be no restraint upon state
action on account of restraints imposed upon the states in certain
clauses of the Constitution as it now stands. Then, too, the con-
stitution of the state should be amended wherever there is any
doubt as to present powers being adequate. This latter step is
not so necessary at the present moment as the amendment to the
national document. The proposed amendment should be passed
by the present Congress at its first session. Then it can be sub-
mitted to the State Legislatures to be chosen in the year 1900, and
in the present attitude of both parties to the subject should re-
ceive the approbation of the necessary three-fourths vote before
the meeting of the Congress which will be elected at the coming
presidential election. That Congress should be composed of men
who will be ready and willing to take up the necessary legislation
to make the control, regulation and direction of these combina-
tions a lasting benefit to the entire people.
With this plan our beloved country can commence the twen-
tieth century with a hope of a triumphant solution of the greatest
of industrial problems. It is idle to attempt to forecast the ulti-
mate results. The dreams of socialism may be realized, or co-
operation may work out the destinies of mankind in an industrial
and social republic differing widely from the fancies of imagina-
tion. But whatever may be the outcome, the substitution of the
control of the people for the control of the trusts will make the
future of the nation under the guidance of intelligence and lofty
purpose forever secure.
292
JAMES E. WEAVEE.
Professor of Political Economy, De Pauw University.
By economic limitations is meant all such checks or restric-
tions that a sound, enlightened study of economics should bring
to bear upon trusts, to prevent them from becoming social evils,
by appealing to the self-interest of the parties or corporations
combined. By way of introduction, and to a clearer understand-
ing of the subject, it should be borne in mind that all trusts,
whether of labor or capital, possess two distinct sides or phases :
First, that of co-operation, recognized as a natural right, only
to be restricted when clearly detrimental to the welfare of society.
This is its beneficent side. It stands over against excessive com-
petition, being the corrective to destructive competition, hence
is fundamental and deserves our highest praise ; but, like all good
things, when carried too far, it becomes an evil, taking on the
form of monopoly, which not only regulates competition, but
practically destroys it. It now in turn becomes injurious to
society, if not limited to its proper functions. Possessed of
despotic power, the monopolistic trust may become the source
of great social evil. It may strive to levy tribute on smaller indus-
trialists and consumers, much as did the feudal lords upon their
serfs during the Middle Ages. This phase justly arouses social
apprehensions, and merits our condemnation. The only or chief
difference between capitalistic and labor trusts is one of power;
but small despotisms may be as galling as great ones, as fre-
quently revealed by labor organizations.
To distinguish in practice between the good and evil phases
of trusts is not an easy task. To find a solution or remedy for
the monopolistic phase, even when distinguished, may well baffle
human ingenuity, from the fact that it depends so largely upon
conditions and limitations, and frequently upon a hidden pur-
pose of those combining. Hitherto, all social appliances have
fallen short of the demands of society to regulate monopolistic
trusts, and this conference witnesses with great emphasis the
general unrest in regard to the recen-t manifestations and expan-
sion of trusts in general. Again, as trusts are competitive as well
as monopolistic, it is rather of the former that this paper seeks
to deal, since the latter can often, at least for a time, violate the
, laws of political economy without suffering the penalty of such
violation. Hence while monopolistic trusts must generally be
more rigorously controlled or even prohibited by law, competi-
tive trusts may be generally sufficiently restricted by the opera-
293
tion of economic laws. This latter phase is especially consid-
ered.
Like all social questions, the elements of the trust are so
multiform as to preclude the hope of ever discovering any single
satisfactory remedy. Doubtless the solution must be as complex
as the evil to be remedied ; that is to say, while rational economics
and ethics must in the end prevail, legislation and public opinion
must frequently enforce their behests. But great caution should
be used in the exercise of legal restrictions, lest individual initia-
tive be crippled and discouraged, .resulting in a serious check to
our present industrial progress. Hence I firmly believe that the
economic checks should be primary and fundamental, since these
appeal directly to the self-interests of the trusts themselves, and
as yet neither science nor art nor philosophy has found a sub-
stitute for that original incentive to human industry, viz., self-
interest.
But what can reasonably be hoped from the application of the
soundest principles of economics in regard to trusts? Much, I
affirm; though doubtless not everything desired, and to formu-
late these is my self-imposed task. The principal dangers from
trusts and especially from those in which competition is still pos-
sible, which I denominate competitive or semi-monopolistic trusts
for which we seek a remedy, may be categoried briefly under four
heads: But in noting them in order, and proposing certain
checks thereto, space permits only the broadest generalizations,
mere suggestions without specific statistical or other satisfactory
proofs, to supply which everyone must test them for himself by
means of his best philosophy and experience, supported by the
most reliable statistical data available.
The first one to be mentioned is that these colossal organiza-
tions have created a great displacement of labor, that is by these
combinations many employees have been thrown out of employ-
ment, which is undoubtedly true; for while some expansion of
labor may follow, for the present many are stranded by being
-dropped from the pay-roll? of the absorbed firms, being no longer
needed. Here economics afford? relatively but little consolation,
for no effective arguments 'can be given for the employment of
useless labor, just as when the skilled artisan finds himself sup-
planted by an ingenious labor-saving machine. We certainly pity
him in his sacrifice for the welfare of society, but the machine
must neither be boycotted nor destroyed. In like manner, when
ir. consequence of the better organization of productive agencies,
middle-men and commercial travelers are dropped, and thousands
of small entrepreneurs are subordinated to the powerful cen-
294
tralized combination, great sympathy is felt for the suffering, but
progress must not be stayed, even if some sacrifice attend the
process. However, even here one check against the arbitrary
actions of the trusts is found, in the fact that if these capable
men be unjustly treated, or not somehow provided for, to the limit
of the possible, dangerous competitive rivals are sure to spring
up, detrimental to the prosperity of the trust, on the general prin-
ciple that only by distributing power can power be accumulated;
hence these higher organizations dare not unduly subordinate
the elements out of which they are composed, as injurious com-
petition would arise, to meet which would be more expensive
than considerate treatment.
The second danger from trusts is financial, viz., overcapital-
ization. This is so manifest, however, that it may in the main
be left to individual correctives. The undue confidence of in-
vestors, and especially those of small means, may permit specula-
tors to unload upon innocent parties much inflated or watered
stock. Then later the business is wrecked, sometimes purposely,
not only to the destruction of the victims, but to the creating
of a general mistrust that may lead to a general financial crisis.
Still it must be said that trusts are no more likely than many
other forms of speculation to deceive the unwary; and the public,
particularly banking institutions, are so keenly alive to this dan-
ger that being forewarned is forearmed. ' A wise precaution
against over-speculation is one of the elementary tenets of eco-
nomics. If this self-interest be supplemented by due publicity,
but little, if any, social damage would likely follow from overcapi-
talization of trusts. At any rate, such danger is not confined to
trusts, but exists as well in all corporations, partnerships, and
even individual enterprises. That is, overcapitalization is not
confined to trusts, and ordinary care or economic provisions
should be sufficient protection against abuses, but if not, where
legislative regulation can avail, the latter should be employed.
But the third danger from the modern trust which is upper-
most in the minds of all is generally regarded as the danger par
excellence, for this threatens our entire industrial regime. It
concerns every consumer, for, if true, it enhances the price of
"his morning meal and his lamplight by night. It has become the
nightmare of politicians, thrusting upon them the greatest of
all political issues. This threatening danger is formulated in
the question as to its effect upon prices and the rate of wages.
It would seem that here we have the crux of the whole matter.
If political science and organic society are incapable of furnish-
ing an answer to this question, and supplying a remedy for the
295
supposed evil, both are doomed from imbecility in the hour of
great need. Here is where we need light rather than heat, for
practical experience has by no means answered in the affirmative
this query as to the injurious effect on prices and wages. In-
vestigation, if possible, must yet supply the practical data to test
economic law in respect thereto. Fortunately, however, as we
believe, economic theory permits us to prognosticate, viz., that
a potent check is found in the self-interest of the trusts them-
selves against inflating prices or lowering wages, but that the
opposite tendency should be found in any rational and wisely
administered trust or combination. This conclusion follows
from the two following considerations. Briefly stated, they are :
First, any undue advantage taken of the consumer by the superior
power of the trusts is bound sooner or later to react upon them
detrimentally, and, if not corrected, will finally overthrow them
totally. It can hardly be questioned that trusts steady market
prices, thus preventing ruinous fluctuations and possibly crises
greatly destructive of our industrial well being, and it is gener-
ally realized by the trusts themselves, with but few exceptions,
probably, that a safe business must be conducted rationally and
in conformity with the best principles of legitimate trade.
Therefore, we should expect that the folly of raising prices
which would react against their prosperity could only be tem-
porary or exceptional. Further, the reduction of expenses by
these combinations is very evident. In most instances this has
been the producing cause. .Competition, by becoming so sharp
as to be almost destructive, demands co-operation as a corrective.
This is the highest manifestation of the trust. The two poles
of industrial activity are fair competition and free co-operation.
These must mutually check each other if a wise harmony prevails.
It must not be forgotten that fhe chief elements of effective
competition are complete knowledge and perfect mobility of the
competing factors, and that although labor may not possess these
two elements equally with capital, that small capitalists usually
possess them with great capitalists; hence the effect of capital-
istic competition is always powerful if not absolutely perfect,
and should result in securing equal returns to last increment of
energy employed, that trusts are largely combination of capital
to reduce the sharp competition of capital, that the conflict is
between capitalists, rather than between capital and labor.
But even when trusts take on their monopolistic or semi-
monopolistic form, they must conform still under general con-
ditions to the laws of trade. To do this they must offer to society,
the consuming public, at least a portion of their profits, and for
296
JAMES B. DILL
J. G. SCHONFARBER
EDWARD P. RIPLEY
EDWARD ROSEWATER
JOHN BATES CLARK
M. L. LOCKWOOD
very good reasons. Their success depends generally on the
magnitude of consumption, and any unfair treatment of the pub-
lic would arouse such resentment that patronage would neces-
sarily be lost. This can be done by refusing to buy, and further
by boycotting the product of the offending trust, wherever found.
Even trusts must court public favor by offering a better and a
cheaper article, and this they can do best through the magnitude
of their production and the superiority of their appliances. Now,
as trusts, as a rule, are dependent on increased rather than dimin-
ished consumption, public opinion can whip them into line should
they demand too high a price for their products, to the end
that the legitimate outcome of the trusts must be lower rather
than higher prices. The same argument may be applied to wages.
But, secondly, in case the consumer cannot influence the trust
in this manner, there is another economic factor that rarely fails
in accomplishing the same end, and I believe facts will always bear
out this position, if carefully examined. This corrective may be
dominated technically the potential competition of capital, and
it is a well-known fact that at present a great mass of idle capital
exists in the hands of enterprising men ready to enter any spe-
cific field of production, whenever the profits of that industry
offer sufficient inducement. So that, to avoid this new compe-
tition, prices must be lowered or profits shared with the consumer.
True, their gains may be for a time concealed, but in these days
of enterprise and publicity that is next to impossible. There-
fore, are we not justified in concluding that economic law of itself
supplies at least these two potent checks against any material
permanent rise of prices by the trusts? Where freedom to enter
any industry is full and free, and where jnonopolistic franchises
have not been foolishly or fraudulently granted, which is be-
coming less now every day, individual initiative and competi-
tion may be largely trusted to counteract any tendency to raise
prices, but must in the very nature of the case force them to the
lowest practicable point. The same law would hold in respect
to wages. But here, moreover, the combinations of labor and
the higher standard of living reinforces the other tendencies.
An additional danger may be mentioned, though variously
regarded by its advocates and enemies, viz., that trusts are a long
step toward state socialism. It would seem an easy matter to
reassure those who fear the socialistic tendencies of trusts. They
rather, if anything, lead in the opposite direction, viz., to anarchy,
the extreme antithesis of socialism. Should trusts finally be-
come so politically powerful as to take the government by the
297
throat, then the masses, in the absence of any other remedy,
should revolt, and bring about a social revolution. Still, we
are rather upon the eve of a social evolution than revolution,
for never in the history of the world has the common man counted
for so much in politics. No, they need not resort to revolution,
but wisely and conservatively operate through economic compe-
tition and combination, and finally through legislation, to secure
any wise and needed reform. Again, the advocates of socialism
should readily understand the difference between the trusts and
the socialistic state. Their purposes are diametrically antago-
nistic; for one- is individualistic, or co-operatively individualistic,"
based upon the egoism of human nature, while the other is altru-
istic, based on, the sacrifice of self. Hence, what under pres-
ent competitive individualistic conditions proves a success
for the trust, which is a co-operation of the most capable organiz-
ers, the great captains or leaders of industry, limited in num-
ber, so that unity of purpose can be preserved, and all for their
personal gain, why should these not succeed? But contrast
with this the socialistic program, even the highest and most
ideal, where is any ground of hope for success from any analogy?
Socialism must organize the whole mass, capables and incapables
alike, and not for the welfare of self, but of the whole. Beauti-
ful ideal, certainly, but too angelic for this world of human pas-
sions and selfish hearts. Is it too much to affirm that any rational
comprehension of the fundamental principles of political econ-
omy scientifically based on human nature as we find it, must
preclude both the fears of the enemies and the hopes of the friends
of state socialism? That is, no logical analogue is found in the
trust.
Still, while these various checks upon the trust have been
emphasized, we dare not conclude that all men, or even the
majority of them, are subject to such checks, for all do not act *
rationally or even wisely for their own self interest, much less
the common good. Until men are controlled from within, they
must be regulated from without. Hence, legal compulsion must
reinforce public opinion based on economic and ethical law. Legis-
lation, therefore, must not abdicate its function, but at the
proper moment and in the wisest manner see to it that trusts,
like any other agencies yea, more so, on account of the power
they yield are not permitted to sacrifice public welfare; that
is, place themselves beyond the laws of political economy. Some
propositions are self-evident here; all trusts made monopolistic
by franchises or public favor should be destroyed by being na-
tionalized or otherwise; freedom of competition must be guar-
298
anteed, hence all other trusts may be regulated by publicity and
taxation. The great difficulty, however, is not so much in the
form of the combination as in the mass of the capital. This
mass may be even more detrimental to society by being in the
hands of one individual. Then what? Must we check indi-
vidual power by limiting the amount of capital in any one enter-
prise, whether in corporate or individual hands? We are not
ready for this yet, but as trusts are in the line of economic prog-
ress, how is it possible to check them other than by legal restric-
tions as to amount of capital, as well as by publicity, etc.?
But I would first exhaust. the economic checks- before resort-
ing to legislative authority; would plead for individual liberty,
limited, of course, by the higher rights of society ; I would strive
to educate morally and economically before calling in the ex-
treme rigor of the law. For these reasons personally I am still
optimistic, even in regard to the trusts, believing that the eco-
nomic checks here briefly suggested cannot fail to operate sub-
stantially upon a wisely educated body of industrial organizers;
for if this can be made effectual, we save untrammeled individual
initiative, that mainspring of progress, that God-given lever to
push, the race onward in the path of civilization. Let us, there-
fore, only regulate and rationalize, and not destroy the trust
when not monopolistic. But if these economic checks fail, then,
for the time being, force must reinforce moral suasion, and the
highest principles of self-interest for society must be saved. It
is not the function of this paper to point out the specific method
of legal restriction, but leave that to the conservative wisdom of
statesmen and other members of this, conference to formulate.
W. P. POTTEE. '
Member of Pennsylvania Bar.
In order to understand the present situation, it is necessary
to look back a little. During the period of time extending from
1892 to 1898, the business community throughout this entire
country was suffering as it had never suffered before, from what
seemed to be chronic overproduction.
The result of this Avas to bring about excessive competition
in all lines of business. In the anxiety to find purchasers, prices
were cut below the limits of reasonable remuneration. This evil
of excessive competition seemed to prevail everywhere. Dis-
couragement marked every department of trade. In the effort
to obtain relief the wages of labor were reduced. This only led
299
to additional complications. The workingmen strove by the only
means at their command, to save themselves, and strikes and
lockouts were instituted, with the usual distressful accompani-
ments.
The only effective means of overcoming this condition seemed
to be the obvious one of an understanding among the producers
in various lines, as to the prices to be asked for their commodi-
ties.
Eegulation in this respect was possible only through a union
of interests upon the part of those engaged in the same line of
business. Ordinary trade agreements were hard to enforce, and
were readily disregarded in the effort to obtain business.
Naturally the next step, in the effort to regulate production,
and siistain prices at reasonable levels, was to combine the hold-
ings of the various parties interested, and concentrate the capital
engaged, so far as might be feasible, into one corporation. No
reasonable objection could be made to this action, for the uniting
of different properties under -one management, and under one
control, upon a fair valuation, could not be harmful to the gen-
eral public.
In this connection I desire to say that during the progress of
this whole movement, the result of trade combinations has thus
far not shown in a single case that the operation has been preju-
dicial to the rights of the public.
It is but the statement of a simple fact to say that the present
tendency toward combination and co-operation is the reaction
from the keen and excessive competition of the past few years.
Whether this movement for co-operation is justifiable or not,
depends upon the facts in the case. Whether for good or evil
is to be determined by an examination of the results. "By their
fruits ye shall know them," and in arriving at a conclusion, calm
and careful consideration is called for, and the subject should
be approached in a spirit of fairness, and not in bitterness or
with blind denunciation. An impulse so general, and so wide-
spread in the business world, must have cause for its existence.
The rights of the public are not to be ignored in any event;
but so long as these rights are respected, the individual is cer-
tainly at liberty to concentrate his capital and combine his re-
sources with his fellows in the same line of business for their
mutual benefit.
The demand for commodities of all kinds at the present time
is greatly in excess of what it has ever been, and it is required,
too, that they be furnished more cheaply than ever before. Ex-
perience has shown that these demands can be met only by the
300
employment of large capital, and upon a most extensive scale of
working.
Civilization has advanced, and a comfortable scale of living
has been brought within reach of the average man, just in pro-
portion to the development of business along these lines of co-
operation and combination. First, it was the individual working
by himself in his particular line. Then came the union of two or
more individuals into a partnership. This was followed by the
formation of the small corporation, and from that grew the larger
corporation, and the last and present stage of development is the
union or partnership of the smaller corporations, into the grand
aggregation, often miscalled a trust.
As a matter of fact most of the business combinations of the
day are not trusts at all. They are simply large corporations.
The so-called "anti-trust" attacks are not really attacks upon
trusts, for the reason that but very few real trusts are in exist-
ence in this country. The hue and cry that has been raised is
really an attack upon large corporations. If the people of this
country are determined to wipe out all corporations, of course
they can do so. No one would claim, however, that such an ex-
treme measure is desired by anyone who has the prosperity of the
country at heart. Such action would be to turn backward the
hands upon the dial of human progress, and 90 per cent of the
country's industries would stop.
To the community as a whole, large corporations are neither
injurious nor dangerous. On the contrary, the economies effected
by the concentration and combination of capital and its direction
by competent management means always the cheapening of com-
modities to the public.
During the process of reconstruction, there may be individual
cases of hardship. Certain men may lose their positions, but this
grows out of the economy effected by the new organization, and
is one of the things which tend to cheapen the cost of produc-
tion under the new circumstances. In this respect, there is no
difference in the effect from that caused by the introduction of
labor-saving machinery, and yet the day has long gone by when
remonstrance is effectual against the introduction of appliances
for saving labor upon the ground that certain operators will be
thrown out of employment thereby.
It is admitted upon all hands that when the general result
is for the good of the public, individual cases must be met and
adjusted as best they may. In the old days of teaming over the
mountains of Pennsylvania, the building of a canal was opposed
by the teamsters on the ground that it would hurt their business ;
801
at a later day, the canal boatmen in turn opposed the building
of a railroad for the same reason, but boatmen and teamsters alike
had to give way for the advance of the new and improved mode
of transportation. Oftentimes, too, the injury was more appar-
ent than real, as in the case cited, the drivers of the teams, and
captains and crews of the boats, many of them, at least, fount}
employment as railroad employes, and so were really not injured
by the change.
Following along the line of the thought just suggested, in
the early days of railroad building, the companies were small
and the roads were short, and their capital was limited. Inde-'
pendent railroad corporations dotted the country here and theje,
with short lines. Rates of freight and passenger fares were high.
No contract for through or continuous carriage could be made.
Now note what happened in the case of the projection and devel-
opment of the Pennsylvania Railroad system. Freight rates were
about five cents per ton per mile. The process of combination
of the little roads into one great system began. One road after
another was taken in, until the Pennsylvania system now is made
up of more than two hundred and fifty companies, which were
formerly separate and independent organizations. The result has
been that with a continued and steady improvement in the serv-
ice, the rates of freight have steadily fallen, until now the cost
of moving a ton of freight per mile, instead of being five cents,
is less than one-half of a cent.
Can anyone say that any harm has resulted to the interests
of the public from the consolidation in this case? Here is one
of the largest combinations in the country, and, next to the
Standard Oil Company, possibly railroads are the subject of
attack more than any other class of corporations. I submit that
the facts do not warrant it. The Pennsylvania Railroad furnishes
employment for more than one hundred thousand men, and these
men probably support upon an average, each of them five persons,
so that five hundred thousand people depend for their subsistence
upon the prosperity of this one great corporation. And this is
not all for, in addition to the wages paid employes, we must
remember that a large proportion of its earnings go steadily back
to the community for the purchase of suppljes. More than forty
millions of dollars a year are poured from this one source into
the channels of commerce. The amount is widely distributed
too, as the articles purchased range from soap and matches to
monster locomotives and steel bridges a mile long.
This is a striking instance, but it is by no means an isolated
one, of the good accomplished by means of great combinations of
capital. The larger the scale upon which an industry is carried
on, the better as a rule is the provision made for the health and
comfort of the workers. Here again the experience of the Penn-
sylvania Eailroad is an instance in point. It has from time to
time reduced the hours of labor of its train crews, and as its last
and crowning effort in behalf of its employes, it is now putting
into operation a system of retiring them at the age of seventy,
upon a pension sufficient for their support. Surely there is noth-
ing in the action of this company to justify the assertion that
corporations have no souls.
Take another familiar illustration of combinations upon a
large scale, which appears in almost every large city in the coun-
try. It has been notably effective in my own home in the city
of Pittsburgh. The street railway system. A few years ago we
had perhaps a dozen different lines in the vicinity. The cars
were small, and were drawn by horses, and a separate five-cent
fare had to be paid on every car boarded. With the introduction
of electric motive power, larger capital was needed to accomplish
the best results, and consequently the small roads were com-
bined, and complete and extensive traction systems were organ-
ized, with arrangements for transfers, so that to-day, for the same
five-cent fare, you can ride from one extremity to the other, sev-
eral times as far, and twice as fast, and in cars in every way more
commodious and comfortable.
Is a combination producing such a result to be hastily con-
demned, or destroyed?
It is only when work is carried on upon a small scale that long
hours of labor, low wages, and unsanitary conditions are found
to prevail. Individual employers are the ones who run the sweat
shops and employ child labor. In large corporations, the rule
is that hours of labor are shortened, and with them there is a
general acknowledgment of the rights of the employees. The
larger the concern is, the greater, too, is the steadiness of em-
ployment, and the more influential in the public opinion is the
standing of the employee.
With the good management which they are able to employ,
and the immense amount of business which they can handle, the
average rate of wages rises, while the price of the service, or of the
product, as a rule continues to fall.
There are instances where the prices in certain lines of business
owing to the fact of unregulated and excessive competition, have
for long periods been, continuously too low to afford reasonable
remuneration. Let me cite an instance which has come under
my own observation. It is that of the production of bituminous
303
coal. The city of Pittsburgh is in the center of the bitumi-
nous district. For the past twenty years, the firms engaged in
the production and shipment of coal have struggled along in keen
and sharp competition and have been unable to make anything
in the business. Many of them have succumbed to the pressure
and been driven out altogether. Almost constant disputes and
friction with the miners has been the inevitable result. The
employers simply have been unable to pay a living rate of wages.
During the past few months the influence of the present tendency
towards combination as a check upon excessive competition has
reached this industry, and to-day a combination is in process of
formation, which already has enabled the employers to effect a
slight advance in the selling price of coal, and this, with the
various economies which co-operation can effect, will enable them
to obtain a fair return for their capital, and at the same time per-
mit of an increase in the wages of the miners.
Here again is a practical instance of great good accomplished,
and its characteristics are those common to all similar combina-
tions. There can be no denial that they carry with them certain
positive economic advantages. They decrease the cost of the
product, first, by doing away with the wasteful methods of com-
petitive business, and, second, by the introduction of improved
methods of work.
They are also enabled by the exercise of intelligent and skilled
oversight of the business, to prevent overproduction, by means
of their ability to ascertain the state of the markets, and regulate
the supply in accordance therewith. By constant study of the
conditions of the business in all its phases, as in the case of the
Standard Oil Company, they are enabled to increase the demand
for a product, and thus enlarge the consumption. They are able
also to provide vastly increased facilities for transportation, and
by reason of all these conditions are enabled to furnish goods at
lower prices than would otherwise be possible.
If abuses should arise, these organizations are at all times
amenable to the law; and the states are able to provide against
violation of reasonable statutes. ISTo combination will ever be
able to maintain abnormal prices, for the Reason that such a
course would call into play the possibility of practical competi-
tion, and this possibility will always operate as a check. Another
thing which will prevent any undue increase in price is the fact
that any great advance in price tends to lessen the demand.
Nothing is better known to experience, than the fact that the
profits of any business are more easily and permanently increased
by the cheapening of cost, and not by the raising of prices.
804
In all the combinations that have thus far been made, prices
have been but slightly advanced by reason of the consolidation.
The rise has been the result of the unusual demand, and has been
as great, if not greater, in lines where no combination exists. As
an example, pig tin has advanced 75 per cent; steel plates 127
per cent; refined bar iron 82 per cent; steel rails 94 per cent.
Yet in none of these is there a combination. In all these com-
modities and many others, prices have gone up simply because of
the physical inability of the manufacturers to meet the demand.
I affirm, therefore, that the movement toward consolidation
is the outgrowth of natural conditions, and opposition to it is
based upon a misunderstanding of the fact that it is the applica-
tion of a great and effectual remedy, to the demoralization of
business, which was the result of unlicensed and excessive com-
petition. Any attempt to crush out or interfere with the proper
and reasonable workings of this remedy is utterly hopeless. The
movement is bound to continue until practically all industrial
activities are brought into a system of co-operation.
You can supervise, and you can regulate, if desired. You can
establish a national board of supervision over corporations doing
interstate business. You can limit the amount of capital in any
one corporation, if thought wise. You can correct abuses if, and
as, they arise. But the people who have learned from bitter
experience in the past the effect of the competitive system, will
not give up the right to co-operate in the conduct of their busi-
ness, in the future.
FRANCIS G. NEWLANDS.
Member Congress, Nevada.
First. The term "trust" is a misnomer as applied to the com-
bination of capital which has aroused so much solicitude. The
old trust was a combination of independent producers to fix the
price of a particular commodity. Such a combination could be
annulled through the courts as an agreement in restraint of trade.
To-day the same object is accomplished in a legal way, viz. : by a
union of capital in one great corporation which purchases the
property of the independent producer and makes them all stock-
holders in a common enterprise. Capital has learned from labor
unions the wisdom of co-operation, and co-operation is now
largely substituted both in labor and capitalistic unions for the
old principle of competition.
It is contended with much force that, if the right of laborers
305
to combine and fix the price of labor by preventing the individual -
laborers from competing for a job by the acceptance of lower
compensation is conceded, it must also be conceded that capital
has the same right. It must be recollected, however, that the
labor union is formed for the purpose of obtaining for labor an
increased share of the profits of production, and that the accom-
plishment of such a purpose is a distinct advantage to society, and
should be favored, whilst the capitalistic union may so exercise
its power as to depress the price of labor and to unduly raise the
price of products, and as this power can only be exercised through
an artificial being called a corporation, which is the creation of
the state, it is the right and duty of the state to limit and
control it.
Second. Tariff legislation will not reach the difficulty, for
whilst it may be true that the field of competition is restricted by
the tariff wall, thus making the organization of a domestic trust
easier by reason of the lack of foreign competition, yet it must be
recollected that combinations of capital exist in England, France
and Germany to-day, and that the effect of lowering the tariff wall
would simply be to substitute a foreign trust for a domestic trust '
in the control of our markets. This would be at the expense not
only of American capital but of American labor. The laborers
now employed by our domestic trusts would be idle; their places
would be taken by laborers employed abroad by the foreign
trusts ; the remedy would be worse than the disease. The Ameri-
can union of capital might be destroyed, but with it would go
down the American union of labor.
The prosperity of the republic is founded upon the prosperity
of American, laborers. All legislation should place the Ameri-
can man above the American dollar, but it should not, in its
endeavor to rectify the abuses of American unions of capital, take
away the employment of the American laborers. What we should
do is to maintain for American laborers and American capital the
practical monopoly of American markets, and at the same time
by domestic legislation inside of the tariff wall, so restrain unions
of capital as to prevent them from oppressing the laborer on the
one side and the consumer on the other.
Third. All attempts to regulate capital by state legislation
will fail simply because it will be impossible to produce voluntary
co-operation among the various states. Some states will welcome
the advantages which capital extends to them for permitting
their territory to become the spawning ground of trusts, and as
long as one state fails to co-operate, trusts will multiply.
Fourth. The only adequate remedy is through federal legis-
306
lation, the operation of which will be uniform throughout the
republic. It is true that the federal government cannot prevent
the organization of state corporations, nor is this desirable ; but it
can, through its power regarding the regulation of interstate com-
merce, restrain their operations, and it can use its taxing power in
such a way as either to destroy or to regulate and control. The
power relating to the regulation of interstate commerce is hardly
sufficient to meet the evil, as evasion would be easy. Any trust
could restrain its operations to the limits of the state under the
laws of which it was organized,; at the same time purchasers from
other states could buy in such state. The sale would be domestic,
the transfer of the product would be interstate, and legislation
aimed at the trust in its interstate business might thus be evaded.
Fifth. The power of taxation of the federal government is
ample to meet the difficulty, and it is much more far-reaching
than the power exercised under the interstate commerce section of
the Constitution. The power of taxation can be used either to
destroy or restrain, and it has been so used within our experience.
Thus, for instance, as to the undoubted right of state banks to
issue currency under state statutes permitting it, the federal gov-
ernment does not deny the right, but it has seen fit to impose a
tax of ten per cent upon state bank currency and thus practically
to prohibit its issue.
So. also, with reference to oleomargarine. The beef trust had
organized for the production and sale of oleomargarine upon a
great scale. Oleomargarine was innocuous and resembled in ap-
pearance and taste the genuine butter. The use of this material
was threatening the destruction of the dairy interests of the
country, in which large amounts of capital were invested, and
hundreds of thousands of people were employed. The states
took hold of the matter and by legislation within their own
boundaries sought to protect the dairy interests and restrain the
oleomargarine interests. Their legislation was, in the main,
"ineffective, and so recourse was had to' the federal government
for a far-reaching law. . The result was that the power of taxation
was so exercised by the federal government as to restrain the oleo-
margarine interests and to protect the dairy interests. Thus,
oleomargarine was made a subject of revenue to the government
and the tax imposed upon it served to limit its competitive
efficiency.
Here, then, we have two illustrations of the power of federal
taxation; one the power to destroy, the other the power to regu-
late and restrain. Why cannot this power be used with reference
to the modern trust, and in a most efficient way? Through it
307
two evils can be reached one, the monopoly of production by
unions of capital, and the other the escape of organized wealth
under present conditions from the burthens of federal taxation.
The latter is one of the crying evils of the times. The whole ten-
dency of federal legislation has been to exempt accumulated
wealth. The wealth of the country has been for years rapidly
drifting into corporations. Stocks in corporations represent,
more than any other class of property, the surplus wealth of the
country, for the man who has a share of stock has something
which he has accumulated over and above his current wants and
expenditures, and the best method of reaching the surplus wealth
of the country is to tax corporations. It is true that the income
tax decision has in a measure restricted the field of federal taxa-
tion. It practically exempts real property and its income, and
personal property and its income, from internal revenue taxation ;
yet the field of federal taxation is still a large one, for it embraces
all the transactions of business and though the real and personal
property of a corporation and the income therefrom cannot be
directly reached, yet every transaction in which such corporations
engage may be made the subject of taxation by the federal govern-
ment, and the taxes imposed may be classified in such a way as to
restrain unions of capital in their monopolistic tendencies.
Now, it is well understood that the great monopolies of pro-
duction can only be accomplished through the formation of
gigantic corporations. The formation of those gigantic corpo-
rations means concentrated control, diminution of the number of
officials, improved economies in every line. From the standpoint
of economics it is hard to point out any danger to which society
is subjected by their creation, so long as their only purpose is the
conservation of energy; but they go further than this. If allowed
to go- unchecked they will undoubtedly attack labor itself by the
diminution of its wages. The ordinary producer, having but one
factory, cannot afford to get into a controversy with his employees
for that would involve an absolute cessation of the work of his
enterprise. A corporation owning a dozen factories can easily
operate eleven whilst it is engaged in bringing the operatives of
the twelfth to its terms, and thus step by step can bring about a
reduction of wages throughout all of its twelve factories. So,
also, having destroyed competition, it can raise the price of its
products and thus increase the profits of capital both by dimin-
ished wages of its employees and increased prices charged to its
consumers. It can also destroy all competition by selling its
products below cost within the territory of competitive operation,
retaining its price? in the field of its monopoly, and thus, without
loss in the aggregate, yield to a localized loss which will destroy
all competitive enterprises. Thus the individual stands no
chance against the corporation, and individualism is practically
destroyed.
The purpose, then, of federal legislation upon this subject
would be to reach accumulated wealth, and at the same time pro-
tect individualism. Taxes, therefore, imposed upon the transac-
tions of corporations, will accomplish both purposes. They will
reach accumulated wealth and they will protect individualism,
for the individual, freed from the handicap of such taxes, may be
able to hold his own and thus the handicap of the tax will pre-
serve the equilibrium between individual enterprises on the one
hand and corporate enterprises on the other.
It is true that it will take time to work out this problem
wisely and justly, but I see no reason why progressive legislation
advancing with conservatism, step by step, should not ultimately
reach every difficulty. The first step should be the organization
of a Bureau of Industry, somewhat resembling that of the Bureau
of the Controller of the Currency, to which report should be
made by all corporations, showing, the amount of their capital
stock, their bonds, their income, their transactions, the number of
operatives employed, the wages paid and all the other data which
in time will present a mass of statistical information that will aid
and guide legislation. Publicity itself will do much in the way
of correcting evils, for definite statistics will suggest definite
remedies. The tax at first inaugurated should be moderate. It
should reach at first only those great organizations whose evil
effects upon modern individualism is conceded, and reliance
should be placed upon the statistics accumulated later on, to fur-
nish suggestions for additional tax legislation.
The powers of the federal government relating to taxation
and interstate commerce in connection with published reports
should be ample to meet every difficulty. No time, should be
wasted in academic discussion as to the precise evils that may
result from unions of capital, or as to whether such evils have as
yet been realized. Accumulated wealth should contribute more
than it does to the federal revenue. This is a sufficient reason for
commencing immediately with corporations, even if, as is
claimed, the evil of unions of capital are imaginary. The ma-
chinery being prepared by law, the evils can be taken hold of as
they arise, and taxation so levied as to restrain if that only is
desirable, or to destroy if relief is otherwise unobtainable.
309
U. M. EOSE.
Little Rock Board of Trade.
Beference may be made to the Arkansas statute of March 6,
1899, restraining trusts, as a piece of experimental legislation.
It provides, in short, that all persons and corporations that shall
become a party to any pool, trust or combination, for the purpose
of fixing prices of merchandise, commodities, premiums of insur-
ance, etc., enumerated at great length, "shall be deemed and
adjudged guilty of a conspiracy to defraud," and subject to a
punishment of from $200 to $5,000. For every offense, each day
of the continuance of such pool, etc., to be a separate offence, and
it was declared that offending domestic corporations should for-
feit their charters, and that offending foreign corporations should
forfeit their privilege of doing business in the state. Moreover,
foreign corporations were made subject to the same penalties as
domestic corporations.
It will be observed that the statute did not specify the place
where the combinations were made in order to render parties to
them subject to its penalties. The attorney-general at once
brought about one hundred and fifty suits against foreign insur-
ance companies and foreign manufacturing companies for a for-
feiture of privileges of doing business in the state, and for the
recovery of the penalties denounced by the statute.
Some of the defendants demurred because the complaints did
not allege that the alleged combinations were not formed either in
the state or with a view to fix prices of commodities, etc., in the
state ; while others answered, denying that they had entered into
any combination in the state, or having for its object the fixing of
prices in the state.
The cases went to the Supreme Court, where it was held that
where a criminal or penal statute does not purport to have been
intended to have an extra-territorial operation it must be held to
apply only to offences committed within the state; consequently
that the answers set up a valid defence. The decision in the
matter is to be found in State vs. Lancaster Fire Ins. Co., 51 S.
W. R. 633. As soon as it was rendered the attorney-general dis-
missed all of the pending suits.
There is nothing novel about the decision; the principle is
elementary and axiomatic. Indeed, the same court had decided
the same thing in 1856, in State vs. Chapin, 17 Ark. 561.
It remains to be said that as soon as this statute was passed
all of the foreign insurance companies doing business in the state,
with one exception, I believe, closed their doors and declined to
310
do any business until the question of their liability under this
severe statute should be settled. As soon as it v, T as settled they
resumed.
It must be obvious that legislation along this line does not
reach the heart of the matter. . Of course it is possible to drive
all foreign corporations out of any state by legislative enactment ;
but while such a course would cause a great shock to public busi-
ness as now organized, the real evils would not be affected. We
might expel foreign corporations engaged in manufacturing nails,
for example, but people would still have to buy nails, as they are
articles of necessity ; while the nail trust would continue to dupli-
cate prices as heretofore. The same thing is true of nearly all
other manufactured commodities. Laws against monopolies are
of very ancient origin, based on principles of public policy that
have found expression in some of our state constitutions, and
which have for long periods lain as disused weapons in the
armory of the law; until now, when something of the kind is
needed, it is found that they are quite inadequate to the occasion.
Our government has survived so many perils, and our confidence
in its ability to overcome all difficulties has become so robust, that
any one who ventures to express any distrust of the future is apt
to be considered as a modern Cassandra, indulging in groundless
forebodings; but the admitted fact that within a few years past
we have undergone a social revolution of a kind and a magnitude
wholly unknown to history, one that places power in the hands of
comparatively a handful of individuals to control the prices of
most articles of manufacture, thereby enriching themselves at
will, while they impoverish the vast multitude of consumers; that
various corporations representing fabulous wealth are in a posi-
tion to exercise exclusive dominion over nearly all of the indus-
tries of the country, and to impose excessive burdens on the rest
of their countrymen precisely as does the patentee of a new inven-
tion, except that their dominion acknowledges no limitation in
respect of time or law, must surely afford food for the gravest
reflection.
If the recent and enormous aggregation of wealth under cor-
porate control, running into billions, and putting to shame the
budgets of the most powerful nations on earth, were alone to be
regarded, the present emergency is full of suggestions of a sudden
collapse exceeding in its disastrous consequences those that re-
sulted from the inflictions of John Law in France, or of the
South Sea Bubble in England. The speedy growth of this ex-
traordinary development, like the conquests of Alexander, Csesar
and Napoleon, foretells its sudden collapse, whose ruinous effects
311
must, as usual in such cases, fall chiefly on the innocent, the inex-
perienced and the unwary. During the Middle Ages, when there
were neither bonds nor stocks, and but little personal property of
any kind, a monopoly of lands led to the establishment of the
feudal system, the most blighting and desolating that ever
afflicted mankind. In a time of ignorance it managed by mere
physical force to perpetuate its existence for centuries, and to
check the evolution of progress, which, in the present period of
enlightenment, travels with lightning speed, so that no such
exceptional longevitj' can be expected for a new feudalism based
on vast accumulations of corporate wealth, which has no armed
castles for defense, and is condemned by principles of public
policy equally immemorial and indestructible.
As a people and as individuals we have been nurtured in con-
victions that are hostile to monopolies, and those convictions will
hardly be weakened by the present exigencies. Never since the
controversy growing out of African slavery have the people of
this country been confronted with any question of equal impor-
tance and of equal difficulty. The question of slavery was settled
by England, Russia, Spain and Brazil without any great expendi-
ture of money, and without the shedding of blood ; but. American
statesmanship, inadequate to cope with the situation, had to
resort to a war in which, considering its incalculable expense in
money and the destruction of property, more was lost than would
have paid for the slaves many times over, to say nothing of the
e p 1 1 a T J J
tearful loss of life.
The present situation contains," I believe, all of the elements
of socialism, anarchy and that deus ex machina, imperialism, that
always emerges at the proper moment. The question as to the
suitable remedy to be applied is one that has exercised and
baffled the strongest minds. The proposal to drive foreign cor-
porations out of particular states, and thus to build around them
a Chinese wall of exclusion, will not attain the desired end. We
shall still have to buy everything almost that we require at prices
arbitrarily fixed by the monopolies which, intrenched behind
charters granted by other states, defy legislation of that kind,
sa yi n g> "If you do not buy of us you cannot buy at all."
We are told that if all of the states and the federal govern-
ment will concur in the proper legislation pending evils may be
corrected, and future ills may be prevented; but the principle of
unanimity, which in Poland was sometimes tempered by assassina-
tion, is not practicable in our government. At no time since its
organization has uniformity of legislation been secured; and the
prospect of such uniformity at present seems slim and remote.
312
As it has been decided by the federal court of last resort that
Congress has no delegated power to restrain the organization of
trusts and combines between manufacturing companies, it is
needless to expect efficient aid from a body which it is incom-
petent to grant. To hope for remedy or redress from the mere
lapse of time would seem to be madness. By amendment to the
Constitution of the United States, Congress can be invested with
power to deal with the evil in all of its phases, just as the English
parliament dealt with it as long ago as the reign of Edward VI. ;
but this step is one of such profound and far-reaching importance
that it will necessarily excite the distrust and opposition of many
that view the present situation with unfeigned alarm, and whose
hostility to monopolies is sincere and lasting.
The problem is one that will be exploited by the political
demagogue, whose words darken counsel ; but violent and inflam-
matory declamation can avail nothing. What is needed is the
deliberate wisdom of the statesman who will act with an eye single
to the public security and welfare.
I am not of the opinion that laws requiring publicity in the
keeping of corporate books and accounts will meet the objects in
view. Similar laws have been often passed, and have been con-
stantly evaded with impunity. The search for truth in the intri-
cate maze of corporate documents has proved to be extremely
discouraging.
In the meantime the problem clamors for solution. Every
day we hear of new combinations, extending in their range from
steam engines to peanuts. If the public prints are to be believed,
millions are sometimes paid to agents who succeed in effecting
these trusts or pools, however created. It can hardly be doubted
that much of this money entrusted to "promoters" is used for
purposes of bribery and corruption. Every day we hear that
superfluous factories or mines have been closed, and that hundreds
of men have been thrown out of employment. The same thing
happened in England when railroads and improved spinning
machinery were introduced ; but the whole country was enriched
and benefited by these inventions ; not sd with monopolies, which
have always proved to be mere festering cancers on the body
politic. The watered stock and bonds which attend their mod-
ern creation only enhance their power for evil.
At 10:15 o'clock the conference adjourned tc 10 o'clock Fri-
day morning, September 15.
313
MORNING SESSION, SEPTEMBER 15.
COMMITTEE ON RESOLUTIONS MEET.
The committee on resolutions met at 9 :30 o'clock and organ-
ized by electing ex-Gov. Luce, of Michigan, chairman, and Ralph
M. Easley secretary. The same doubts and differences on the
subject of resolutions which had agitated the conference when.the
question of the committee was debated, prevailed in the commit-
tee meeting. On motion of Howe, of Louisiana, the chair was
instructed to appoint a sub-committee of five on resolutions, and
after a general debate of an hour's duration on the policy to be
followed by the committee an adjournment was taken until 2
o'clock.
William Wirt Howe was in the chair and called the conference
to order at 10 :30 o'clock. A delegate called the attention of the
chair to the fact that many more delegates were present than at
any previous meeting, and suggested that the credentials of all
persons in the delegates' seats should be examined. No formal
motion was put and the suggestion was not acted upon. Louis
F. Post, of the National Single Tax League, was the first speaker.
LOUIS F. POST.
Single Tax League of the United States.
My only purpose in speaking on this occasion is to contribute
to these deliberations a brief statement, in bare outline, of the
position of single tax men on the subject of trusts. By single
tax men 1 mean those men the world over and women, too
who are proud to be known as followers of Henry George.
"We recognize that there might be such a thing as a good
trust. There might be commercial combinations that would re-
duce prices by economizing. They would indeed displace men,
as all labor-saving machinery and methods do; but under just
and normal conditions, there would be abundant opportunities
for all who were displaced. Immediate demands for them in kin-
dred occupations would constantly exceed the supply. Such
trusts would tend to improve social conditions instead of making
them worse. Those are the kind of trusts which our r>ro-trust
friends have in mind when they defend the trust. But in fact
there is no such trust in existence to-day, and under prevailing
industrial conditions there can be no such trust.
The trust question as it faces us is not a question of business
combination. It is a question of legal monopoly. If competi-
tive conditions prevailed, combinations of competitive businesses
would do no harm. They would have-to do good, or they couldn't
keep the combination alive. But when businesses control legal
monopolies and form combinations of these, then you have harm-
ful trusts. And that is the kind of trust we have to-day the
kind of trust of which we complain. The trust question, I re-
peat, is at bottom not a question of business combinations, but
a question of legal monopoly. It is not to be dealt with by re-
strictive laws, operating upon methods and effects. That would
only make bad conditions worse. You have got to go beneath
the methods and effects and get at the causes of these bad trusts.
You have got to strike at the monopolies which give them their
power. Abolish the legal monopolies that underlie trusts, and
trusts will disappear. Without these monopolies no business
combination could be injurious to the public. Without them
every business combination that came to stay would be able to
stay only if it proved to be really and wholly beneficial. But
if those monopolies be perpetuated, all trusts will be tainted, all
trusts will be bad; and by no system of restriction can you either
destroy them or regulate them for the public good.
Take any trust which on its face seems to be a combina-
tion of mere competitive interests. If it were so in fact, it would
be a good or at least a harmless trust. But scrutinize it, and you
will find that somehow, directly or indirectly, it depends for its
power upon monopoly. It may have no\monopoly by name. It
may simply be taking advantage of general laws that prevent
free competition. It may depend, for example, upon the restric-
tions upon free competition which are imposed by tariffs. To
the extent that the tariff narrows the field of competition, to
that extent it fosters trusts. One of the very objects of the
tariff is to produce that condition of strangulated competition
without which trusts could not live. If we wish to get rid of
the trust, we must sweep away the tariff and make trade as free
between the people of the world as it is between the people of
our States.
While single tax men demand the abolition of the tariff-
offering in its place for revenue purposes an infinitely wiser and
juster system of taxation while they would have no tariff at all,
yet they do not suppose that the abolition of the tariff would
315
abolish all trusts. It would abolish a good many, and weaken
the foundation of a good many more. But other and more direct
systems of legal monopoly would still foster trusts.
There are the highway monopolies. Take the railroads, for
instance. That is a highway, and in private hands is a highway
monopoly. The monopoly is not in the cars, or tracks, or tun-
nels, or buildings, or anything of that sort. It is in the right-
of-way in the land that constitutes the "way" as distinguished
from the structure. These highways connect places, and to
control them is to control traffic. Eailroad corporations can form
oppressive trusts because they can control their highway monop-
olies.
They can and do do more than that. Give this monopoly
of highways to railroad corporations, and they make exclusive
contracts with business concerns, which form trusts upon the
basis of special railroad privileges. One of the most familiar
examples of this subletting of railroad highways is furnished by
the case of express companies. Express companies have
monopolies, because they get special privileges from rail-
roads. No outsider can compete in the express business. The
existing express companies have monopolies of right-of-way.
And they can form oppressive trusts by combining these monop-
olies. Express companies are only one class of concerns deriving
monopoly privileges in that way. There are others. The Stand-
ard Oil trust built up its power in precisely that way. The
cracker trust is said to have privileges of this kind. And doubt-
less, if you inquire closely, you will learn that many a trust with
an innocent face derives its power from railroad privileges:
Highway monopolies, then, must be abolished, if we would
free ourselves from vicious trusts. But even if that were done,
trusts would still have a firm foundation to build upon. The
fact is that even to-day no trust can perpetuate itself unless it
gets its feet upon the ground. All the advantages of tariffs
and railway privileges and other monopolies will not avail trusts
in conflict with hostile trusts which monopolize sources of supply
and distributive points. Monopoly of land is, after all, the ulti-
mate basis of the trust. It is an absolute condition to success
that the trust have its feet upon the earth. This has been dis-
covered by the great trusts. The steel trust and the copper
trust go back to the land and make ore mines part of their prop-
erty, while the coal transporting trust of the anthracite region
is careful to secure not only highways but coal mines; and rail-
road monopoly in itself is being subjected to the more powerful
monopoly of land at terminal points.
316
Let me follow this idea a little further. The control of trusts
by trusts is clearly among the possibilities of trust development.
As partnerships have merged into corporations and corporations
into trusts, so will trusts merge into trusts of trusts, and finally
into one all-powerful trust. That is the tendency. It is already
manifest, and will be a thing accomplished unless we kill the
trust system.
Suppose, for -example, the steel trust should reach out until
it controlled all the steel business clear back to all the ore mines.
It would then have its feet upon the ground, and no competitor
in the steel business could cope with it. But it must use coal,
and here, let us suppose, is one coal trust which has reached out
until it controls all the coal mines. It, too, has its feet upon
the ground. Suppose, now, that the interests of these trusts
collide, and what could be the outcome but the consolidation of
the two into one. That illustrates the trend of trusts. And if
not stopped, that trend will persist until the organization of trusts
and their absorption into trusts of trusts eventuate in the owner-
ship of all businesses by some gigantic combination.
To that triumph of the trusts most socialists look forward
with satisfaction. They see in it the opportunity of the people
to take possession not only of the earth, but of the artificial in-
struments of production also, by dethroning the single trust under
whose control all business will have come. They are satisfied,
because in this trend they discover signs of the evolution of public
ownership of all the instruments of production and distribution.
But there is little real cause for satisfaction in that. As the
evolution of the trust proceeds, trust employes become in greater
and greater degree mere voting machines. It is not their con-
victions as citizens that they register at the polls. They vote
as they are ordered to. This condition would be enormously
worse if the development of trusts proceeded even approxi-
mately to the point of a universal trust. And when the time
came to dethrone trusts, the voice of the people would be stifled.
The trusts themselves would decide the issue. They would do
it through the army of dependent voters whose livelihood they
would control. It might be that they would decide in favor
of the substitution of such a government trust as the socialists
look forward to. But if they did, they themselves would fix the
terms. All land and all machinery might by their consent and
with the votes of their dependents, be turned over to the govern-
ment, but it would be for a price which the trust magnates would
dictate and to a government which they would continue to con-
317
trol. It is not by waiting until trusts own everything and then
taking it from them that the trust question must be met.
We must kill the trust by securing in time the point of vant-
age toward which it is advancing. We must keep its feet off
the ground. It would not be enough to abolish secondary monop-
olies. We must also abolish the monopoly of sources of supply
and points of distribution.
Since trusts, in order to survive, must get their feet upon the
ground, must control the earth at the points of supply and the
points of distribution, the abolition of all monopolies except
land monopoly would fail to abolish them. By acquiring control
of the land they would control everything else. So it is that
single tax men, though they would abolish the tariff, though they
would abolish highway monopolies, though they would repeal
every law that creates or supports monopoly, they would not
stop there. They would strike at the mother monopoly of all.
They would abolish the monopoly of land. To do that they
propose nothing revolutionary. Eevolution is not necessary.
All that is necessary is to tax into the public treasury the peculiar
value that attaches to especially advantageous locations. If that
were done, no man or combination of men, whether incorporated
or not, could monopolize the sources of supply or the points of
distribution without paying annually to the public the full value
of their privilege. That would deprive them of all advantage
over others. It would lift their feet off the ground.
You remember the classic fable of Hercules and Antaeus.
Hercules with all his strength could not conquer Antaeus so
long as Antaeus could touch the ground. But when Hercules
discovered wherein the power of his adversary lay, he lifted
Antasus from the ground and then destroyed him with ease.
The trusts are the modern Antaeus. Let the people lift them
from the ground and the battle against them will be won.
While Mr. Post was speaking the committee on resolutions
entered the hall and filled every seat reserved for the delegates.
The other portion of the auditorium had been filled with auditors
long before.
318
THOMAS J. MOEGAtf.
Socialist.
Mr. Post was followed by Thomas J. Morgan, of Illinois, who,,
speaking on "The Trust from a Socialist Point of View/' said :
We see, from the socialistic view, not the special interest of
this or that trade, of this or that business, of this or that state,
of this or that nation, of this or that particular race, but we see
the interest of the whole human race, as it is involved in the de-
velopment of modern industry and modern commerce.
We socialists look into the past and see the end of the feudal
system. We see the domination of the landed aristocracy de-
stroyed and the rising importance of the new manufacturing and
business interests. We see the employer and the merchant
stepping into the imperial parliaments and taking charge of the
nations. We see, following the individual employer, a partner-
ship; following the partnership we find a corporation, and fol-
lowing the corporation in its logical order, we see the introduc-
tion of the trusts. We welcome the appearance of the trust as
one of the natural and inevitable products of our industrial and
commercial system.
The socialist sees that you are totally impotent to prevent the
operation of trusts. You are impotent to interfere with its
growth in the states or in the Union. It overrides your state
and national laws in its progress.
The socialist sees what you fail to perceive; that is, that in-
dustry and commerce has long ceased to be mere local, state, and
national interests, and that the limits of the workshop, the farm,
and the market are co-extensive with the boundaries of the hab-
itable earth, and hence that the controlling influences are world-
wide, and above and beyond the reach of all your puny efforts.
It is very interesting to note the very high stand that is taken
by those who are opposed to their natural offspring, the trust.
They pose before the American people as the guardians and
champions of personal liberty, of good citizenship, of manhood,
and they tell us that unless the trust is destroyed we must go
back to the individual methods of industry and business of the
past, or we will become slaves; that our dependence in the
future must be, not upon gigantic organizations of property own-
ers, but upon the single individual property owners. We social-
ists go back and look over your records, and we ask you to listen
to what the individual employer and business man did before
the corporation came and before the trust was dreamed of. You
individual employers, you individual business men, you opened
the doors of the orphan asylum, and you took out of it the fath-
erless children, and put them into your individual factories,
and ground their lives into dollars ; you took the man and his
wife ; you took the mother and the child, and you put them into
the bowels of the earth to bring out your black diamonds so you
could enrich yourselves. You sent your old rotten ships to sea
with worthless cargo, so they might sink with their crews, so
you could enrich yourselves with the fraudulent insurance. And
an act of Parliament was required to prevent you from continuing
this murderous method of enrichment.
This spirit of murderous greed is not dead. It is seen in
Africa, where the Kaffir is down in the diamond mines and the
gold mines. It is seen in the effort to subject the Boers. Not
alone there, but here you freed Cuba, didn't you? Oh, the poor
Cubans, they must be freed from Spain! But what do you do
with the negro down South? You disfranchise him. Then you
individualistic business men, your spirit goes out into the Philip-
pines, and will reduce the Filipinos to the level of your negroes
down South.
You go down to your sunny Southland here, and what do you
see? From Virginia and Arkansas, and all these other places
where these men have addressed you about personal liberty and
about the erjormous resources of their states as one of the induce-
ments to the individual capitalization, they tell you there is no
restriction for child labor down South.
And in the North, in this state, the Supreme Court, at the
request of the Manufacturers' Voluntary Association, has declared
that an individual employer may drive the hardest bargain with
a starving woman or girl, and work her twelve or twenty-four
hours for a day's work and pay 50 or 75 cents as compensation,
and that all laws that interfere with this "right" of the indi-
vidual employer are unconstitutional.
In the face of such a record as this, you individual employers
and business men come here and pose as champions of liberty,
guardians of manhood, and saviors of society.
The corporation is a legal personality, but it has no soul ; the
trust has neither personality nor soul, but soulless as the first isj
and bodyless and soulless as the trust is, it is utterly impossible for
either or both to exceed in inhuman cruelty the record you indi-
vidual employers and individual business men have already made.
We have been regaled here with delightful descriptions of the
vast natural resources of the particular states from which the
320
respective speakers hailed, others have attempted to picture in
words the creative forces of machinery, steam, electricity, har-
nessed and operated by the "dignified" millions of American
workmen, and of the enormous wealth which has and can be pro-
duced. You all agree that if as yet America may not be able to
feed, clothe, and house the world it certainly is able to do more
than that for its own people. In other words, if we but look about
us at our bursting granaries and warehouses, and our productive
power, we must see that the problem of production has been
solved, and that not one single human being in this land need
suffer for lack of the necessaries, comforts, and even luxuries of
life, because of any inability to produce them.
And yet, plain as this is, it is still more plainly seen that want,
gaunt and dreadful, ever stalks beside millions of our American
workmen, and that the shadow of this monster of modern civiliza-
tion is now spreading over the great middle class.
We socialists clearly see that as the little workshop and small
factory and mill had to give place to the larger and larger manu-
facturing institutions, so the little business is absorbed by the
ever increasing corporations, and they in turn into trusts, and the
many trusts -into still larger and fewer trusts, till it requires no
prophetic eye to see the form of the one all absorbing and con-
trolling trust. Cannot you, business men, see with the socialist
in this inevitable line of development of the private ownership of
the earth the means of production and distribution the end
of the principle of private property?
The fetich of private property in the mines, in the soil, in the
forests, and in the fields, and everywhere else, an idolatrous
worship of the millions of propertyless workers as well as of
the propertied classes, is the bane of civilization, is the illusion of
civilization, and must be wiped out of the intellect. We social-
ists rejoice that the trust has come to show you that the logical
sequence of the ownership and control of what is now known as
private property and the resources of the earth, that the private
property of this great country and others like it, will be organ-
ized into trusts until there will be one trust, and you will not be
in it.
You can send bands of music to your legislatures, you can pass
resolutions, you can hold your demonstrations everywhere; but
the concentration of private property, the right of man to own
all he can get and hold all he gets, will go on with irresistible
force so long as the principle of private property in the things by
which we live is maintained by you men.
It is very interesting and somewhat amusing to the socialist
321
to watch your actions as you feel this resistless pressure" you try to
escape in* every conceivable way but cannot, and this conference
proves beyond a doubt that as a class you are in great distress
are very sick and we, socialists, seek to comfort you by the asser-
tion that the disease which afflicts you is fatal, that in the very
near future you will die, and we shall be present and rejoice at
your funeral.
With this condition confronting you, with this outlook before
you, will not you business men look above the present system of
production for profit and consider the better principle of produc-
tion for use?
Will you still continue trying to tear the corporation and the
trust to pieces, so that each of you individuals may have a little
and begin again in the "good old way," or will you not see that
these great trusts, with their organized methods of production in
which all waste is eliminated, in these great corporations for dis-
tribution which are being perfected, a means to be used and not
destroyed? Will you not see that with these perfected mechani-
cal methods of production and distribution, the mythical "self-
made-man," the assumed superiority of the employing and busi-
ness class disappears in this bodyless, soulless thing called a trust,
but which still can supply all the necessaries, comforts, and luxu-
ries of the world?
Will you not see with the socialist, that in these forms of com-
bination the warfare of competition must cease, a warfare in
which man is at war with man, and man with woman, and both
with the child in every place of industry and commerce in the
world?
Will you not lift your eyes, your thoughts, your aspirations
from the low groveling plane of inhuman, stupid warfare in
which the prize for you is profit and the prize for the worker at
best only a "living wage" ?
Will you not lift your heads and hearts above this and realize
that in the higher, peaceful relations of fraternal co-operation
you must seek and will find that commonwealth in which alone
the. people rule, in which alone there can be liberty, in which
alone there can be manhood ; manhood which can exist only in a
state where the trust perfected includes the whole people, where
private property which once belonged to the individual em-
ployer and business man, next to the corporation, and last to the
trust, has become in the very nature of things the common prop-
erty of the common people, and makes the commonwealth a fact
instead of a mere abstraction?
322
HENRY WHITE.
General Secretary United Garment Workers of America.
Henry White, of New York, general secretary of the United
Garment Workers of America, was next introduced and said :
The industrial combination known as trusts have so en-
trenched themselves in our economic system, that it is not so
much a question now as to how they can be suppressed, but what
the public attitude should be toward them, and whether or how
they should be regulated for the public benefit. They are already
a phase of our industrial development, and being here have at
least some presumption in their favor, but they are not yet suffi-
ciently established to give them the sanction of time and experi-
ence. They have just forced their way into the arena of public
activity. The benefits derived by the community from them
still requires demonstration, likewise adequate proof as to the
dangers attending their existence. Simply citing cases showing
abuses is no indictment against the method itself. We must dis-
tinguish between the use and abuse of a thing, otherwise no
human institution could stand. Discrimination is the soul of an
argument. While pointing out the evils of trusts we must not
forget the serious grievances of competitive business its limita-
tions, its wastes, its uncertainties. Workingraen are only too
familiar with the disheartening reply when asking for an increase
of wages, "Can't afford it on account of competition." The trust
method, at least, changes that situation as far as ability to con-
cede better conditions are concerned.
If the success of the trusts has been to the detriment of the
people society, always supreme, can harass it, tax away its profits
and even outlaw it, but as to whether it can be destroyed under
a system of private enterprise or whether society can prevent
competing concerns from consolidating or being operated under
a mutual agreement without undoing the work of progress and
establishing medieval trade restrictions, that is the question.
National incorporation, if that were possible under the Con-
stitution, suggests a way of uniformly regulating corporations, by
limiting their operations to the definite purpose for which they
are chartered, instead of the unsatisfactory state regulation which
has led to such grotesque results. Government ownership and
control of all monopolized industries is one way of dealing with
the subject, but we are not evidently prepared to seriously con-
sider so vast and revolutionary a proposition, there being nothing
in all history or in our own experience to support it. Society
323
cannot be moulded at will to fit any scheme no matter how well
thought out.
The real reason why trusts have grown so wonderfully in this
country is really due to the American genius for doing things
upon a large scale, and putting natural forces to the best use.
Favored legislation, tariffs, discriminating railroad rates, or the
many other things, commonly ascribed as being the cause of
their growth, reminds me very much of the fly upon the wheel,
which exclaimed, "How fast I am making it turn." These things
may accelerate their development and enable them to exact undue
profits, but they do not account for the phenomena itself. It is
Yankee enterprise rather which quickly utilized the advantages
which centralization gives just as it applied electric energy im-
mediately after its secrets were known. We frequently hear
men of business experience expressing themselves disparingly
upon this subject as though the well established law of trade, viz. :
that money for investment will flow in the direction of the most
profit and greatest security had ceased to operate and that the
trusts charged with exacting exorbitant profits had preempted
all claims and forestalled the formation of rival corporations.
Can it be that the spirit of rivalry has ceased to assert itself? Is
it not more likely to do so in another form through competition
between great combinations ? As soon as present industrial ten-
dencies have evolved from the present formative state there can
be no doubt that, that force in business which has never failed
will be made manifest. In a fair free field would not superior
service more likely be the only means by which a corporation
could continue to dominate the market? Where a monopoly is
supported by the obtaining of favored freight rates, legislative
privileges, patent rights, or the tariff, this beneficent process
would be hampered or even counteracted and all of our energies
therefore should be directed toward removing such impediments
instead of vainly striving to prevent the natural and inevitable
movement toward concentration. This is the pith of the whole
question.
That the tariff in some cases enables a combination in control
of a product to put up the price based upon the difference in the
customs duty, there can be no question. I mention as an in-
stance the case of woolen cloth. Where a monopoly is due to the
control of a necessary invention it is improbable that inventive
genius will have exhausted its resources, and that such a mo-
nopoly will be long continued. In America competition has
reached a condition of intensity unknown anywhere else. Every
device of a fertile and ingenious people is resorted to in order to
324
enable one rival to obtain an advantage over another, and the
principal weapon used is the cutting of prices. Instances can be
cited where production has been carried on in some large indus-
tries at practically no profit, simply with the hope that conditions
would improve and because of the inability to withdraw invested
capital. Against such destructive warfare, combination has come
as a relief. This tendency is but the fruition of such competition.
While in the very nature of things competition, under private
enterprise, cannot be avoided, in the long run it can at least be
carried on in a form other than in the ruinous way.
While this evolution continues there are some important in-
dustries which escape this tendency. I refer, for instance, to
the clothing trade which I am identified with, where manufac-
turing can be carried on just as cheaply upon a small scale as
upon a large one. To this is due the sweating system which is
a survival of the old domestic workshop method transplanted
from Europe, fed by immigration, and exploited by American
capital. The sweatshop has managed, therefore, to prevent
that industry from drifting into the ways of the trust.
Our trade is even denied the privilege of choosing between a real
evil and a possible one. In the clothing trade free competition
of a certain kind has reached its last ditch and any change would
be gladly welcomed as an improvement. This is the sort of free
competition which follows the throwing of a bone among hungry
animals. There is a competition to emulate, to excel, to build up,
and another which devours and destroys.
On the problem itself I confess I have formed no positive con-
victions, because of the suddenness in which this industrial reor-
ganization has come upon us and the difficulty of grasping its
true meaning. I have, however, a few fundamental questions to
ask in the course of my address, which require a convincing
answer in order that public alarm may be allayed that the trust
institution may establish itself in the public confidence, prove
that it is necessary to progress, show that it widens the sphere of
human endeavor and adds to the happiness of mankind. The
opposition to trusts, it is claimed by them, is due to the incidental
but temporary disarrangement and that this opposition is similar
to the antipathy manifested toward improved machinery and bet-
ter business methods. Their advocates claim the following ad-
vantages for them :
That it gives the consumer the benefit of increased economy
in. production by lowering prices and by which consumption is
increased. That it makes employment more regular and enables
higher wages to be paid. That it creates more certainty and sys-
325
tern in business, thus making panics less likely. That it opens
up foreign markets on account of the superior productive
methods.
Now if the soundness of all these claims be admitted, and
there are no serious evils, associated with the trust, then it ought
to be hailed as a benefactor of mankind for it brings results com-
pared with which all other improvements in human history be-
come as naught. But, alas, for the ungrateful public. It can
only see the forked tongue and gleaming eyes of a monster.
This deep-rooted antagonism cannot be solely attributed to
the squeezing out of the middlemen, the displacement of labor or
the work of the alarmist, but if analyzed is found to be due to
the fear that these great financial institutions are establishing
an irresponsible, impersonal and selfish despotism. That this
power tends to control legislation, that it reaches out for public
franchises by special privileges and so intrenches itself that it can
successfully keep out competitors.
Now, to what extent is this so? And is there some compensat-
ing or balancing power in society? An active public opinion
must, of course, be always relied upon to remedy abuses, but it is
roughly formed and proverbially slow, and is frequently thwarted
by the compactly organized few. History has some warning to
give in this regard, and surely those who control great wealth
have not usually acted as though they were its steward. Have we
been encouraged into believing that the trust managers will use
their power for good, rather than for evil?
Is it possible for a trust to keep in control only so long as
prices are kept down to a point which would shut out competi-
tion? Numerous cases can no doubt be cited, if the current
newspaper reports can be credited, where prices keep going up
and the trust holds the fort. Are such cases isolated and due to
the general advance in prices and have no bearing upon the larger
results, or do they indicate the real character of the .trusts and
what we may anticipate from them?
On* this serious problem, where does labor stand? I have
. been invited to speak from the point of view of the wage earners,
or rather, the organized portion of them, for the unorganized
have no voice, and like "the man with the hoe," have always
been mute.
_ I feel justified in saying that the general attitude of the trade
unions toward the industrial corporations is neither trust nor
anti-trust. They have a position of their own. They are not
making any leaps in the dark. Hard experience has taught them
caution. Trade unions, the creation of modern social evolu-
tion, have no quarrel with the progressive forces in society, but
they demand for the workers a share in the benefits.
While organized workingmen may disagree, somewhat on the
general question, they agree in this, tt at improved means of pro-
tection is more vital to them than improved methods of produc-
tion, as important as the latter is. They want some say as to the
terms of employment. Even though the trusts may concede
higher wages and shorter hours, it is the recognition of the right
to make terms through the agency of the union that concerns
them most. Employers Avill often voluntarily grant concessions
as a means of offsetting the demand for recognition, knowing
that such recognition would enable the men to deal with the
employer more like an equal. Will it be the policy of these cor-
porations to recognize the function which organized labor ful-
fills in society and treat with them as such ? Or, will they deny
to the workers advantages which they themselves enjoy? Will
they insist upon ignoring the necessity of workingmen acting in
groups in view of the impossibility of the individual making sat-
isfactory terms of employment in a great factory, where uniform
conditions are fixed?
What will the policy be toward united labor when the trusts
are more fully established? Will the unions have to meet a more
unyielding foe? That is the question which a million organized
meclianics are asking and an assuring answer cannot be given by
words alone. It might be said that necessity would stimulate and
strengthen the movement of the workers, and no doubt it will,
because years of struggle and sacrifice made for economic inde-
pendence have trained and nerved the American toiler for a
greater trial and the test must soon come, for the organization on
the other side is proceeding at such a pace that labor will have to
make great strides in order to catch up. To meet one single
employer who speaks for the entire trade is quite different than
coping with one who figures on the advantage his competitoi 1
will gain in the event of a strike.
Now, suppose the unions are overcome and destroyed. In-
stead of the natural and orderly methods of trade unionism the
discontent would express itself through wil,d and revolutionary"
uprisings, or it might give way to a dull deadening passiveness,
the very worst fate which could befall society. Professor Brooks
has well said: "If the growth of the trust would end in the
crushing of the unions, it would be a great human tragedy."
Trade unions have often been likened to trusts. True, they are
alike in respect to the features of organization and the desire to
eliminate a detrimental competition ; but they differ in this, that
327
trade unions depend for effectiveness upon admitting all crafts-
men to membership; they enjoy no privileges and represent the
movement of the mass for economic justice and social advance-
ment.
The whole purpose of the human race is not alone to produce
goods cheaper. A visitor to a great factory may be delighted
with the order and system which he observes, but when he
mingles with the workmen he often finds them sullen and discon-
tented. True prosperity is not so much a question of superior
production as that of more equitable conditions. In that I agree
with the delegate from Texas, but there is no occasion at the same
time to ignore social growth and change. The essence of civil-
ization is the doing of justice and a nation's standing must be
measured by its ability to administer justice, likewise with a sys-
tem of industry. The element of fair dealing must always be
paramount or its fruits will become like dead sea apples, sour and
bitter to the taste.
The golden age of labor is supposed to have been in the
fifteenth century. Gibbons, in his work on "The Industrial
History of England," says: "The cost of living was not more
than one-tenth of that at the present day. Food was abundant
and cheap. Three pounds of beef could be bought for a penny.
A pig cost about four pence. Employment was fairly constant
and regular, and in addition to their wages the laborers still
possessed valuable old manorial rights to common pasture and
forests. Artisans earned about three shillings a week, which
should certainly be worth more than thirty shillings a week at
the present. Industry was organized into craft guilds" a form
of trade unionism.
Yet, this was in a state of primitive industry, 'in the days of
the domestic handicrafts, and was alone made possible by the
social harmony which prevailed, when the master and journey-
man met in common fellowship. With that kind of harmony
combined with the economic effectiveness, which the trust makes
possible, the human race would advance with mighty bounds.
The trust managers have magnificent opportunities; will they
avail themselves of them? Will they show the necessary large-
mindedness ? Judging by our knowledge of human nature, which
we know has not changed perceptively for a thousand years under
varying conditions, we have reason to be anxious, but the people
of America have never failed to successfully meet a great issue
when once they grappled with it. The vigorous manner in
which the trusts were opposed here but indicates the feeling out-
328
A. M. COMPTON
DAVID ROSS
WILLIAM H. TUTTLE
HENRY D. BAKER
GEORGE A. SCHILLING
PAUL J. MAAS
side and with such sentiments aroused no possible power can pre-
vail against the people's might.
In the lowering clouds of social strife I see a welcome light.
The mere fact alone of such a gathering as this shows that the
age of reason is dawning, and when men reason everything is
possible.
Other speakers of the morning were, M. M. Garland, former
president of the Amalgamated Iron and Steel Workers; Samuel
Gompers, president of the American Federation of Labor, and
John W. Hayes, secretary and treasurer of the Knights of Labor.
The latter remarked that as some of those who had been assigned
to talk on the side of labor were not present, he felt that he should
be accorded more time than that allotted other speakers.
Cockran moved unanimous consent to an extension of the
speaker's time. Mr. Hayes declined to accept an extension as a
concession. He demanded it as a right. There was confusion in
the galleries, and without any formalities, the chair closed the
incident by intimating to Mr. Hayes that he would probably find
the ruling in his case sufficiently elastic.
SAMUEL GOMPEKS.
President American Federation 'of Labor.
Mr. Gompers' subject was "The Control of Trusts." He
said in part :
We are all conscious of the giant strides with which industry
during the past decade has combined and concentrated into the
modern trust. There is considerable difference of opinion, how-
ever, a's to what is regarded by many as an intolerable evil.
Organized labor is deeply concerned regarding the "swift and
intense concentration of the industries," and realizes that unless
successfully confronted by an equal or superior power there is
economic danger and political subjugation in store for all.
But organized labor looks with apprehension at the many
panaceas and remedies offered by theorists to curb the growth and
development or destroy the combinations of industry. We have
seen those who know little of statecraft and less of economics urge
the adoption of laws to "regulate" interstate commerce and laws
to "prevent" combinations and trusts, and we have also seen that
329
these measures, when enacted, have been the very instruments
employed to deprive labor of the benefit of organized effort while
at the same time they have simply proven incentives to more
subtly and surely lubricate the wheels of capital's combination.
For our part, we are convinced that the state is not capable
of preventing the legitimate development or natural concentra-
tion of industry. All the propositions to do so which have come
under our observation would beyond doubt react with greater
force and injury upon the working people of our country than
upon the trusts.
The great wrongs attributable to the trusts are their cor-
rupting influence on the politics of the country, but as the state
has always been the representative of the wealth possessors we
shall be compelled to endure this evil until the toilers are organ-
ized and educated to the degree when they shall know that the
state is by right theirs, and finally and justly come to their own
while never relaxing in their efforts to secure the very best possi-
ble economic, social and material improvement in their condition.
There is no tenderer or more vulnerable spot in the anatomy
of trusts than their dividend paying function, there is no power
on earth other than the trade unions which wields so potent a
weapon to penetrate, disrupt, and, if necessary, crumble the whole
fabric. This, however, will not be necessary, nor will it occur, for
the trade unions will go on organizing, agitating and educating, in
order that material improvement may keep pace with industrial
development, until the time when the workers, who will then
form nearly the whole people, develop their ability to administer
the functions of government in the interest of all.
There will be no cataclysm, but a transition so gentle that
most men will wonder how it all happened.
In the early days of our modern capitalist system, when the
individual employer was the rule under which industry was con-
ducted, the individual workmen deemed themselves sufficiently
capable to cope for their rights; when industry developed and
employers formed companies, the workmen formed unions; when
industry concentrated into great combinations, the workingmen
formed their national and international unions, as employments
became trustified, the toilers organized federations of all unions
local, national and international such as the American Federa-
tion of Labor.
We shall continue to organize and federate the grand army of
labor, and with our mottoes, lesser hours of labor, "higher wages,
and an elevated standard of life, we shall establish equal and exact
justice to all. "Labor Omnia Vincit."
330
JOHN" W. HAYES.
General Secretary and Treasurer Order Knights of Labor.
Mr. Hayes, speaking on "The Social Enemy," said :
The question which we are invited here to discuss "Trusts
and Combinations" is fast pressing itself for solution before '
the highest tribunal in the nation, the court of final resort, for
all questions of public policy, the court of public opinion. It is
too vital, too important, to be confined to the narrow limits of
commercial affairs, of mere business operation, or mercenary
speculation. It touches the very foundations of our free insti-
tutions, involves the liberty of the people, the comfort, happi-
ness and prosperity of millions of free men, and the stability of
our governmental system, established by the fathers to defend
and protect coming generations in their inherent rights, which
rights were declared by them to be the gift of nature to all her
children.
This question, then, involves more than the trivial matter of
production and prices. It goes far beyond the profitable opera-
tion of the manufacturer. It rises to the high plane of a gov-
ernment policy, involves the question of human rights, of indi-
vidual liberty, of the status of the citizen, of the dignity of
citizenship, the right of defense, a limit to the power of wealth,
a point at which the encroachment of mercenary greed must
stop, and a barrier created that will enable us to defend our lib-
erties, our manhood, and our independence.
I shall, therefore, discuss this question only as it bears upon
the broad field of human rights, and denv at the outset the
moral right of any individual, or combination of individuals, to
so monopolize any natural field of industry to such an extent
as to be able to dictate the conditions which govern the lives of
that portion of society which gains its maintenance by the exer-
cise of productive industry in that particular field. I assert that
it is contrary to the best interests of society indeed, that govern-
ment has not the constitutional power to enact such legislation
as will make it possible for any combination of individuals to so
limit the volume of production in anv natural field for its own
particular advantage, or so create conditions that anv individual
or combination of individuals may have despotic power over the
lives of any citizen or number of citizens.
I further assert and maintain that these great combinations
are an assault upon the inherent and constitutional rights of the
citizen, and that the real and vital advantage to be gained is the
331
despotic control over labor. Virtually to own and command
the labor engaged in any particular field, and consequently it
is an assault upon that portion of the people. If one field may
be invaded and reduced to despotic dictation, all may be, and
the logical outcome must be the conquest of all fields of produc-
tion, the establishment of a despotism in each, the enslavement
of the people, the overthrow of our free institutions, and the erec-
tion of moneyed aristocracy. Thus would our boasted free insti-
tutions become a fraud and a pretense, our government perverted,
and only used as a machine to enforce the will of the dictators.
The term "trust" is so indefinite, so vague and uncertain,
being used many times without a clear conception of its scope
or exact reference, that we must secure a definition for it. Web-
ster defines a trust to be "a combination to control production and
prices." This definition furnishes us with sufficient grounds
to attack them constitutionally, as the control of production in-
volves our inherent rights, the liberty of our citizens in fact,
the very existence of our form of government. Not only does
the trust dominate and control production and prices, but it
controls and cuts off our opportunity to labor, which is one of
our inherent rights, and thus the very right to live is denied us,
or we are doomed to involuntary servitude for the benefit of a
more favored class. This, you see, places the question beyond
the profitable operation of the manufacturer and raises one of
equity, of justice, and of the rights of man. An analysis of the
character and objects of the trust cannot but convince any un-
biased and patriotic mind that they are inimical to our popular
form of government, subversive of our institutions, tyrannical in
their methods, antagonistic to the common welfare, the common
enemy of society, and should be treated as an invader or armed
revolutionist aspiring to dictatorial power. Arms are not the
only resort of the invader, the despot, or the conqueror. Vio-
lence is not the only means of making conquests and enslaving
the people, and it can be proven beyond any question of doubt
that the methods of the trusts are the methods of the invader,
the conqueror, and the despot, and the ends to be accomplished
by the instigators of the trusts are exactlv those intended to be
accomplished by arms directed by military genius. Taking this
view of the trusts, which I hold is the correct one, I assert boldly
that they are the enemies of society, and as such should be de-
stroyed as any common enemy, and that the financial phase of the
question should not come into the subject for consideration, as
the liberties of the people are far above the mere question of
money.
332
The definition that a trust is an aggressive combination of
private individuals leads naturally to the inquiry, against what
or whom this aggression or assault is to be directed? Is it an
organization of private individuals formed to attack some similar
organization in a competitive rivalry, the result of which will
alfect the private interests of those immediately concerned,
leaving the unsuccessful and unfortunate the ability to recover
from any injuries they might suffer from the contest, with their
social status unaffected and their capacity and ability to produce
unimpaired? Or is it possible that this aggression is against
society, against the established social and political conditions,
which guarantees to every citizen the right and opportunity to
labor in any field of. industry he may find most favorable to his
pursuit of happiness and the enjoyment of his liberty? What
more nearly concerns the happiness of man than the enjoyment
of the full return of his industry, or his liberty, more than the
access to any field of industry nature has provided, from which
.he may gather the necessities and comforts which minister to
his happiness and the happiness of those depending upon him?
It is the duty of society and government to foster and encour-
age production, to guard every field of industry for the common
good of society, and to develop the producing energy to the great-
est extent possible.
There is no fear that a people can produce too much of any-
thing that is serviceable and useful to the community; that the
people can become too comfortable or too industrious. The good
of society demands that the productive energy be developed to
the greatest degree possible; that the fields of industry be not
circumscribed, and that free access be guaranteed and preserved
to all who require or desire to exercise their productive labor in
such fields. The controlling of any field of industry by any indi-
vidual or combination of individuals is contrary to the declared
spirit of our institutions, for it recognizes the power of such indi-
vidual or combination to restrict production, even to absolutely
close the field of opportunity against the citizen, if they consider
their personal interests will be benefited thereby.
The great corporations, the trusts, with their capital, their
machinery, special privileges, and other advantages, are over-
whelming the individual, reducing him to the condition of a
mere tool, to be used in their great undertakings for their indi-
vidual profit, and of no more consequence than a piece of dumb
machinery. Man is the slave of necessity, and he who controls
the necessities has the power of a despot. The first and prime
necessity is the opportunity to exercise his industry in some
333
productive field where he can secure the means of existence.
To close this field, to cut off this opportunity, is to sentence
him to death. To restrict the exercise of his productive ability,
or Hmit the terms of his access to the opportunity by the will of
another, is to make him the slave of another. It is claimed by
short-sighted, selfish, and mercenary men that if the opportunity
is closed in one field there are others to which the individual
may turn. This is too silly and childish an assertion to merit
notice. First, because no such possibility should be allowed to
exist under our free institutions ; and next, because were it pos-
sible for one field to be monopolized, it is possible for all to be,
and the individual would turn from the field closed against him
to find all others in the same condition. Even were this not
so, his skill, experience, and training in that field would be lost
to him, and he would enter a new one at a disadvantage in the
competition with trained minds and skilled hands already em-
ployed, and an injustice would be done on the one hand, and
undue favor extended on the other. The trust, by monopoliz-
ing the field, becomes the dictator of the conditions which gov-
ern the life of every individual engaged in the field monopolized.
By limiting the extent to which he may exercise his productive
energy, limiting his wage, or the possible amount of his earn-
ings, it dictates the quality and quantity of food the worker may
eat, the kind of clothes he may wear, the kind of shelter he may
provide for his family, the opportunity for education and im-
provement his children may have, and, by cutting his opportunity
to labor, it denies him even the right to live.
The great danger from these great combinations is the fact
that they step in between the citizen and the government and
levy such tribute as they may choose, imposing the most severe
penalties in the form of enforced idleness, destitution, and suf-
fering for refusal to comply with their demands. The individ-
ual is thus subjected to the dominition of two distinct powers
the one the political government, which taxes him and controls
his relations to his fellow-citizens, and which power is of his
own creation and is submitted to voluntarily; the other con-
trols the necessities by which he exists, and only by permission
of the combination which controls his field of industry can he
exist at all. This latter is, in its nature, compulsory, and is only
submitted to because he is unable to resist it. In this sense he is
a slave.
Each field of industry is looked to to supply whatever demand
may be made upon it by the necessities of the people not only of
our own country, but throughout the world. A larger demand
334
gives greater activity to such industry as is already employed and
opportunity to such energy as may at any time be unemployed,
the supply being naturally adjusted to the demand and a just and
equitable return made to the producing energy. The operation
of the trust interrupts this natural adjustment, arbitrarily fixes
the volume of production, and demands whatever price necessity
may compel the unfortunate consumer to pay, and thus an unjust
tax is levied upon all society to fill the purses of the greedy dic-
tators, who dole out whatever pittance they may choose in the
form of wages to those unfortunates whose labor they are ena.bled
to command. In this way society is compelled to pay tribute to
this speculative freebooter, and submit to his dictation as to
the quality and quantity of whatever product he controls which
its necessities may demand.
It may be said in reply that this is never done. I answer that
it is possible it may be, and it should be so arranged that such a
thing would not be possible in any civilized society. The trust,
then, is the enemy of society, as well as of the individual.
This surely is enough to condemn it, for whatever is the enemy
of society should be exterminated without thought of mercy or
charity. But the trust is worse. It is the enemy of free insti-
tutions, a breeder of treason against the government, involving
the overthrow of our system and the destruction of our liberties.
This is a severe charge, but it is capable of clear and undisputable
proof.
The great object of human endeavor is the achievement of
the greatest degree of human happiness. This is the great aim
of all human society, all human governments; and this is the
declared and recognized purpose for which our free institutions
were devised and established, and the machinery of our govern-
ment was designed and constructed for the purpose of accom-
plishing this result in the most effective manner. By preserving
the inherent rights and liberties of the individual and defending
the dignity of citizenship, it is hoped that the citizen may be pro-
tected from the tyranny of more fortunate individuals and classes,
and the operation of unjust conditions and influences which may
assail him, and he be left untrammeled in his pursuit of that de-
gree of happiness to which he may aspire.
The establishment of the trust renders impossible this pres-
ervation and defense, because it transforms the citizen into a
servile dependent upon the despotic will of the corporation,
which is governed only by mercenary greed and selfish desire,
the trust becoming in its very nature a power far more effective
in all things directly pertaining to the individual's comfort and
335
happiness than the government. In this way it usurps the power
of government, which it nullifies and overthrows, and so far as
the individual affected is concerned, assumes the functions of
government. The object and aim of the trust being purely mer-
cenary and selfish, naturally it will seek to establish and main-
tain conditions which will give it absolute control of the pro-
ductive energy employed in its field, regardless of the rights of
individuals or the common welfare of society.
The legislation enacted by the government, if uninfluenced,
naturally would be the expression of the popular will in the in-
terests of individuals and society. This legislation it becomes the
interest of the trust to influence and pervert to its own profit
and advantage. This opens the door to corruption of the legis-
lative branch of government and the oppression and overawing
of the popular will. The representatives of the people are cor-
rupted, and the class dependent on the trust for its employment
and maintenance intimidated and practically disfranchised
through fear of loss of employment and enforced idleness. They
are compelled to support the methods of the trust or neglect to
exercise their rights as citizens. In this way the independence
of the citizen is destroyed, his manhood degraded, his right to
give free expression to his opinions upon public affairs abridged.
He becomes a sycophant, a moral coward, a helpless dependent
upon the will of his master, and the will of the trusts becomes the
only voice heard. Legislation in this way becomes merely the
dictation of the trust, and the pretense that it is the emanation
of popular will is false and fraudulent. In this way the power
and machinery of government are gradually transferred from the
people to the corporation, and that which was founded and in-
tended to protect the citizen and defend his natural and civil
rights becomes the means of his oppression. This is unques-
tionably treason, a conspiracy to usurp and pervert the govern-
ment, to overthrow free institutions, and to establish a despotism
and a favored and dominant class, practically autocratic in its use
of power. That this is not only possible, but practically in opera-
tion at the present time, is proven by the history of our political
campaigns for the past two decades/ and a review of the legisla-
tion enacted in the interests of corporations, which constitute
the great bulk of all legislation, municipal, state, and national.
It is universally admitted that legislation emanates from the class
benefited by it, and, looking over the mass of legislation, one is
at no loss to decide what class is benefited. Therefore, there can
be no doubt as to what influence brought about its enactment.
The fraud, corruption, and bribery of legislatures, the open de-
fiance of executive authority, the corruption of courts and their
officials, the usurpation of power and the legal assumption of
rights, the ready appeal to the military and arrogant overriding
of the civil authority by this power in controversies between cor-
porations and employes ; the defiance of municipal authorities in
questions between corporations and municipalities, the employ-
ment of armed mercenaries to enforce their decrees, the con-
stant and never-ceasing struggle of corporations to compel as
many hours of labor and as low a rate of wages as is possible to
enforce, are all clearly indicative of the character, desires, and
purposes, and show beyond any question such combinations to
be the enemies of society and of any form of government which
tends to abridge or control their power over the citizen, or the
exercise of their will in any undertaking their greed and avarice
may suggest, regardless of the rights, interest, liberties, or hap-
piness of the people, or even the interests of the people's govern-
ment. Their intents are unquestionably treasonable, and if car-
ried to their ultimate results will certainly cause the overthrow of
our institutions and government.
In this world all things work in a circle. So it will and must
be with trusts if carried to their logical culmination. The in-
spiring motive wbjch called them into being will prove their de-
struction, as well as the destruction of our government. They
will end by destroying themselves, as well as the government
which gave them birth. The very nature of the system proves
this.
The trust being an aggressive combination for purely selfish
objects, attacks the individual, and by overthrowing his natural
rights seizes upon his field of opportunity and production, appro-
priating them to its own advantage. This field having been con-
quered, and the trust strengthened in its financial power, the
aggressive spirit of selfish greed looks for conquests in allied
fields, which are soon invaded and monopolized, or other com-
binations, seeing the success of the first attempt, enters upon the
same campaign of conquest. Soon the individual is overwhelmed
and every field of production is monopolized by a trust. Indi-
vidual enterprise, opportunity, liberty, and individual energy are
destroyed, competition for the individual is' impossible, and the
war between the trusts begins.
The strongest combination in one field attacks the weaker in
allied fields, and the overthrow and absorption of this strengthens
the vicW and makes further conquest possible, which finally
ends by the overthrow of all opposition and the monopolizing
of all fields of production by one colossal, irresistible combina-
337
tion, instigated by mercenary greed and utter selfishness, which
will issue its autocratic decree to a cringing mass of dependent
slaves, whose very right to live would depend upon the im-
perial will of the corporation, which would hold the power of
life and death over its subjects. These would represent the
citizenship of the pretended republic which might stand for the
sham of civil government, for should even a pretense remain, the
laws enacted would be merely the will of the corporation. But
would such an aggregation of power and wealth be content to
allow even a pretense of its subjection to any recognized author-
ity? It is scarcely reasonable to suppose, but it is far more prob-
able that all sham and pretense would be thrown aside and the
victor openly declare his power, brush aside any futile opposi-
tion, set up his aristocracy, and free institutions, the popular
government erected by patriotic fathers, would disappear from
the face of the earth, and in its stead would arise a despot-
ism born of greed and selfishness, subservient to the interests
of an utterly irresponsible group of heartless speculators, ruling
their slaves with an iron hand in order to secure to themselves
the greatest profit and advantage, and to whom the common
welfare would mean only their own mercenary advancement.
Besides such conditions the despotism of RUSSIA would be liberty,
hereditary monarchy liberal, the condition of the black slave of
the South enjoyable. JSTo more deplorable fate could possibly
befall any people than that, which in this case is possible, as the
logical outcome of recognizing this heartless, this heathenish
and selfish system.
I do not hesitate to proclaim that in recognizing it at all we
are nourishing a serpent, fostering treason, giving aid and com-
fort to the enemies of society, welcoming an invader, assisting
in the overthrow of free institutions and popular government,
inviting a dictator, and laying the foundation of despotism. We
are sowing the seed of revolution and may reap the harvest upon
the bloody fields of civil strife or amid the groans and sighs of
fettered slaves, bereft of manhood, wallowing in moral degrada-
tion, ignorance, and vice, degraded from the exalted dignity of
citizenship in a free and mighty nation to a condition of syco-
phantic dependence upon the despotic decree of an autocrat.
The slums of Europe have been raked to secure a horde of
the most ignorant, the most servile, the most depraved, the
lowest element of the most oppressive aristocracies of modern
civilization, and these purchased slaves, dependents upon the
will of an autocrat, without even the rudiments of education,
without even a faint conception of liberty or of human rights,
with no conception of the character'of our institutions and gov-
ernment, have been injected into our population and employed in
the development of some of our most productive fields, where
they are worked under conditions almost identical with those
under which the convicts of Siberia exist, conditions which no
free American citizen could submit to and no man worthy of cit-
izenship should. Thus are these great fields of industry, the
inheritance of American children, closed against our own people
for the profit of a few speculators, and the industry in these fields
ruled despotically by force, and practically a system of slavery
established.
NOT does the wrong end here. This mass of ignorance and
depravity has been degenerating for centuries under the most in-
iquitous tyranny, and cannot by any means hope to reach the
plane of intelligence our people occupy. They submit willingly
and with no sense of humiliation to methods and treatment our
own people would not brook, and thus gradually their masters
introduce and usurp authority similar to that of European poten-
tates, which, being accepted, gradually comes to be looked upon
as legitimate, and so usurped authority comes gradually to be
recognized as legal, and our government the executor often of
the will of the corporation. Further than this, the influence
of this degraded and vicious element upon our own population
is bad in the extreme, tending to degrade and lower our own
citizens, rather than to elevate those too dense and ignorant
to be impressed by moral influences. The result is rather to
Europeanize our own people than to Americanize the stolid mass
Avhich exists under such degrading influences.
However, it is plain that this grand inheritance of the Ameri-
can people, these great fields of opportunity and production, have
been closed to their rightful owners and absorbed by a greedy
few, who operate them with foreign labor under the most servile
and degrading conditions.
That the unrestricted competition of centralized wealth
against individual enterprise is fatal to the individual and against
the best interests of society is further proven in the commercial
field. The small merchant has been forced into the position of
a paid servant of the combination. Formerly young men en-
joyed the opportunity Of entering this field of occupation with
the hope of advancement, if not fortune. Beginning as clerk,
they could gain a knowledge of the business and qualify them-
selves to conduct a business of their own or become partners
of their employer, in either case becoming independent, self-
reliant, self-supporting, and valuable citizens, maintaining their
339
family in comfort. Now this opportunity is closed. The field is
monopolized hy combinations of wealth. The clerk must remain
a clerk, without hope in the future, except such increase in his
pitiful wages as his master may in his magnanimity see fit to dole
out to him. His opportunity is further limited hy his "being
forced into competition with helpless women, driven hy necessity
to accept any wage in order to exist.
To sum up the whole, this policy of the trusts is an aggressive
invasion organized .against the best interests of society and de-
structive to our free institutions and popular government. It
is too often the instigator of fraud, corruption, bribery, and trea-
son. It is the ally of despotism, tvranny, mercenary selfishness,
and slavery, and is an enemy to the elevation of the race and the
equality of man.
JOHN B. CONNER.
Chief Indiana Bureau of Statistics.
It is said that the germ of the corporation idea had its origin
in Rome in the ecclesiastical organizations and combinations, and
that the English law in respect to corporations was fashioned by
these ancient impressions, when taking civil instead of ecclesias-
tical form. Then followed the organization of guilds in trade
and commerce, and universities. To a great extent in these times
of combinations and trust organization, the corporation has taken
on. the idea wholly of corporate personality, instead of that of
public utility. More than a century ago Blackstone said : "When
it is for the advantage of the public to have any particular rights
kept on foot and continued, to construct artificial persons, who
may maintain a perpetual succession and enjoy a kind of legal
immortality," the law authorizing corporations seems necessary
and proper. Note that he predicated the need of this form of
organization "for the advantage of the public." In the early his-
tory, and indeed till recent years in this country, the idea and
principle of advantage to the public were both the purposes of
y authorizing corporations and their limitations. The decisions
of many high courts go to confirm this view.
But in recent years legislative bodies have on one account and
T extended the rule under which corporations have been
1 the persons participating in their organization,
ami not public benefit" are the only conceptions of their being.
attaining this view, recently the well-known head of one of the
5 said: "It is not material to the public how business
340
is transacted, .whether by a corporation or by a trust, as the
object is the personal interests alone of those who participate and
invest for profit."
And so practically many states in their legislation seem to
have drifted away from the purpose of the early law creating cor-
porations, and herein lies the uprising against trusts which have
taken advantage of this condition. No class of the people can
say to any other class that "You did this/' The stream never
rises higher than its source. Year after year the people of all
parties have been electing and re-electing to legislative bodies
of the states those who, under misapprehension., or otherwise,
enacted the laws perverting the true idea of public advantage in
corporate bodies. The real remedy lies in a complete revision of
these laws, and in a return to functions held to be for the "public
advantage." It is not hard to discriminate or to determine what
is included in such organizations. Great railway lines could not
be constructed by single individuals for want of necessary capital,
but in the development and growth of the country natural water-
ways and canals became totally inadequate in transportation, and
it was' and is greatly to the public benefit that railways be con-
structed, and associated capital and privileges of bonding and
stocking became imperative under the conception of the corpora-
tion. Ancl the same is true of other transportation, commercial,
and the numerous manufacturing enterprises requiring great
capital to meet the requirements and demands of the public.
N~one of these obstruct free competition, for both in the matter
of great transportation lines and manufacturing, the country has
witnessed how public demand has called one after another into
being, and competition has been left free along these lines of
enterprise.
But state legislation in behalf of corporations in the past
thirty years, in some of the states, losing sight utterly of the prin-
ciple of public benefit, and looking only to private or personal
advantage, have paved the way to combinations and trusts hav-
ing in view the restraint of trade and destruction of competition,
and it is this that has now precipitated the movement toward a
remedy.
The old form of trust, in which one corporation held stock in
another, wa~s stamped out some years ago by the courts, but a new
form of combination has appeared lately in which a corporation
under a new name absorbs industrial organizations in given lines
by purchase, and issues of stock, evidently having for its object
such abridgement of the law of competition and limitations on
production as threaten public interests. It is this new order of
341
Combination to which state legislatures must address themselves
in the way of such revision of corporation legislation as will meet
and defeat personal ends having no conception of public good.
It is held by some that the economic policy of this country
promotes the organization of trusts. This is best answered by
the facts, that Great Britain maintains a totally different policy,
and yet that country is where trusts originated and where they
yet abound. Great Britain has corporate and trust combinations
capitalized up into the billions of dollars. There, as here, the
fundamental provisions of law, originally intended to extend cor-
porate privileges only in consideration of public benefit, have
been perverted to recognize personal and private advantage
largely. And so, eager always to avail themselves of such per-
sonal advantages, this condition has been seized upon by many,
and thus far acquiesced in by all classes and parties, and only in
the past few years have the people begun to realize that, there was
a wrong somewhere underlying the possibilities for such a con-
dition. The note of warning sounded by the Sherman act passed
by Congress in 1890 touching this question in its interstate rela-
tions should be made available in state revision of corporation
law, and legislation that would stamp out trusts under state juris-
diction and authority.
It is readily seen that by such revision of the laws respecting
corporations as would embrace the conception of advantages to
the public, would of itself make impossible the organization of
corporate trusts having the tendency toward restraint of trade,
which is contrary to the interests of the public. At least such
combinations would have no lawful status. The possibility of
such combination? operating under the laws of states not so revis-
ing their codes, might readily be met and prevented by like proper
requirements. There could be no breach of the amity between
states under the recognition of such iust provisions as put both
home and foreign corporations on the same footing. It may read-
ily be supposed that the action of a few state legislative "bodies
in this direction would soon influence all the others to a return
to the original conception of corporate authority and privileges.
It has been said that revolutions never go backward. That
is true of revolutions in the right direction, and when they tend
toward higher and better conditions, but not applicable in fact
or observation to industrial, commercial and social conditions of
a state or nation possessing the power of imparting higher and
better aspirations to all whom they touch. The fears and im-
pressions of fatalism for the most part have their origin simply in
misapprehension of the facts and want of ability to discriminate.
342
Take an illustration at point in the matter of commercial organ-
ization: When the numerous lines of railway from the central
west to the seahoard began to consolidate, many believed that it
was the beginning of capitalization of such power as would
eventually bring ruin to great interests and great industries. That
such consolidations have resulted in shortening transit three-
quarters in time, and very greatly reducing expenses of travel
and freights, these fears are now seen to have been without foun-
dation. If it was then believed that such powerful capitalization
would eventuate in combinations that would overthrow the law
of competition and result in restraint of trade, the Supreme Court
decisions of 1897, under the law of 1890, already referred to, show
how strong the country is at the first appearance of possible dan-
ger. If the revolution in railway consolidations set its face for
strides beyond the limit of public good, we had in the court
decisions of 1897 a very marked illustration of the fact that such
revolutions do go backward, and of the power of the nation to
put limitations on corporate greed.
The philosophy of Mr. Jefferson, that the possibility of error
might be tolerated where truth was left free to combat it, is ap-
plicable in business and commercial affairs under free competition
and natural laws of trade. The law of the nation and the courts
have shown how tbey stand for truth, so far as interstate com-
merce is concerned. The states may exemplify the power of
truth over error in state relations in the same way.
J, G. SCHONTARBEK.
Executive Committee Order Knights of Labor.
Thirty years ago the great organization known as the Knights
of Labor issued its first public declaration of principle and in-
tents, and the writers of that declaration must have been pro-
foundly prophetic in the scope of their thought. The first par-
agraph in that declaration predicted exactly the conditions which
have made it necessary as a patriotic duty for the Civic Federa-
tion of Chicago to call together these men present to confer as
to the public welfare. The Knights of Labor is not a combina-
tion of private individuals bound together for the purpose of
furthering their personal individual interests, regardless of any
other individuals, or the common welfare of society. It is a
popular combination, formed for the purpose of maintaining and
defending the best interests of society as a whole, and guarding
and advancing the general welfare. It has chosen as its slogan
in this great social contest, "the greatest good to the greatest
number," as follows:
"The alarming development and aggressiveness of the power
of money and corporations under the present industrial and
political systems will inevitably lead to the hopeless degradation
of the people. It is imperative, if we desire to enjoy the full
blessings of life, that a check be placed upon unjust accumula-
tion and the power for evil of aggregated wealth. The much
desired object can only be accomplished by the united efforts of
those who obey the divine injunction, 'In the sweat of thy face
thou shalt eat bread/ therefore, we have formed the order of
Knights of Labor for the purpose of organizing, educating, and
directing the power of the industrial masses."
Calling upon all who believe in securing the greatest good
to the greatest number to aid and assist us, we declare that our
aims are :
1. To make industrial and moral worth, not wealth, the true
standard of individual and national greatness. 2. To secure to
the workers the full enjoyment of the wealth they create; suf-
ficient leisure in which to develop their intellectual, moral and
social faculties; in a word, to enable them' to share in the gains
and honors of advancing civilization.
This is the general purpose of the organization, and the
declaration goes on setting in detail twenty-four measures by
which it is hoped the declared objects may be -attained; all of
these depend upon legislation directed by the popular voice, as
our Constitution provides, and all are consistent and in harmony
with the spirit of our free institutions and methods of our gov-
ernment.
It will thus be seen that the object of the Kjiights of Labor
is moral as well as economic, fostering independence, pride of
character, dignity and manhood, and endeavoring by precept
and action to elevate mankind to that plane upon which it can
share in the gains and honors of enlightened advancing civiliza-
tion. Having thus called your attention to the character of at
least one great reform labor organization and the basis of its
work, I shall only briefly attempt to discuss its relation to trusts
and combinations, our reasons for opposing the same, and a sug-
gestion of remedy not so radical as to cause revolution.
We have long looked for and expected the conditions that
now confront the people, but I trust we are not so blind as to
confound all combinations of capital looking to economy of pro-
ton and distribution with those especially detrimental to the
:s of society. Trusts should be divided into two classes
344
at least; one class, that which find their being and profit in the
franchises or special privileges granted by city, state and nation;
receiving legislation which enables them to mortgage the unborn
babe of the American citizen, as well as burden him by taxation to
the point of bare subsistence. The other class is that which finds
its profit solely. by combination of capital, and performing useful
functions in society, such as partnerships usually perform.
Where this latter class are not enabled by the aid of an iniquitous
and discriminating tariff or alliance with other corporations, that
enables it to restrict production, it can do little harm in the field
of individual competition. We believe the remedy for the first
class of trusts is so simple and patent to all that there need
hardly be a discussion of it now. It has almost passed from the
field of discussion to the field of actuality. Over three hundred
American cities have in part or wholly given us an example by
municipal or state ownership of public utilities how these trusts
can be eliminated from the field. If the power to oppress the
people, to burden society and mortgage futurity has been given
by law, it can be taken away by law, and that, too, without injus-
tice to anyone. Public utilities, such as railroads, telegraph,
water, electric light, gas, street railways, are among the princi-
pal trusts or combinations that oppress the people which can
be easily and safely remedied. Our organization pointed this
out at the same time it warned the people of the "alarming devel-
opment and aggressiveness of the power of money in corpora-
tions," by suggesting in its preamble that all things which can
be best done for the whole people by the whole people, should
be so performed. At the bottom of the success and the main
example for nearly all the combinations of to-day has been that
given by gas and water corporations and municipal and state
railways generally. Having gradually eliminated competition,
they have watered the stock and distributed the same so as to
make it almost impossible to secure local legislation that would
restore to the people the valuable rights foolishly given away,
lost or stolen.
It remains to be seen whether the national government is
beyond the reach of a quickened public conscience, and can be
induced to enact such legislation as will gradually pump the
water out of these inflated capitalizations of inter-state roads,
telegraphs and telephones, and restore t-o the people by taxation
those rights which are as essential to the perpetuity of the state
and nation as is the repelling of a foreign foe or the maintaining
of the so-called public credit. Over-capitalization has been pro-
ductive of higher charges for all these services, to the public.
and' has opened the door for the speculator and the promoter,
until, like England, we are on the verge of a South Sea bubble
bursting, which can but bring misery and poverty to the entire
country. As stated, we believe the remedy lies in the hands of
the city, state and national governments to destroy this kind of
trusts. They had their being in law, and should find their power
for evil eliminated by law, that is, by condemnation and pay-
ment to the holders of the actual value of the property con-
demned, not including the franchise value, which has never
become the actual property of the corporation, for the reason
that even the state cannot give or deed away the rights of future
generations.
The other kind of trusts, the commercial combinations, have
little power for evil if deprived of the support and assistance of
the special privileged corporations. Take away the railroads and
their discriminating power between shippers, and where would
be your Standard Oil Company? "With railroads transporting
one gallon of oil as cheaply as a hundred, as woiild be the case
under government ownership, we could safely leave to individual
effort the development of competitive enterprises that would keep
down prices, while enlarging the field for employment.
_ In the mass of evidence presented before the Industrial Com-
mission it was shown that enormous sums were paid in the form
of rebates by the railroads of the country to the favored trusts,
which favoritism alone appears to guarantee them the power to
crush all opposition and establish a monopoly for each in its
respective field. Had I the time, many instances in this evi-
dence could be cited, namely: The Atchison, Topeka & Santa
Fe Railroad case, and the great case of Mr. George Rice before
the Inter-State Commerce Commission, in his endeavor to do
business in oil on equal terms with other citizens. It would be
only multiplying evidence to repeat these cases. The extent to
which this favoritism goes in the discrimination against the com-
petitors of trusts is almost impossible to estimate,^ but it is suffi-
cient to maintain these monopolies, and let it be remembered
this discrimination is exercised upon the highways of the
nation, upon which all citizens are supposed to have equal rights
and advantages.
If . 1S * aimed y the railroad management that they are mov-
s freights of this country cheaper than the freights of anv
other country are moved. Statistics show that the average cost
ol moving freight is 0.85 cents per ton mile, including every-
_ig, and yet it was shown before the Industrial Commission
iual shippers had paid and were paying from 4.32 to
346
13.5? cents per ton mile. If this is true, and the coverage for all
is the 0.85 cents per ton mile, then how much less than 0.85 cents
per ton mile does the trust pay in order to bring the average of
all freights of the country down to 0.85 cents? This has only
been set out to show what an enormous advantage the trusts have
under the present railroad system; indeed, with most of us this
seems to be the key to the trust situation. With competition in
the market shut off by the railroads, the trusts are the masters
-of the situation; the roads are not hurt, but merely get the
freight from one. shipper instead of many, thereby decreasing the
employment of labor, and yet not decreasing the price of the
product carried.
Now, what is the remedy? Take these railroads, these high-
ways of the people from the corporations. By such legislation
as will insure the payment of the actual value of the roads, less
the over-capitalization of the franchise value and other water
in the stock, re-establish the equality of all the people in the
access to the highways of the nation. When this is done, the
cornerstone which supports the trust superstructure, and the
main edifice, will fall. W'ith absolute equality over the railways
of the country, so that every butcher could ship a car of cattle
just as cheap as the beef trust, the beef trust could not hold the
monopoly of the beef trade; with a like condition every owner
of coal lands could reach the coal market on the same terms as
the monopolistic combination of coal owners, and this is true in
regard to nearly every industry monopolized by trusts. Their
control of the means of access to the markets or their connection
with those who do control these means of access is the principal
source of their power.
To-day, by means of a postal system operated by government,
the letter of the individual, pauper, or workman, miner or
butcher, oil producer or farmer, goes te its destination just as
quickly and at as little expense as the letter of an Armour, a
Rockefeller or any king of industry. Send their coal, their oil,
their iron, their meat, their wheat to market upon the same
terms of equal speed and cost, and these great combines, will soon
lose their power for evil, and the increase of healthy competition
will give increased employment to labor and higher wages be-
cause of demand.
Corporate ownership of railroads is the backbone of the tru>t
and a protective tariff its right arm. It is within the limit of
possibilities for the government, by the right of eminent domain,
to come into the ownership and control of the railroad, and also
to repeal the tariff tax upon every article controlled by a trust.
847
Do both these tiling and it is scarcely probable that trusts
could exist at all.
The withholding of opportunity to labor out of use through
iniquitous tax systems in the cities and states has restricted op-
portunity and restricted trade. Tax idle land out of the hands
of the monopolizer, or let him pay the people for the special
privilege of controlling the land just the same amount as his
competitor pays for utilizing the land, and we will have oppor-
tunities for labor galore, the demand for labor will soon raise
wages. Coal mines and the farms, the building sites and the
water fronts will resound with the ring of the pick, the hammer
and the noise of the plow, for it will be unprofitable to hold the
opportunities for labor out of the market. Our present system
of taxation is so much to blame for the present industrial con-
ditions that men who are seeking the remedy to correct must have
the courage to apply the knife of legislation to the sore, even
if it cuts to the quick.
I have grave doubts about the American legislator having
arrived at that point of courage; probably his constituency have
not suffered quite enough yet to make them forcibly prod him
into action, and I am justified in this belief by the -attitude of
the last Congress toward the Dockerv amendment to the tariff
bill. It is now hardly disputed that the high tariff act has en-
abled various trusts and manufacturers to levy tribute on, the
American people to the full extent of the tariff, while only in
one or two isolated cases dividing even a small portion of the
result of the robbery of the whole people with their employees.
The tariff tax has helped the industrial trusts to put up prices
and enhance the cost of living to the consumers, and when we
remember that the consumers are composed of seven-eighths of
the people of the country and the employees of protected indus-
tries _harcl]y the other efghth, it will be seen clearly how injus-
tice is done by this iniquitous tax. It has not compelled the
manufacturer to raise wages, nor to reduce the' working hours,
for both of these results wherever secured have been forced at
the point of the strike by the organizations of labor, while the
condition of the consumers, the larger mass, of wage earners
and farmers, has been lowered in the scale of civilization. No
tariff tax ever helped the farmer to pay off the mortgage, nor the
unskilled laborer to get over $1.25 a day, and only a beneficent
jod who ordained a famine or -short crop in one country and
smiling plenty in another has shifted the starvation point from
one hemisphere to another temporarily, while the brain of man
348
conceives and invokes measures that will eventuate in poverty
for the millions all around and plenty for the few everywhere.
Let us summarize: The Knights of Labor are opposed to
trusts and to restrictions upon trade, commerce and industry,
because we believe that, firstly, trusts are an evil when allied
with corporate monopoly, or when receiving special privileges
from municipality, state or nation, and to secure these special
privileges they resort to the corruption of councils, legislators,
and Congresses, corrupting the body politic and lowering the
standard of morality and liberty among the people. We believe
this evil can be cured by municipal, state and national ownership
of the means of transportation of passengers, freight and intelli-
gence, and the absolute freedom to sell in the highest market
and buy in the lowest. Secondly, restrictions upon trade by
means of tariff tax is governmental aid to the trusts and a special
privilege to levy tribute upon the consumers; and thirdly, be-
cause these trusts not only lead to legitimate economies in man-
ufacture and distribution, but to abuse of legislation, corrup-
tion of courts and legislatures, and to the oppression of the
masses, as well as shutting out the opportunity for employment
for the industrial masses. Our platform in its fifth, seventh,
seventeenth, and twentieth planks has for twenty-five years
been offered as the proper remedy for these evils under our
form of government, and until the people of this country are
aroused thoroughly to the dangers to their liberty lurking in a
continuance of the present system and demand at the hands of
their law-making power the radical legislation needed, our work
as the Knights of Labor will go on, organizing and educating
the industrial masses to a realization of their rights and ihe need
for real liberty.
M. M. OAKLAND.
Ex-President Amalgamated Association of Iron and Steel Workers.
Mr. Garland, in "An Iron and Steel Worker's View of Com-
bination," said :
With a full realization that this conference is made up of
many of the brightest minds of the country, and being neither a
constitutional lawyer nor a professor of economics, it would be
the height of egotism on my part to say anything on this great
question now under consideration, except from the standpoint of
actual experience, and that must be by the humble experience of
349
an iron and steel worker. And while this observation is from
that source, yet it may, in application, fit most of the other
branches of business and interests affected by the trusts and com-
binations. The whole life of the men employed in the iron and
steel rolling mills must, from the very nature of his labor, be of
the practical. Years of such toil leaves no room in his life for
"theory. With him is first to realize results; he reckons the
probability of a question from actual experience with it.
The trust question is an old one. It has been the instigator
of much attempted anti-legislation, and has formed the target for
campaign speakers in almost every kind of elections, from ward
aldermanship to the highest office in the land. . Its influence was
used as one of the exhorting features for organizing labor among
the iron and steel workers more than a quarter of a century since,
and now it works a most active development of organization
among workingmen because of example from employer.
When the iron and steel worker became convinced that capital
at all times had been used by some possessing it to monopolize
particular branches of business, until the vast and various pur-
suits of the world were becoming centralized under the immedi-
ate control of a comparatively small portion of mankind, he real-
ized that to secure for himself an equivalent for his labor suffi-
cient to maintain him in comparative independence and respecta-
bility to procure the means with which to educate his children
and qualify them to play their part in the world's drama, it was
absolutely compulsory that he form a combination with his fel-
low worker to control, as far as possible, wages and fair treatment.
This organization was immediately formed, and is now termed a
trust by many, but the fair mind cannot consider the open trade
union as such under the general acceptance of the term; but in
deference to a number of decisions by the eminent judges of both
local and superior courts in the several states of the Union and the
decision of an attorney-general of the United States, all of which
declare us at least amenable to whatever penalties would occur to
a trust violating the statutes of present enacted anti-trust legisla-
tion, to that extent we are compelled to accept the onus. But it
s the recent rash of corporations, doing business in the same
line of manufacture or interest, into one or more immense corpo-
rate combinations, usually termed trusts, that has challenged
widespread comment and occasioned the discussion of the ques-
tion by this conference. ]STo corporation desires to lose its
identity, and there can be no doubt that much of this, in the iron
and steel industries, ha? been caused by the same elements that
forced the workmen to organize that of self-preservation. The
350
corporation of many years' standing had grown with the increased
uses of iron and steel, until in some branches of the trade several
firms were more powerful and held more assets, each within them-
selves, than any of the trusts that have yet been formed in the
same line of business.
The discovery of immense mountains of Bessemer steel ores
in the Mesaba and adjoining ranges, together with the ductile and
malleable qualities of steel, have made possible the introduction
of machinery on a large and costly scale, and large capital rapidly
gained an ascendency over the smaller and lesser equipped plant
until one of two options against absolute dissolution only re-
mained. One to try to eke out an existence on what orders
might be left over after the larger plants had taken all that it
could attend to, and the other was to combine capital with other
plants that were at the same disadvantage, and form the corpo-
rate combine, the trust. Already the mighty change has taken
place. We had passed the point where corporations in iron and
steel were of great moment, whose capitalization was limited to
thousands or hundreds of thousands of dollars, and we had en-
tered the era of millions and hundreds of millions of dollars capi-
talization. The recent years of business depression furnished
many examples of this truth. For instance, one of the largest
steel firms in the country in the winter of 1893 and 1894, and at a
time of dearth in orders, taking advantage of a glutted labor mar-
ket, reduced the wages of employees, and then sent agents out with
the open declaration that they were to take orders irrespective of
price. The hope of citizens in many towns and villages, which
depended on rolling mills and factories, was taken away, and
thousands of workmen were bereft of even the broken time and
small pittance that had served to keep them from want, while the
boast of the large corporations went abroad, that they had given*
their employees steady work.
The possibility of an employee becoming a steel magnate, as
insinuated by some of the speakers here, has long since become
as scarce as the proverbial "hen teeth."
The trusts can avoid reducing wages wantonly. They can
divide work among employees in times of depression in any line
of trade, as the employees would then be in the employ of one or
but few firms. But the inclination to better the condition of the
employee will be no stronger with the trust than it has been with
the corporation, but the endeavor to apply this legislation will
find a more fertile field in this direction than any other.
But in considering the subject of legislation, so strongly urged
by some against trusts, care should be exercised that the bills hold
351
no ulterior meaning. The working people are appealed to in
almost every state to urge the passage of some pet measure of cer-
tain representatives to law-making bodies, which propose to crush
out trusts and combinations, and while it may be that labor
unions do not possess the skill, cunning and capability of trusts to
defeat the aim of the enactment, it is certain that the application
of such legislation has found its final and only target to be labor
unions. The record of neither city councils, state legislation or
national Congress. ever contained one breath of intimation that
anti-trust, restriction of combination or interstate commerce laws
passed by these could, in the least, interfere with the free and full
exercise of the right of workmen to organize, yet, I make the
assertion, without fear of successful refutation, that every one of
these laws that have been passed upon and found constitutional
by the courts have been found to apply to organizations of labor,
and that every such law now on the statutes, not yet passed upon,
will be so decided when adjudged, not excepting the much mooted
conference called for, state law of Texas, nor the one that came
from the home of the "red apple," Arkansas, or if either or both
of them become federal enactments there would not be one small
cluck left in the workingman's eagle that has soared so valiantly
through this hall for the past two days.
Future anti-trust legislation must be drawn with a full
knowledge of whether it is intended to cover the evil, claimed by
this title, or whether it is to restrict the efforts of workmen in the
organization of their fellowmen.
The position of the worker may become easier as the operation
of the trust proceeds; the example is set and the necessity
widened for every man in their employ to unite in common organ-
ization. The farmer, mechanic, laborer and business man alike
will feel its effects for good or evil.
While it is with a true sympathy that springs from the actual
experience of loss to the thousands of our men of remunerative
positions by reason of the introduction of machinery that we
behold the almost entire discharge from positions of that valu-
able class of citizens, commercial travelers, yet by their presence
to the realm of the wage-worker will be added another element
that gave but passing thought as to whether goods sold by them
were made under fair or unfair conditions, and that the brain
that could command a large commission will of necessity be used
m the council halls of the labor and farmer organizations, and the
horror_with which, all too many, have held up their hands'in
beholding men in organizations of labor resorting as their last
352
remedy to strike and stoppage of work in resisting unfair condi-
tions which have been imposed upon them will have passed away,
by reason of a fuller knowledge of these wrongs, brought about by
the magic touch of concerted cause, and property rights will then
be commingled with human rights by common consent. The
right of workmen, by conference, to be heard through their own
selection of representatives as to the rate of wages and hours the
condition of trade warrants will become in fact, and the farce
meeting now so often employed by capital as a prelude to the lock-
out in order to enlist public sympathy will disappear under the
melting rays of peaceful relations, forced by a wider field of legiti-
mate trade unions, and the conference settlement will take the
place of strike and lockout between employee and the corporate
combination.
Thus far in this new day of trusts the workmen in rolling
mills find their inclination is to treat with organization. The
annual wage scales and agreement were presented by our repre-
sentatives and conferences arranged promptly. An advance in
wages, ranging from ten to twenty-five per cent in different de-
partments, was secured, and further advances in wages seems
assured by reason of advance in prices of material and product,
which is one of our agreements. A number of plants that had
been operating non-union and at unfair wages, were unionized by
the wage rates applying to them since they had become a part of
the trusts. I would not be understood to infer that there would
not have been an advance in wages if the trust movement had not
been on, nor do we think the price of material would have been
less, for we note that in branches where trusts do not control the
greater rate of advance has occurred in material. That in this
country a trust, or the trusts, could long maintain an unnatural
or inordinate price for material or product is a remote con-
tingency, for not alone would other capital interested in the con-
sumption of product combine on as large a scale and become their
competitor, but the fact remains that there is not an article pro-
duced in these modern times, but there are, or can be, adopted
several substitutes for it, and the cost, as a rule, will not vary
enough to permit any very great or long-lasting extremity to our
needs.
That this new form of trusts will bring, voluntarily, any new
virtues to the business world is a doubtful question. They are
organized for the purpose of making mone}^ and will certainly
attempt to operate to that end; but they have awakened more
powerful watchers in the interests of the great mass of common
353
people, and in this country the majority of the privileges of the
people and interests cannot long be trampled on. The action of
the trusts within themselves will soon decide whether they are to
be tolerated as useful members to the nation's household, or
whether the show of hands raised against them will relegate them
to oblivion.
WILLIAM H. TUTTLE.
Member Illinois Bar.
At the present time, while the subject of trusts and combina-
tions of capital is under discussion, and particularly while there
is a general demand that such combinations and aggregations of
wealth be regulated by law, a correct understanding of the legal
status of combinations of labor becomes quite important. Such
a knowledge is all the more important because it has received com-
paratively little attention. The legislator, who would regulate
trusts, and at the same time not embarrass trades unions should
understand the distinction, or lack of distinction, so far as the
policy of the law is concerned between combinations of capital
and combinations of labor. If the two are so closely allied in prin-
ciple as to be separated with difficulty, every one interested should
understand the matter, and be prepared to meet the difficulty,
otherwise many radical measures, intended to root up the tares in
the industrial field, will pluck up the wheat also. Striking ex-
amples of this have occurred, leading to unjust criticism of our
judiciary and executive officers, because laws that were aimed at
one class in industrial life, hit another class as well, and perhaps
hit the other class first. We will take time to mention one illus-
tration. In 1890 a law was passed by Congress, entitled "An
act to protect trade and commerce against unlawful restrictions
and monopolies." It provided that "every contract, combination
in form of trust, or otherwise, conspiracy in restraint of trade, or
commerce, among the several states or with foreign nations, is
hereby declared to be illegal." The law was unquestionably
aimed at railroads and monopolies, and intended to relieve the
.middle classes and laboring men. The laboring man, however,
was the first to be affected by it. and it has even been so far-reach-
ing as to make the railroad strike illegal, which subject we will
discuss more at length hereafter. It can readily be seen that
unless we understand the situation our somewhat frenzied de-
mand, for radical legislation to help the laboring: man. may
cause him to prav for deliverance from his would-be friends.
This fact, with which a layman may not be familiar, should
m
be borne in mind in this discussion, as in all other similar dis-
cussions, that is, that most of the law principles involved are not
found in the statutes, but belong to the realm of the common law,
or unwritten law. The common law is a set of legal principles
which courts have declared to be the law because the good of
society, technically known as public policy, demands it. Public
policy therefore plays an important part in our laws. It is the
basis of the common law and the sanction of our statute laws.
Indeed, statute law may be declared void because it opposes pub-
lic policy. Story says: "What constitutes public policy is dif-
ficult exactly to determine. It is in its nature uncertain and
indefinite, fluctuating with the change of habits and opinions,
with the growth of commerce and with the enlargement of inter-
national intercourse, but the rule may be safely laid down that
whatever contravenes an actual rule of policy or which interferes
injuriously with the true interests of society is against public
policy." Notwithstanding the fact that public policy changes
with the times, no principle has remained more deeply rooted and
unchangeable than the requirement that trade and competition
shall be free from restrictions. It is the legal basis of our whole
industrial life under the competitive system.
We now come to the important question in our discussion.
Is there a distinction between capital and labor so far as concerns
the requirements of public policy that there shall be freedom of
competition? Is it against public policy for capital to combine
in trusts and monopolies and artificially control the price of com-
modities which it has to sell, and not against public policy for
labor to combine in trades unions to artificially control its wages?
It may be safely stated as a general proposition, that the policy of
the law recognizes no distinction between capital and labor in
requiring freedom of competition. This was the rule of the Eng-
lish common law without exception, and is the rule of the present-
common law made up of decisions based upon principles of public
policy. In recent years, however, certain distinctions have been
attempted by statute law, which we will notice later. A leading
case, State vs. Stewart, speaks in common of labor and capital as
follows: "The principle upon which the cases, both English and
American, proceed, is that every man has the right to employ his
talent, industry and capital as he pleases, free from the dictation
of others; and if two or more persons combine to coerce his choice
in this behalf, it is criminal conspiracy. The labor and skill of
the workman, be it of high or low degree, the plant of the manu-
facturer, the equipment of the farmer, the investments of com-
merce, are all in equal sense property. If men by overt acts of
355
violence destroy either they are guilty of crime." Mr. Tiedman,
in his text book on commercial paper, says: "All combinations
of capitalists, or of workmen, for the purpose of influencing trade
in their special favor ~by raising or reducing prices, are so far
illegal that agreements to combine cannot be enforced by the
courts." In the case of Doremus vs. Hennessy, recently decided
by the Illinois Supreme Court, this general language was used :
"No persons, individually or by combination, have the right to
directly or indirectly interfere with or disturb another in his law-
ful business or occupation, or to threaten to do so for the sake of
compelling him to do some act, which, in his judgment, his own
interest does not require." These decisions, with many others,
indicate that in the field of industry, capital and labor are part-
ners of equal importance, endowed with the same privileges and
subject to the same restrictions. _ We can only take time to dis-
cuss, somewhat disconnectedly, certain phases of the law of com-
petition and apply the principles involved to both labor and capi-
tal, hoping thereby to at least illustrate the identity of these
principles.
Free competition, whether involving capital or labor, deals
with the unit and abhors a multiple. The law gives each person
the greatest freedom of individual action in his business relations
with others. Such freedom is the life of free competition. In
this discussion we leave out of consideration all cases where one"
is bound by contract to work for a certain time, or to-do a certain
thing. Such cases are comparatively few, however. Likewise
there are certain employments and lines of business charged with
a public duty, which are required to furnish certain services to
every one and treat all alike. The business of railroads, and
other common carriers, keeping hotel, furnishing light and water
to a municipality are examples. With these exceptions always in
mind we may accept this as a general proposition, that every one
may enter into or refuse to enter into, may continue or refuse to
continue business relations with each and every one else.
This is true of both capital and labor, as proven by many deci-
sions that use language which may be applied to both. It is so
important that the action of the individual shall be perfectly
free, that the courts will not inquire into the motive that actuates
him in entering into, continuing or discontinuing business rela-
tions with others. So true is this that the courts frequently
reiterate the statement that in this regard a person's actions may
be governed by "whim, caprice or malice."
In emphasising the freedom accorded to the individual, we
have demonstrated the abhorrence of the law for any combina-
356
tion, or agreement, or other restriction that will deprive the indi-
vidual of his freedom, whether voluntary or otherwise. If the
law, to secure freedom of competition, accords to individuals
unusual freedom, it likewise, for the same purpose, greatly
restricts their actions when they pass from the relation of so many
units to an association or combination. All agreements between
two or more persons the object of which is to control the price at
which the parties to such agreements shall sell their commodities,
the amount of goods which they shall produce or sell, or generally
to restrain trade and commerce are illegal and void as against
public policy. The law is exceedingly strict in this regard. It
insists that the determination of all these things shall be left to
individual discretion. Under the common law, however, the
penalty for making such an agreement consists in the refusal on
the part of the courts to enforce them. It results therefore that
the parties thereto may each individually carry out such an illegal
agreement, without suffering any criminal liability. If one fails
to carry out such an agreement, however, the other parties to the
agreement cannot compel him to do so. They cannot enforce
against him any fine or secure damages for any loss to them
caused by his failures. The court will help neither party in such
a transaction, but will treat the illegal contract as void. Many
contracts of this sort, involving capital, have been the basis of
litigation, and the courts have again and again condemned them
as against public policy. It is apparent that when such agree-
ments between laboring men are disregarded by the parties
thereto they may be deprived of further advantages and privi-
leges under the agreement or association, but the other parties
to the agreement would not be likely to consider it worth while to
sue the violators of the agreement for money dam acres. The
courts have therefore but seldom passed upon the legality of con-
tracts to raise or regulate wages. The fact that comparatively
few decisions can be found condemning contracts restricting free
competition in labor has led some writers to question whether the
law did not consider associations of labor more favorably than
combinations of capital. TVe believe, however, the ca=e of More
vs. Bennett, decided by the Illinois Supreme Court, is directly in
point, and correctly expresses the law. In this case one member
of the Chicago Law Stenographic Association sought to recover
damages from another member because the latter had broken the
rules. The court said of the association : "It clearly appears,
both from its constitution and bv-laws, and from the averments
of the declaration, that one of the objects, if not the leading
object, is to control the prices to be charged by its members for
357
stenographic work "by restraining all competition between them.'*
The court cites cases of which it says : "The determining circum-
stances in all of them seems to have been a combination or con-
spiracy among a number of persons, engaged in a particular busi-
ness, to stifle or prevent competition and thereby to enhance or
diminish prices to a point above or below what they would have
been if left to the influence of unrestrained competition," and
says: "All such combinations are held to be contrary to public
policy and the courts will therefore refuse to lend their aid to the
enforcement of the contracts by which such combinations are
sought to be effected."
From the nature of things, very seldom can trusts and trade
combinations on the one hand or labor organizations on the
other, secure the co-operation of all competitors ; and those out-
side the combination or association are a constant menace, whom
the parties on the inside usually seek to coerce in whatever man-
ner may appear effectual. This is the source of much litigation,
and is the danger ground of the strike and boycott, to which are
applied precisely the same principles as those that control in
trusts and combinations. The strike and boycott are of such
importance in this discussion of labor combinations as to require
somewhat extended treatment.
The law encyclopedia says : "The term strike is applied com-
monly to a combined effort on the part of a body of workmen
employed by the same master to enforce a demand for higher
wages, shorter hours or some other concession by stopping work
in a body at a prearranged time and refusing to resume work until
the demanded concession shall be granted." The attempt of
laboring men when on a strike to prevent others from taking their
places has been so frequent that it has given rise to many deci-
sions which have more or less clearly defined the rights of the
strikers in the premises. One in sympathy with a strike may
argue with one who is about to take his place, or who has taken
his place, and try to persuade the latter that he would best serve
his own interests and the interests of his fellow men if he refused
to work and aided in making the strike effectual; but such argu-
ment and persuasion must not be accompanied by circumstances
and such a showing as will amount to intimidation.
The general and prolonged labor trouble on the various rail-
road* in 1894 gave rise to many instructive decisions relative to
strikes, in many of which the courts discredited the strike and
rendered decisions against the railway employees. From a legal
standpoint the struggle was unfortunate for the laborer. As
conducted by Eugene V. Debs, and the American Eailway
358
Union, it was wrong in principle and could not succeed in law.
The decisions of the courts were therefore favorable to the rail-
roads. The strike of 1894 was fought out in the courts on the
legality of the sympathetic strike, and the sympathetic strike
lost. No other results ought to have heen expected from a legal
standpoint. As we have previously seen the workmen on the
various railroads had the right to quit their employment as indi-
viduals, although their quitting was in the nature of a boycott,
and was for the purpose of coercing the railroads to help them in
their fight against the Pullman company. The law could not
inquire into their motive as long as they acted as units, but they
passed out of the realm of individual action and confederated to
act as a union. As a confederating body they were without the
immunity granted them as individuals. Eight here the strike of
1894 failed and left the labor unions demoralized by an inev-
itable defeat.
The law will not, if it can help it, tolerate indirection or allow
damages to be done on the excuse that it indirectly will be an
advantage in competition. The labor unions were doing that
which was injuring the railroads. It was incumbent upon them
to show that their action in thus doing what would injure capital
and inconvenience the public, was justified by some reasonable
excuse. Their excuse was an indirect one. Employees of the
Pullman company were on a strike for higher wages. The vari-
ous railroads throughout the country were carrying Pullman cars
under contract. Employees of the railroads entered into the
strike, not because of their own wages, or to better their condi-
tion. Helping another body of employees in their struggle is too
remote a reason for inflicting the damage to the railroads and the
public that was necessarily contemplated. There was no ele-
ment of legitimate competition, such as an attempt to secure their
own higher wages. That this position was taken by the courts is
indicated in the decisions in cases growing out of the strike.
In one of the cases it was said: "All the employees had the
right to quit their employment, but they had no right to combine
to quit in order thereby to compel their employer to withdraw
from a mutually profitable relation with a third person for the
purpose of injuring that third person, when the relation thus
sought to be broken had no effect whatever on the character or
reward of their service. "In the celebrated case against Eugene
V. Debs, when carried to the Supreme Court, while the court
would not grant relief to Debs, who was sentenced to imprison-
ment, Justice Brewer, in the course of a lengthy opinion, said
359
specifically : "The right of any laborer, or any number of labor-
ers, to quit work was not challenged."
In the heated conflict of the railway strike of 1894, where
new phases of legal action were developing, and where it was
necessary to cope with aggravated conditions, under the stress
and hurry that usually attends cases requiring an injunction,
some of the courts overstepped their rightful bounds. Judge
Jenkins, during that time, in the United States Circuit Court,
took the position in passing on the right of employees to quit
service of a railroad that "one has not the right arbitrarily to quit
service without regard to the necessities of that service," and held
that "the duties of an employee of a public corporation are such
that he cannot choose his own time for quitting the service," and
held that the right of employees of a railroad "as the right of bond-
holders and shareholders are subordinate to the rights of the pub-
lic and must yield to the public welfare." This was a case where
the employees of the Northern Pacific Eailroad Company, oper-
ated by its receivers, had threatened to strike, if their wages were
reduced, as contemplated by the receivers. An injunction was
granted whereby such employees were enjoined from doing many
things, such as disabling engines, interfering by force, and
threats with those who desired to continue in the employment,
and were also restrained "from combining and conspiring to quit
with or without notice the service of said receivers with the
object and intent of crippling the property in their custody, or
embarrassing the operation of said railroad, and from so quitting
the service of said receivers, with or without notice, as to cripple
the property or to prevent or hinder the operation of said rail-
road." In other words, they were enjoined from striking to pre-
vent a reduction of their wages. In his discussion, he says:
"This part of the motion presents the issue whether a strike is
lawful. "A strike is essentially a conspiracy to extort
by violence. * * "I know of no peaceable strike ; I think
no strike was ever heard of that was or could be successful unac-
companied by intimidation and violence. * * " "The strike
has become a serious evil, destructive to property, destructive to
individual rights, injurious to the conspirators themselves and
subversive of republican institutions." "Whatever other doc-
trine may be asserted by reckless agitators, it must ever remain
the duty of the courts, in the protection of society, and in the
execution of the laws of the land, to condemn, prevent and punish
all such unlawful conspiracies and combinations." This opinion
was not upheld, but it contains an element of truth that can not
well be disregarded. The higher court did not take this view of
360
G. W. NORTHRUP, JR.
P. E. DOWE
BYRON W. HOLT
LAWSON PURDY
JOSEPH XIMMO, JR.
JOHN F. SCAXLAX
the strike, and so reversed the case. Suppose, however, in view
of the violence and lawlessness that frequently accompanies the
strike, the courts should take the view of strikes in general ex-
pressed by Judge Jenkins. If our contention is correct that the
law only gives great liberty to the individual and looks with dis-
favor upon the association or combination -that seeks to destroy
individual discretion, the courts could at once punish the con-
federating together as a conspiracy without any change of time-
honored principles.
So far we have been dealing with the strike in its relation to
the public policy of the common- law. None of the cases above
cited were based on the federal statute of 1890, and they must be
considered and read with that fact in mind. We now must con-
sider the effect of some of the statutes, and particularly the effect
of the federal anti-trust law of July 2, 1890, on the status of the
railway strike. Judge Thayer, in granting a temporary injiinc-
tion during the strike of the American Eailway Union in July,
1894, made use of the following language: "A combination
whose professed object is to arrest the operation of the railroads
whose lines extend from a great city into adjoining states until
such roads accede to certain demands made upon them, whether
such demands are in themselves reasonable or unreasonable, just
or unjust, is an unlawful conspiracy in restraint of trade and com-
merce among the states within the act of July 2, 1890, and acts
threatened in pursuance thereof may be restrained by injunction
under section four of the act." This language is broad enough
to cover all railway strikes. The Circuit Court to wbich the case
was appealed quoted with approval the language of Judge Thayer
above noticed, but followed with comments on the circumstances
of the particular case that would indicate that the idea of the boy-
cott was strongly in the mind of the court as well as the violation
of the federal law. Another case in the federal court affords a
still more sweeping statement. In Waterhouse vs. Comer it is
stated : "It is true that in any conceivable strike upon the trans-
portation lines of this country, whether main lines or branch
roads, there will be interference with and restraint of interstate or
foreign commerce. This will be true also of strikes upon tele-
graph lines for the exchange of telegraphic messages between peo-
ple of different states in interstate commerce. In the presence
of these statutes which we have recited, and in view of the inti-
mate interchange of commodities between people of several
states of the Union it will be practically impossible hereafter for
a body of men to combine to hinder and delay the work of the
transportation company without becoming amenable to the pro-
361
visions of these statutes. * * * w "It follows, therefore,
that a strike or boycott, as it is properly called, if it was ever
effective, can be so no longer/' The several courts, except the
United States Supreme Court, that heard the case involving the
injunction against Eugene V. Debs and others engaged in the
railway strike of 1894, and the proceedings taken to punish Debs
for violation thereof, base their authority in the premises upon
the federal anti-trust law of 1890. The Supreme Court consid-
ered it unnecessary to discuss the effect of this law, for it held that
the federal court had authority to issue the injunction under the
general powers committed to the United States government over
interstate commerce and the transmission of the mail, regardless
of the act of 1890. We know of no case where the United States
Supreme Court has passed upon this relation of the strike to the
law of 1890, but we see no reason to believe that the lower federal
courts have not correctly stated the effect of this law upon the
strike. The authority which this statute has added to the com-
mon law is set forth in a recent leading case as follows : "Con-
tracts that were in unreasonable restraint of trade at common
law were not unlawful in the sense of being criminal or giving
rise to a civil action for damages in favor of one prejudicially
affected thereby, but were simply void and were not enforced by
the courts. * * "The effect of the act of 1890 is to render
such contracts unlawful in an affirmative or positive sense and
punishable as a misdemeanor, and to create a right of civil action
for damages in favor of those injured thereby, and a civil remedy
by injunction in favor of both private persons -and the public
against the execution of such contracts and the maintenance of
such trade restraints."
In observing the important effect of the federal anti-trust law
of 1890 on labor organizations we must not conclude that combi-
nations of capital have been less seriously affected, or the equality
of labor and capital in the law has been impaired. Beginning
with a case decided less than a year after the passage of the law
to the effect that "a combination between coal producers in one
state and coal dealers in another to regulate prices of coal in a
certain city * * * " "is in violation of the act of Congress
of July 2nd, 1890," this law has been successfully invoked against
many such industrial combinations, and through the decision of
the United States Supreme Court has been used to destroy such
powerful railway organizations as the Trans-Missouri Freight
Association and the Joint Traffic Association.
The fact that labor organizations have not suffered under
state anti-trust laws does not prove that these laws have been more
,362
carefully drawn to protect labor than the federal anti-trust law.
Although ahout thirty states have passed anti-trust laws neither
capital nor labor has been affected by them, for there has been no
earnest effort to enforce them; and for this reason there are few,
if any, decisions of the courts defining their application. With-
out such decisions, however, we can arrive at fairly definite con-
clusions concerning the application of some of these statutes with
their accompanying penalties. We must keep in mind that pub-
lic policy, outside of statute laws, shows little or no inclination to
favor combinations of labor to regulate wages more than combina-
tions of capital to control prices. We will commence with Kan-
sas. We may presume the legislators there would be as careful
not to injure the laboring men as in any state. The Kansas law
contains the following provisions : "A trust is a combination of
skill or acts by two or more persons, firms, corporations or asso-
ciations of persons, or either two or more .of them, for either, any
or all of the following purposes: First, to create or carry out
restrictions in trade, or commerce, or aids to commerce, or to
carry out restrictions in the full and free pursuit of any business
authorized by the law of this state." Such combinations are
"declared to be against public policy, unlawful and void. * * :
"All persons, companies or corporations within this state are
hereby denied the right to form, or to be in any manner inter-
ested, either directly or indirectly," etc., "in any trust as defined
in section one of this act," and prescribes the following penalty:
"All persons, companies or corporations, their officers, agents,
representatives or consignees, violating any of the provisions of
this section, either directly or indirectly, or of abetting or aiding,
either directly or indirectly, in any violation of any provision of
thi^ decree, shall be deemed guilty of a misdemeanor and shall be
fined not less than $100 nor more than $1,000, and confined in
jail not less than thirty davs nor more than six months, and shall
forfeit not less than $100 for each and every day such violation
may continue." The language of the federal law, above men-
tioned, which the courts decided applied to labor organizations
is. "Every contract combination in the form of a trust, or other-
wise, or conspiracy in restraint of trade or commerce," etc. The
Kansas law broadens this and in addition to "restrictions in trade
or commerce" adds "or aids to commerce," and then makes it
general and sweeping bv including "restrictions in the full and
free pursuit of any business authorized bv the law." Tf. there-
fore, the court was correct which declared that "in anv con-
ceivable strike upon the transportation lines of this country,
whether main lines or branch lines, there will be interference
363
with and restraint of interstate or foreign commerce." and that
the federal law applies to such strikers, then the Kansas law
applies not only to strikes that effect trade and commerce, but
all such organizations or movements of workingmen that restrict
the free pursuit of any business authorized by law. The Kansas
law was evidently patterned after the Texas anti-trust law of
1889, but the latter was amended in 1899, leaving out these fea-
tures, which we have mentioned. The anti-trust law .of Louisi-
ana, New Mexico, Nebraska and Mississippi ako include among
the prohibited agreements and combinations those that are in
restraint of trade and commerce.
Again it is possible that the anti-trust laws of several states
may be used against labor organizations for the reason that in
regulating the wage? of labor they effect the price of commodi-
ties. In People vs. Fisher it was said : "Whatever disnutes may
exist among political economists upon the point, I think there
can be no doubt in a le^ral sense but what the wa^es of labor com-
pose a material proportion of the value of manufactured articles
"If journeymen bootmakers by extravagant demands
for wages so enhance the price of boots made in Geneva, for in-
stance, that boots made elsewhere, in Auburn, for example, can be
sold cheaper, is not such an act injurious to trade? * *
"Combinations and confederacies to enhance or reduce the price
of labor, or of any article of trade or commerce, are injurious.
They may be oppressive by compelling the public to give more for
an article of necessity or of convenience than it is worth ; or on the
other hand of compelling the labor of the mechanic for less than
its value." Tbe laws of Arkansas. Indiana and Georgia, which
are all practically the same, include among the "arrangements,
contracts, agreements." etc.. which are declared illegal, those
"designed, or which tend to advance, reduce or control the price
or the cost to the producer or to the consumer of any such article
or product." This provision of the law may be found to be as
far reaching in its effect on the laboring man as the provisions
of the federal anti-trust law. "We have pointed out these items
in the anti-trust law* of different state* as perhaps the most con-
spicuous examples of some provisions that may be made to apply
disastrously to labor associations.
In some of the anti-trust laws combinations of labor are spe-
cifically excluded from their operation, and in Illinois there is
this exception made to the operation of the law : "Provided, how-
ever, that in the mining, manufacture or production of articles of
di'o. tbe cost of which is mainly made up of wages, it
364
stall not be unlawful for persons, firms or corporations, doing
business in this state, to enter into joint arrangements oi any
sort, the principal object, or effect, of which is to maintain or
increase wages." But the United States Circuit Court in the
North Division of Texas in 1897 decided the Texas anti-trust
law of 1889 unconstitutional, as class legislation, because, among
other things, it excepted from its provisions, restrictions of com-
petition in "agricultural products or live stock while in the hands
of the producer or raiser," which provision, or substantially the
same provision, is also found in the laws of Arkansas, Georgia and
Indiana. The decision last referred s to we believe in certain par-
ticulars to be somewhat erroneous and we do not consider it con-
clusive, but the court seems to support that portion of the deci-
sion mentioned above by good . argument. The court em-
phasizes the fact that "One of the most sacred rights of liberty
is the right of contract," which these anti-trust laws seek to
abridge. The court says, "The merchant, the manufacturer, the
agriculturist, three great classes of the world, each dependant
upon the other, each entitled to the same protection before the
law, each justly claims alike, under the Constitution, the right
of life, liberty and property." The Texas law was declared to be
class legislation, because it allowed the agriculturist to make a
contract restricting competition but did not allow the merchant
or manufacturer to do so. If this is good law, might not the
court by analogous reasoning divide industry into two classes,
the laborer and the capitalist, and say that a law that allowed the
laboring man to make contracts restricting competition, but pun-
ished the capitalist for doing the same is class legislation and un-
constitutional ?
We have discussed certain phases of the law governing all
agreements and combinations that seek to prevent freedom of in-
dividual action in order to show in a general way the legal status
of labor organizations, and also to prove that labor and capital
in this particular occupy the same position before the law. It is
true certain expressions, very comforting to the laboring man,
appear in some of the decisions emphasizing his privilege to com-
bine against the oppression of employing capital, which might
indicate that the policy of the law outside of statute law is chang-
ing so as to allow labor organizations more rights than combina-
tions of capital to control the individual actions of their members ;
but such dicta lose most of their force when it is noticed that they
occur in decisions that really find against the labor organizations
on the vital issues in the case, and appear to be included in the de-
365
cisions largely for the purpose of making the actual findings in
these cases less disappointing. We have not noticed anything in
the law that indicates any important distinction in public policy
so far as it relates to such organizations and combinations be-
tween labor and capital.
I. D. CHAMBEKLAIK
Executive Committee Order Knights of Labor.
We read that a certain man on the road from Jerusalem to
Jericho fell among thieves (Christ used that word instead of
kleptomaniacs). The priest and the Levite, representing the
prosperity, aristocracy, religion and legal ability, passed by on
the other side, too holy and so far above the common herd that it
was profane, vulgar and irreligious to soil their clothes and fingers
and spotless reputations by mixing with common people who
work, and who should have brains enough to take care of them-
selves. But there passed a stranger, that hated Samaritan, who
saw the man-brother was robbed, wounded and half dead; and he
bound up the wounds, took him on the Samaritan horse to the
inn, and paid the bills. What a fool! The modern man would
ask: What office is he running for? Christ hit the evasionist
with his interrogative: "Who was neighbor to him who fell
among thieves?" In imitation o'f the organized labor leader of
Nazareth, the Carpenter's Son, who was crucified between two
thieves, because he "went about doing good," the order of the
Knights of Labor builded upon the maxim: "That is the most
perfect government, in which an injury to one is the concern of
all," and have gone out teaching the rights of man, the republic of
our fathers ; and that a government of the people, for the people
and by the people should not perish from the face of the earth.
It is the only prominent organization on earth that has fearlessly
taught opposition to all forms of violence; and labored to pro-
mote an intelligent and independent use of the ballot, instead of
the strike and the gun. This is why it has been the target for
the trust, and becomes the enemy of legal robbers. These little
bands are organized throughout the country. They meet in the
school houses of Kansas, in the vacant corn cribs of Nebraska,
in the miners' cabins of the Rockies, and in the lodge rooms of
the East.
The handful of speculators and absorbers of labor products
are not the people to rescue labor, or correct economic ills. The
four million wage-workers have been so long on the treadmill,
366
and in the clash of greed against greed, that they are losing sight
of the Goddess of Liberty, and their eye fails, except where the
labor union holds the light of hope. But the thirty millions of
farmers have remained closer to the foundation principles of the
republic, and are the last to forget the landmarks of human
liberty. They are the great producing element of society, and,
therefore, the chief feeding grounds of the trusts. When their
hogs, cotton and wheat must go on the market, "the market is
off." When the corn is all in the hands of wealth, the market
and rates are "fixed/' and the speculator makes more than the
farmer got for his crop. He sells his corn as "rejected corn," too
low to be even graded, and it turns up in the next state as a prime
quality of seed. I spent two days in a Nebraska county seat
watching a battle to prevent a car load of flax being shipped to a
customer outside the elevator pool, and followed for months the
crushing out of an independent grain buyer, because he gave
honest weights.. No cars and an effort to assassinate came into
the contest, and he was helpless in the courts. Milltown, near
ISTew Brunswick, N". J., with 2,000 people, workers in a rubber
shoe factory closed by the trusts, and the homes were only
worth farm values. The 2,000 were homeless, but the wealth
was transferred to the trust. Overton, Col., had one of the finest
oil refineries, until the Standard harvested it, and they are now
tearing down the brick buildings and the thriving young city is
deserted. The farmer saw a large corn crop on top of a surplus,
and ten million bushels in sight, and it went on the Chicago
market for 70 to 75 cents. Ten years later with a crop failure,
and a foreign demand, and only a half million in sight, corn sold
in Chicago for 40 to 45 cents. When he asked the reason, he got
soup, flavored with over-production, and charged it to religion,
saloons, the agitators, high and low tariff, or anything that would
be a soothing syrup, so he could be worked for another crop; and
after a few such games got a mortgage on his farm. Few peo-
ple seem to understand that one of the secrets of the fight on sil-
ver, including the shut-down "of the western smelters, is to bear
the mines, so the great syndicate can buy them in. The farmer
sees the practice of law going to a few corporation lawyers, the
practice of medicine rapidly concentrating to the company doc-
tor; they see what the average merchant does not see, until too
late, the department store to become the distributer, and the old
merchant driving a mule team. He sees this meeting to-day
talking of "palliatives" and "control" instead of an open war
on a giant evil. The genius who influenced the county board to
bujld a bridge with public money and license him to collect toll,
and keep up repairs, got the other bridges condemned by dividing
the profits with the chief spirit on the board. But for the guns
of the citizens he would have had a fat job, and when he suddenly
quit, a valuable financier had left the country, who might have
adorned the halls of Congress.
Attorneys for these combinations simply ridicule or deny the
general facts. They appeal to your patriotism: they ask us to
worship the flag, even though we are hungry, and they look at us
as cranks, and our proofs as merely isolated cases, that have no
bearing in discussing the question. We, therefore, call up a
single witness, divesting it of all possible personality and in great
brevity.
Think of a business man going to New Mexico and Texas to
hire fifty men on this agreement: "We will pay you $5 a day,
pay all expenses, furnish transportation, food, guns, dynamite,
and to each one an insurance on his life. Here is a list of forty-
two men, in Wyoming, that we want killed, because they have
taken homesteads and planted their cabins where we want to
feed our cattle. For each and every one of these men you kill,
each of you shall have $50. We will go along and defend you
in the courts." They went, and the wires were down, until the
sheriff and three hundred deputies cornered the gang, and then
the wires worked all right. The president ordered the regular
army to rescue the invading army from the sheriff. The two
witnesses who saw the murder of two peaceable citizens were
paid $1,500 and $1,700 to fly to British possessions, with the
trust attorneys, who furnished horses. But a snow storm turned
them to Nebraska, where they were arrested on a trumped-up
charge of selling whi?key to Indians and the government sent a
special train to rush them east, where the courts could not find
them. One of the prominent counsel for the defense said to me,
"The whole power of the government will be used to cle?r these
men," and they went clear. But the trust papers and trust poli-
ticians never refer to it. I give it as it has been told on many a
platform, and oft repeated in the press, but never challenged.
Silence is the safest policy. Many of the farmers and miners of
the Rockies are witnesses with myself. A generation ago the
Senate Commission warned us of a deliberate attempt to make
the governing power a function of commerce, and we notice this
ca?e as evidence that the trust has clandestinely entered the citadel
of the nation, and seized the reins of government. The govern-
ment must, therefore, take possession of the trust and use it or
die.
In this conference we discuss "at" trusts, and daintily talk
368
all around them, of classifying and placing them under control;
and philosophize on molecules, and evolution of trade, and the
benefits we can derive from stealing and murder, and the plunder
oi a people, all of which is as ineifectual as a penal statute in
governing a cyclone. The trusts are all related, and fully under-
stand that an injury to one is the concern of all see Vanderbilt's
holdings. This family of trusts owns the nation. It has control
of nearly every line of industry, manufactures, the higher courts,
carrying trade, the channels of thought, and pockets the prod-
ucts of the soil. It has made money the god, and labor the slave.
While somebody, on this floor, favoring one of these engines of
modern commerce, may deny my statements, and call it rot, the
proprietors will laugh at the man who is hired to defend them.
As a whole, labor, the foundation of all national wealth and
greatness, is sinking into decay, while the political doctors seem
to imagine that transferring wheat from the Armour elevators to
the Leiter transports is a process of producing more breadstuff,
and that the collection of labor products is a process of creating
wealth. The wise men of the East assume not to see that the
homes are fast becoming unproductive, and drifting into syndi-
cate farms, like English estates, to be operated by menials. All
our so-called industrials are in the trust family, now registering
at the New Jersey Hotel, and there seems to be a trust on patriot-
ism. You notice we are closing out our stock of man's inalien-
able rights, and we will soon be prohibited from speaking of our
inheritance a right by contract under the Constitution.
What is the quality of American manhood, politics and mor-
ality when our physicians of economics must call a thief some
softer name, and when the home is going, and independent
thought on these lines is strangled in the back yard, to prevent
alarm? You may call it a dark picture that should be concealed.
When your neighbor's house is on fire, don't tell him, for fear he
calls you an alarmist or a pessimist. We do not yet accept as
the only remedy Senator John M. Thurston's solution: "No
great reform comes but by the sword."
The trust embodies all the evils that make a nation the pest-
house of humanity, and is rapidly changing the republic to a
monarchy. It was generated in greed and special privileges, de-
fended by falsehood, animated by robbery, sanctioned by decep-
tion and fattens on the sweat and toil of honest industry. It is
fed and prospers on the blood of humanity, and its natural food
is the wreckage of decent government. It was conceived in a
desire to defraud. It was born of illegitimate parentage. Its
existence, in the broad sense, is in defiance of the genius of the
republic, and a blot on the flag of our country. To shield and
defend a monopoly is to give aid and comfort to an enemy in time
of public danger, and to treat them as factors of advancing civil-
ization is to compound a felony. "Pushing foreign trade" may
be as selfish and murderous as highway robbery. The so-called
trust or monopoly of to-day is a mutiny in society, an enemy of
the nation and a conspiracy against civilization. The good se-
cured to us by the trust method is small, incidental and only for
the benefit of the legal monster. The evils are great, universal,
national, loaded with decay, and fatal to a free people. They are
made legal by statute, defended by official dignity and for the sole
purpose of stealing the products of labor the only source of
national wealth and greatness. Are we to offer "palliatives" and
decree where the monster may feed next, or dare we call a spade
a spade? Europe and America are looking at the quality of the
patriotism assembled in Chicago to-day.
A recess was taken until 3 p. m.
COMMITTEE ON EESOLUTIONS.
The committee on resolutions met at 2 o'clock, and Chairman
Luce announced a sub-committee of five as follows: Edward
Keasbey, of New Jersey, chairman; Cecil Smith, of Texas, Attor-
ney-General Gaithers, of Maryland, S. H. Greeley, of Illinois, and
Edward Eosewater, of Nebraska. There was a long discussion
over the propriety of the conference adopting any resolutions.
A large majority of the. members expressed the opinion that no
resolutions could be passsed by the gathering under the call is-
sued by the Civic Federation. Albert Shaw, of New York, and
W. W. Howe, of Louisiana, were the only members who spoke in
opposition to this argument. The call was read and discussed at
length. Finally Louis Post, of Illinois, moved that 'the commit-
tee report to the conference that under the provisions of the call
issued it would be improper for the body to adopt a resolution of
any kind touching on the subject under consideration. This was
agreed to, and Chairman Luce was instructed to so report to con-
ference.
370
AFTERNOON SESSION, SEPTEMBER 15.
The conference was called to order at 3 :20 o'clock by Vice-
Chairman H. V. Johnson, and David Ross, of the Illinois Bureau
of Labor Statistics, took the place of E. E. Clark, of the Order of
Railroad Conductors, on the program.
DAVID ROSS.
Secretary Illinois Bureau of Labor Statistics.
"Whether this conference can accomplish anything beyond
the interchange of opinions, or whether the process of consoli-
dating industrial interests can be interrupted, or whether it is wise
to attempt to interfere, are problems which, for the present at
least, will probably remain to be solved.
Whether right or wrong, the opponents of the new system of
industrial activity have acquired a temporary advantage in the
odium they have succeeded in attaching to the modern definition
of the term "trust." Eloquent tongues and brilliant imagina-
tions are enlisted in the work of coining new words in which to
picture the frightful calamities which await us.
Through our own neglect we have become the victims of vil-
lainy, the playthings of power. Nothing can save us now ex-
cept an appeal to our neighbors who may happen to be members
of law-making assemblies, and the enactment of a law, accord-
ing to some, defining the ratio for the free and unlimited coin-
age of silver; according to others, through the confiscation of
rent, as proposed by the advocates of the single tax; still others
favor the nationalization of all industry and the municipal own-
ership and control of local monopolies.
We are not requested by our reformers to consider the eco-
nomic causes which make necessary the reorganization of in-
dustry upon a stronger and broader basis. We are only asked to
believe that these vast combinations have been and are being
formed for the fiendish purpose of preying upon the necessities
of the people, and, while robbing them, secure in the majesty
of mierht, can afford to laugh at the law and the courts.
The present improved industrial condition of the world is
the result of centuries of toil, energy, and enterprise. Mechan-
ical and inventive genius, encouraged by great commercial oppor-
tunities, has made possible durinsr the past few years such rapid
changes in trade methods as to fill the minds of all with wonder
371
and some with fear. Genius, like air, knows no limitations, and
while the American hrain has proved most potent in the per-
formance of modern miracles, it is not entirely alone in this re-
spect. The federation of labor and the combination of wealth
go hand in hand and are found in their most complete and force-
ful form only in those countries where the people are the most
advanced.
There is a destiny that shapes our ends, and the evident fate
of the young republic is to become the future master and helper
of the world. Industrial evolution traces its history from the
small workshop to the factor}', and- from the factory to the great
corporation, and -from the corporation to the so-called trust of
the present day.
Men who profess to betray great apprehension for the rights
and liberties of the people cannot truthfully contend that these
various transformations have operated to abridge any of their
privileges. On the contrary, there has been a steadv and sub-
stantial forward movement. It has been further demonstrated
that with each succeeding change there has come, not only a re-
duction in the cost of life's necessities, but also an increase in
the wages of human labor, with other improved conditions of
employment. It would seem that our latest form of industrial
organizations will prove no exception to the rule, so far as toil's
compensation is concerned, as wages in the skilled and unskilled
occupations have recently advanced fully 25 per cent. This up-
ward movement in wages has not been entirely confined to prod-
ucts manufactured by the trusts. In a few lines of industry
prices have been advanced considerably beyond the increase in
wages not on account of anv trust influence but due to the
inability of manufacturers to fill orders, many of them for foreign
markets. When productive capacity is more fully developed
prices will again decline, but, under the new system, not so as
to seriously impair profits or affect wages.
Engaged in a content for the trade of the world, and believ-
ing that present combinations are the inevitable incidents of
our industrial situation, there is no particular duty I would im-
pose on our legislative assemblies bevond the reasonable regula-
tions which ovpry civilized state reciuires. As a state enact-
ment, the Illinois anti-trust law, as amended, is the best I have
seen. It makes lawful an advance in prices only where it can
be shown that such action was taken for the purpose of- main-
taining or increasing wages.
The sympathetic public has alwavs professed its willingness
to pay if assured that labor gets its share. Men talk of destroy-
372
ing such combinations by legal enactment, on the supposition,
presumably, that it is possible and desirable to return to the
simpler systems of the past. Our development as an industrial
state is the result of trade conditions and opportunities which no
legislative power could anticipate or control. Even those
charged with the management of great enterprises are seemingly
powerless, and appear to be urged on by some unseen and irre-
sistible force, and yet an influence which makes for better condi-
tions.
While this question is distinctly an economic one, the indi-
cations now are that it will be given political significance. The
peculiar feature about this phase of the case is the attitude of
certain party leaders who, in the national contest of 1896,
ascribed the horrors of that period to low prices. Men who had
formerly favored free trade as a means of reducing prices be-
came the most vigorous advocates of free silver, claiming that un-
limited coinage would immediately enhance values. In the con-
fusion of theories the wonder is that more people were not de-
ceived.
The past two years have been noted for exceptional activity
in all industrial and commercial lines. Great organizations have
been formed for carrying on the growing business of the country.
During this period the wages of workingmen have been increased
and the hours of labor shortened. The application of sound
principles in governmental affairs has aided in placing increased
comforts within the reach of every wageworker in the land. In
many departments of industry there is a scarcity of labor. Yet
in the face of these encouraging indications and they present
the appearance of permanency we are asked by certain discon-
tented disciples to believe that the method of the new business
era constitutes the greatest danger that confronts our republic.
This class of industrial pessimists have put upon their fear
and fancy the duty of destroying their judgment.
" Imagination bodies forth the forms of things unknown,
* * * * And gives to airy nothing
A local habitation and a name. "
Much of the public feeling against so-called trusts is the
result of misconception. Certain people have been educated to
think that the combination of capital, like the organization of
labor, is to consummate the schemes of plunder and oppression.
This opinion not only reflects unjustly upon our motives as civil-
ized beings, but it has arrayed against it all the laws of trade.
It is impossible for any combination of employers to perma-
373
nently fix the price of any product where the field is open to face
competition. The only sense in which a trust could be main-
tained is where, by reason of greater economy in production, the
product is placed upon the market at a price so low that others
would have no inducement to compete. Against this form of
"price fixing" the people who consume would certainly have no
reason to complain. In spite of all our prejudices, has this not
been the tendency?
When the great railroads organized years ago the appre-
hension prevailed that rates would be advanced, and the
calamity prophets of that day, like the present, were painfully
realistic in describing the fate that was to destroy us. Trans-
portation charges for freight are less by two-thirds now than
they were prior to the organization, with a corresponding im-
provement in the service.
The independent refiners of petroleum will unite in declar-
ing the Standard Oil Company a monopoly, and yet it cannot be
disputed that it was powerless to maintain prices. The reports
show that the wholesale export price of oil has declined from 25
cents per gallon in 1871, to less than 6 cents in 1899. The peo-
ple are getting a bettgr article for nearly one-fifth the former cost;
changes in the process of refining have saved the people millions
of dollars, without, it is fair to presume, impairing the profits of
the company.
The oil and railroad interests of the country have been singu-
larly free from labor disturbances. As a matter of recent his-
tory, our most serious conflicts have been with interests that
neglected to federate. Labor leaders will agree that better terms
of employment can, as a rule, be obtained from large than from
small employers. Why, then, should we fear the results of con-
solidation? It is the part of reason to encourage a tendency that
will make possible higher wages, lower prices, and less hours of
labor.
Workingmen who will be expected to join the crusade against
so-called trusts should have a care lest they become the victims of
designing demagogues who would invoke the law to punish those
who favor the restrictions which labor unions impose.
374
M. L. LOCKWOOD.
President American Anti-Trust League.
M. L. Lockwood, president of the American Anti-Trust
League, spoke on the subject of "Property Eights and Human
Eights/' saying :
We are confronted by great questions, greater, I feel, than
have ever confronted any generation of men. Slowly and by
tortuous route man has pulled himself up to the present stage of
civilization, and we now live in the most important age of all the
centuries ; in an age in which the capability of this man for self-
government will be put to a new test, tested in that crucible of
absolute unlimited supply of corrupt corporate money in our pub-
lic life. Absolute unlimited corrupt money, because if they may
be allowed to destroy competition and plunder the people, the
trusts and monopolies and railroad combines can afford to make it
absolutely unlimited. From a money standpoint it will pay
them.
We live in an age of the most marvelous development, in an
age in which man has come nearer to unlocking the secrets of
nature than ever before, in an age in which he has harnessed,
blocked and unloosed the lightning and has invented labor-saving
machinery so perfect in its mechanism that it can almost think
and actually talk. Man has more than doubled his power to
produce. He has invented compressed air drills that can strike
five hundred blows a minute, when he could once strike only
twenty-five a minute.
And yet corporations have claimed it all. Corporations say,
"This is ours." "That the marvelous inventive genius of man
in the creation and production of labor-saving machinery shall
not lighten the burden of man at all." Yes, and when multi-
plicity of factories create competition for man's labor and com-
petition developed in the supplies to man so that he was com-
mencing to realize a benefit, then corporations further combined
created trusts and monopolies, destroyed competition, combined
to force man to. become a cog, a commodity, a serf to their grind
for money. And when with the help of the compressed air drill
and with steam and electric power it had become possible for
man to mine enough of the precious metals with which to pay
his honest debts in the coin of the contract and walk uprightly
and free of debt, then the shylocks of the world in secret and by
corrupt means demonetized one of the precious metals, thereby
375
doubling the value and purchasing power of the other, chaining
man to the rock a more helpless slave to debt.
My friends, do you recognize that under this system of mo-
nopolies and trusts that all of man's inventive genius and marvel-
ous creation and production of labor-saving machinery has only
heaped on him a heavier burden, that a few by the organization
of trusts and monopolies are becoming multi-millionaires, while
the burden upon the back of man is becoming heavier and heavier
for him to bear? Do you recognize that these great captains of
monopoly and finance under this system to-day are absorbing all
the wealth produced by the people: and more, that they are
annually absorbing a part of the accumulated wealth of the
nation? Do you recognize that annually tenant farmers in
America are increasing by thousands; that the property of this
great nation is slowly but surely being concentrated in a few
hands, the rock upon which old Rome and Greece and Carthage
were wrecked? Is there no way to call a halt and turn back from
this road to ruin?
To-day we have men with fine-spun theories telling of the
advantages of trust combinations, telling us that trusts and mo-
nopolies can lop off here and lop off there and make more money.
Money everything! Man nothing! My friends, they have g'one
money mad. Can it be possible that man, man made in the like-
ness of God, has become so cheap that he shall be ground under
this juggernaut of monopolies and trusts that a few may be-
come rich in money, rich in millions that have already become a
curse on their hands, a curse to their sons and to their daughters,
a hindrance to the development of that kind of noble manhood
and womanhood of which they and the republic may justly be
proud?
My friends, we aro confronted to-day by two great forces,
property rights and human rights. And now when property
rights assume the new relations of perpetual corporate owner-
ship, an entail, without human heart or human conscience behind
t, what is its power for evil? We eulogize Jefferson for his deliv-
ering us from the curse of propinquity and entail, and we find
ourselves now in the grip of a greater monster. England charged
the old East India Company four hundred thousand pounds, two
millions of dollars, annually, for the right to plunder the people
of Inoia ; and they would only give fifteen years at a time, at that.
But this great republic of ours srives the Standard Oil Company,
the bugar Tru=t, tbe Big Eour Beef Combine, and the rest of these
the perpetual risrht to plunder the producers and
imers of America, and doesn't charge them a cent. If the
376
Standard Oil trust could be secure in the monopoly they now
have, they could well afford to pay the government thirty mill-
ions of dollars annually for the privilege, and cheap at that.
And here I must digress for a moment.
I was somewhat surprised last evening to hear a gentleman
upon this floor tell an American audience that Eussia had put a
protective tax of $2 a barrel on oil to keep American oil from driv-
ing the Russian oil out of Russian markets, and in the very next
moment he tells us that if it had not been for the organizing
genius of the Standard Oil Company people that Russian oil
would have flooded the American markets and dried up the
American oil wells and shut down American refineries. Now that
is spreading it on pretty thick thicker than I have been used to,
and I have been used to a good deal. The gentleman would
have us believe that the Standard Oil Company have a monopoly
of the brain and business capacity of America, but I want to tell
the gentleman and you that if it had not been for railway rebates
and discriminations that there would never have been a Standard
Oil trust monopoly. I want to say to the gentleman and to you
that if he will re-establish and maintain equal rates over the rail-
ways of America (that in spite of this legitimate evolution of
business that we hear so much about), that the energy, enter-
prise, courage and business capacity of the American people will
drive the Standard Oil Company, with its extravagant methods,
into a secondary position in the oil trade of America in less than
ten years. Oh, but they say that that would be waste, that that
wouldn't be evolution of business, that that would be competi-
tion, but I want to say to you, my friends, that competition is a
good thing for the people and a bad thing for monopoly.
Yes, we are confronted by two great forces, property right
and human right, for the last two hundred and fifty years. For
the last two hundred and fifty years whenever property rights
have encroached upon the rights of man, man has moved onward.
He came to America, Along the Atlantic coast for the last one
hundred and twenty-five years, when property rights have en-
croached upon man, the brave and the true went west, and they
have gone on and on until they can go no farther. And they
have turned back, and to-day property rights and human rights
have met upon the highway and are combatting for the mastery.
The echoes of dynamite from Shoshone County, Idaho, from
Cleveland, Ohio, and from Brooklyn, New York, admonish us
that the battle is on. It is not of our choosing, but the battle
is on.
My friends, do you recognize the gravity of the situation?
377
Do you recognize that a new issue is utton us, the solution of
which will take great men, "sun crowned, who live above the
fog," men prompted by the noblest impulses, no money-worship-
ing men, no corporation, railroad-controlled men, will do; but
statesmen broader than the world had ever known, noble men,
brave enough to hold the scales, appreciating the mighty issues'
of the hour; men who can weigh and weigh justly human rights,
human flesh and human blood, human heart and conscience,
human hopes and human aspirations in the one scale, and prop-
erty rights in the other. This is no work for pigmies. This is a
work for giants, filled and prompted by the divine spirit of God.
Such men and such men only can meet and solve this issue and
carry the republic upward and onward in its mission for mankind.
My friends, there has been so much cold, cruel, corporate cash
crept into our public affairs that I want to call your attention to
the fact that while manhood and land and all unmonopolized
commodities are becoming cheaper and cheaper, that almost all
corporate capital has nearly doubled in value in the last three
years. Why is this? It is because corporations have been given
free rein to combine, to create monopolies, to create freight
traffic and passenger associations, to destroy competition and to
plunder the producers and consumers of America. That's why.
My friends, a freight traffic association, a trust or monopoly
create no wealth. Freight traffic associations and trusts are
organized to take from other men the wealth they produce with-
out giving them any adequate recompense in return. Wealth is
not created by trusts. Wealth is created by labor, by hard, untir-
ing application of brain and muscle upon the raw resources of
nature. Trusts create no wealth. Trusts and monopolies, by
the destruction of competition, obtain power to fix prices to the
producers and consumers and then plunder all producers and
consumers of wealth.
Let me illustrate: Every man, woman and child in America
that works, works, and as a result of this labor a certain enormous
amount of wealth is produced in one year. Don't get away from
the fact that freight traffic association and trust combines cre-
ated none of it, that labor created it all. Now then. Let us
bring all this wealth that has been created in one year together
in an enormous pile before us. Now, then, if, under this system
of monopolies and trusts, the Standard Oil Company can come in
and take from this pile of wealth that the people have produced,
say, fifty million dollars' worth of it annually; and if, under this
system the Sugar Trust can come in and take, say, two hundred
million dollars' worth of this wealth that the people have pro-
duced annually; and if, under this system, the Big Four Beef
Combine can come in and take twenty millions' worth of this
wealth that the people have produced annually; and if, under
this system, the freight traffic and passenger associations can
destroy competition and take from this pile of wealth that the
people have produced three hundred millions annually more than
the law of competition would give them; and if, under this sys-
tem, all of these innumerable trusts which now control nearly
every necessity of human life can come in and take from this pile
of wealth that the people have produced all they can get under this
infamous system, there is practically nothing left for the people.
This system must not go on. It must stop. It is ruining our
institutions of government. It is undermining the foundation
stones of the republic. It is uprooting the tree of liberty and
there is no virgin soil in which to plant it again. Can we not
join in the restoration and maintenance of the doctrine of equal
rights to all and special privileges to none? Cannot we join in
rescuing our dear land and country from the curse of a corporate
oligarchy of wealth upon the one hand or the horrors of a French
Revolution upon the other?
Mark you, it was the lion-hearted, the cream of the world,
who faced old ocean's roar that they might be free and equal. If
we fail now, popular government as our fathers planned it, is gone
and gone forever. Mind you, the brave are not the small. They
would move onward before they would stop and quarrel, but
drive them to the wall, and then look out. My friends, the brave
are at the wall now. The monopolies, the trusts and the shy-
locks have put them there, and they are fighting back. But this
military power, this 100,000 of a standing army they want; my
friends, these questions cannot be settled with a standing army.
This standing army has already been allowed at the behest of
this corporate conspiracy against American rights to arrest inno-
cent American citizens in Shoshone County, Idaho, and put
them in a bull pen without any warrant of law. And this in free
America under the Declaration of Independence and bill of
rights and the Constitution of the land! My plea is not for crimi-
nals. My plea is for the rights of American citizens, for there
is nothing so sacred between heaven and earth, aye, there is
nothing more sacred, even at the holy altar of God than the right
of American citizens. And yet we have seen these rights trampled
under foot by this military power. An outrage against an
American citizen in Idaho is an outrage against you. An outrage
against an American citizen in Idaho is an outrage against every
American citizen everywhere. If they can do this thing in
379
Idaho to-day, they can do it here to-morrow. This power grows
from that upon which it feeds. The power that is behind it is
the selfish greed of corporate capital. "Onward and onward
they go, determined, it seems, to drive the American people to
destruction; to give their roofs to the flames and their flesh to the
eagles." I see men before me who have been reared in an atmos-
phere of luxury who look upon these words as extravagant. My
friends, you do not know the heart beats of the masses as I know
them. Now, then, what is the remedy?
One of the most important remedies is national ownership of
the highways of the people, the railroads. For railway discrimi-
nation has been the father of it all. But how can this great cor-
porate conspiracy against equal rights and equal opportunities be
checked and driven 'back? That is the question of the hour.
My friends, there is not a monopoly in America to-day but has
been created and maintained by railway discrimination some
system of favoritism. These trusts and combines do not have a
monopoly of the brains and business capacity of the country.
Under the great law of evolution, keener brains and brighter
minds and men with more intense capacity for application to
business are being produced. It is only when trusts and monopo-
lies are hedged behind some condition of advantage that they can
expect to monopolize. Xo one knows this better than the great
leaders of the trust-monopolies. They know it so well that their
greatest energies have been directed, not to a matter of the supe-
riority of their goods, but as to how they can best manipulate the
men who control the highways of the people so that they can go
over these highways with their goods to the practical exclusion of
their competitors.
The bludgeon that has created all exporting monopolies and
trusts is railway discrimination, secret rebates, manipulation of
cars and a general effort on the part of the railway managers to
hinder, humiliate and- discourage all men whose tastes and
inclinations lead them into the channel of business occupied by
their favorites and co-conspirators. This power is also an im-
portant factor in maintaining manufacturing trusts that do not
export. The fear of railway discrimination, the fact that all
moving spirits in these great industrial combinations stand close
to the men who control the highways of the country, deter men
from putting their money into enterprises against such desperate
odds as those created by railway favoritism.
Then what is the remedy? Take these railways away from
these corporations. Let the government own and run them.
380
Tinder the power of eminent domain, take them. Pay for them
just what they are truly worth. Bun them under a department
of government just as the postoffice is run now. Then every
man can go to market with the products of his labor just as cheap
as any other man. Then equal rights and equal opportunities
can be reestablished. But, says one, how can the government pay
the "interest on this enormous public debt which the purchase of
these roads will create? My friends, the people, who are the gov-
ernment, are paying it now. In excessive freight rates charged
by these corporations they not only pay the interest on the
bonded debt of these roads, all dividends on watered stock, but
they are paying hundreds of millions annually for the benefit of
monopolies, trusts and favored shippers.
One great advantage of national ownership is that the bonded
debt necessary to purchase all these roads could be placed by the
government at from one and one-half to three per cent less inter-
est annually than is now being paid by these corporations on their
bonded indebtedness. And this great saving of interest would
be an important factor in cheapening the cost of transportation
to the people. By government ownership, the people are only
changing the managers of their highways. And the present man-
agers have shown themselves unworthy to perform such a great
public duty. By government ownership, only, can the equal
rights of the public over these highways be guaranteed to the
people.
Guarantee absolute equality over the highways of the country
so that every butcher can ship a carload of cattle just as cheap
as the Big Four Beef Combine,- and the Big Four Beef Combine
cannot hold a monopoly of the meat business of America twenty-
four hours. Guarantee absolute equality over the highways of
the country so that the independent oil producers and refiners of
America can go to market just as cheap as the Standard Oil Com-
pany people and the wrongs of the Standard Oil Company will
soon be a thing of the past.
How can this reform be brought about? How? By creating
a great political force, independent of party, independent of
party bosses, strong enough to drive from public life, from legis-
lative halls, from senatorial chambers, from executive chairs and
judicial benches the subservient tools of the trusts and corpora-
tions and put in their places men whose hearts beat in sympathy
with God's toiling millions. When you have done this, the rest
is easy.
How can this great political force be created? By all men of
881
all parties who are opposed to trusts and monopolies, organizing
in their respective counties and townships American Anti-Trust
Leagues, an organization interfering with no man's politics, an
organization the religion of which is to vote against men who are
controlled hy trusts and corporations and to vote for men who are
prompted by impulses for the public welfare. Let the old parties
nominate their candidates and the men of the American Anti-
Trust League will elect the good ones and defeat the bad ones.
Let all men of all parties, religions and creeds, who are opposed
to trusts and monopolies and who are in favor of the great basic
principles of equal rights to all and special privileges to none,
join in the defense and maintenance of these great fundamental
principles of the American republic. This is no time for the
friends of the principles to divide their forces. Let all men who
love their country better than they do their party, come. Let all
Democrats, all Republicans, all Populists, all Prohibitionists,
come. Let all Knights of Labor men come. Let all Farmers'
Alliance men come; let all American citizens come and fight for
the maintenance of the great principles of equal rights for
that great principle of the brotherhood of man for which the
lowly Nazarene suffered upon the cross, that He might inculcate it
into the hearts of men. Come and create a great power strong
enough to drive from public life all men, be they Democrats or be
they Republicans, who are opposed to these principles, and re-
establish equal rights and equal opportunities to the American
citizenship. Divided, you are but as egg shells in the hands of
the enemy. United you are omnipotent. These questions are
above party. They are as broad as our common country.
The weapon is in your hands. The greatest weapon in all
the annals of time. It is greater than gatling guns, greater than
dynamite aye, the thirteen-inch guns may thunder from all
the battlements and they are but puny compared with your
weapon, the ballot. Use it, and see that it is honestly counted.
He who would use dynamite and vote wrong will be damned
through all eternity.
This precious weapon, it costs oceans of blood to wring it from
the kings and emperors and the aristocrats of the old world. Use
this weapon earnestly and prayerfully this weapon before which
legislators, congressmen, senators, presidents and judges are but
as chaff in the whirlwind.
Organize the American Anti-Trust League. Stand shoulder
to shoulder with all the sons of toil. Rescue our land and gov-
ernment from the curse of a corporate oligarchy of wealth.
Rescue popular government from the grave opening to receive
382
it. Carry the republic onward and upward in its mission of giv-
ing to man an equal show in the battle of life.
Do this and you will be blest of all generations of men.
A photographer was given possession of the stage and took a
flash-light picture of the assemblage.
EDWAED QUINTON KEASBEY.
Member New Jersey Bar.
Edward Keasbey, of New Jersey, spoke on "New Jersey and
Trusts/' saying :
New Jersey has been called the mother of trusts. I have not
come here to maintain or defend them, for although many of
them are only a few months old, they are all big enough to take
care of themselves. I have come to hear what is said about them
outside of their home, and to carry back to people of my own
state any suggestions you may have to offer for their regulation
and discipline. At the same time I would like to say a few words
on her behalf, and to state as clearly as possible the principles
upon which she is acting in dealing with the corporations for
whose existence and conduct she is in a measure responsible.
It is true that many large corporations have been formed
during the last few years under the laws of New Jersey, and that
these are called the trusts. The names of many of them are well
known. In name and in form they are merely ordinary corpora-
tions organized under an old statute in New Jersey that makes
provision for the formation of manufacturing companies, but
their capital stock is very large and their names will be recog-
nized as those of some of the most notorious of the trusts. There
is the Standard Oil Company, with a capital of $100,000,000;
the American Sugar Eefining Company, with a capital of $75,-
000,000; the American Woolen Company, with a capital of
$65,000,000; the Amalgamated Copper Company, with a capital
of $75,000,000; the Distilling Company of America, with a capi-
tal of $125,000,000; the Federal Steel Company, with a capital of
$200,000,000, and many others. The whole number of corpora-
tions organized between the first of January and the first of August
of the present year is 1,636, and the aggregate of their capital
stock is more than two thousand million dollars.
New Jersey, indeed, is not the only state in which la?ge cor-
porations are formed for the purpose of carrying on business
383
throughout the whole country. "West Virginia and Kentucky
have for a long time afforded especial facilities for the formation
of companies intending to exercise their powers in other states,
and Delaware has lately offered peculiar inducements for the
creation of such companies. In fact there is hardly any state in
which corporations cannot he formed with capital enough and
powers enough to hecoine formidable rivals of the greatest of the
companies that have been organized in New Jersey, and yet it
cannot but be interesting in a conference of this kind to inquire
what it is in the laws or policy of New Jersey that leads men to
turn to that state for the organization and protection of the cap-
ital invested in such great enterprises.
Combinations of capital for the purpose of controlling the
market are no longer made in the form of trusts. They are no
longer made by means of agreements to refrain from competition,
and by placing the stock of rival companies in the hands of trus-
tees. When the courts declared that such agreements and con-
spiracies were invalid and the legislatures of many states declared
combinations in the form of trusts or otherwise to prevent com-
petition to be unlawful the agreements were annulled and the
combinations were dissolved, and men who desired to unite their
interests under one control formed corporations and transferred
to them the stock or property and business of existing companies.
It is these corporations that we have to deal with and not with
agreements in restraint of trade or conspiracies to prevent com-
petition and maintain prices.
The results intended and accomplished by the corporations
may be the same as those intended by the trusts, but the difference
is vital in its legal effect.
The corporations are in form like other corporations and they
exercise the rights of property which are common to all corpora-
tions, and indeed to all individuals. They differ from other
corporations only in that they are larger and more powerful, in
that they have more capital, and have acquired the control of
many separate enterprises under a single management, and as a
consequence they do in effect prevent competition among the sev-
eral enterprises under their control, and tend to monopolize, so far
as is possible, the trade of those enterprises. It is in these points
of difference that they resemble the combinations made in the
orm of trusts, and it is in these points of difference that they
J regarded as dangerous, but in discussing the dangers and the
emedies it is important to bear in mind, first, that it is not trusts
Agreements in restraint of trade that we have to deal with, but
orporations, and secondly, that it is not corporations as such
881
chat have aroused this anxiety, "but only the fact that the form
of organization has been used to avoid the effects of excessive com-
petition and to control so many individual enterprises as to create
a single ownership and create what is called a monopoly of the
trade in which they were engaged. It is the attempt to prevent
competition and create a monopoly that has alarmed the people
and provoked antagonism. It is for these that remedies are de-
manded.
It is in view of these facts that I wish to inquire why it is that
so many large companies commonly called trusts have been
formed under New Jersey's laws, and to consider whether she
owes it to her" own people, or to the country at large to make
changes in those laws. There has been no legislation in New
Jersey against trusts as such. No statute has been passed de-
claring combination and agreements by way of trusts or otherwise
in restraint of trade to be unlawful. When combinations of in-
dustrial enterprises became so large as to be formidable, it soon
became apparent that it was not easy to find words which would
apply to the really formidable combinations of capital without
affecting the freedom of contract between individuals and mak-
ing illegal a great number of perfectly harmless arrangements
with respect to the conduct of their trade. It seemed best to leave
it to the courts to declare invalid contracts which were found to be
really against public policy rather than to pass laws in general
terms which might hamper the liberty of individuals and restrict
the natural tendency of organized society toward combination of
effort. This tendency among the workingmen had been recog-
nized and encouraged by the repeal ; of the laws making it criminal
for them to combine to obtain higher wages and this was followed
some years after by removing from the conspiracy act all refer-
ence to acts injurious to trade or commerce. The question what
acts are injurious to trade or commerce was considered too dif-
ficult a question of political economy to be left to a jury in a~trial
for conspiracy.
The first fact to be noted in the inquiry into the policy of New
Jersey with regard to corporations is that there is nothing of
much consequence that is new in her existing laws. The large
companies lately incorporated were organized under a general law
which, in its substantial features, has been in force ever since
1846, and which has been unchanged in any very important par-
ticulars during the last twenty-five vears. From a verv early time
it has been the policy of New Jersev to encourage the combina-
tion of capital for the promotion of industries, and charters were
freely granted for that purpose. There is one that is still in force
38!)
that was drawn, or at least revised, by Alexander Hamilton, for
the formation of a society for the establishment of useful manu-
factures, with a capital of one million dollars and with power to
hold property to the amount of four millions, and with authority
to create a city government which was to take the name of the
great New Jersey lawyer who took part in the formation of the
Constitution of the United States and which became the great
manufacturing city of Paterson. Special charters, however, cre-
ated special privileges, and a general act, as I have said, was passed
in 1846, and the power to grant special charters was abolished in
1875, and in that year a revision of all the general acts concern-
ing corporations was made and permission was given to any per-
sons to form corporations for any lawful business or purpose
whatsoever. The provisions of that act were substantially the
same as those of the earlier statutes, and these provisions have
remained substantially unchanged until the present day. The
act was drawn with the purpose of carrying out the settled policy
of the state to encourage the aggregation of capital for promoting
manufactures and developing the resources of the state. It was
recognized that the effort? and the means of individuals were in-
adequate to large undertakings, and that provision must be made
for combining the resources of many without risk of individual
liability, and corporations were regarded as a means of accom-
plishing this result.
The earlier acts contained a provision for filing statements
every year of the condition of the companies, and their assets
and liabilities, but this was omitted from the act of 1875. It was
considered that the publication of such a statement might, under
many circumstances, be disastrous to the business and that such
a requirement would not be tolerated with respect to the business
of individuals. Provision was, therefore, made that stockholders
should have access at all reasonable times to the books of the
company, and they were given power to make such regulations
they saw fit for the conduct of the business, but no obligation
was laid upon the company to make known to the public or its
the precise condition of its affairs. In this respect the
policy of New Jersey differs from that of many other states, and
.s conference publicity is suggested as a safeguard against
dangers of the large corporations called trusts. Without ar-
lent now, I wish only to emphasize that the policy of Few
v was adopted nearly twenty-five years ago with a view to the
irnment carrying on business within her own borders. It is a
policy of treating corporations as associations, of indi-
r business enterprises and dealing with them as it deals
886
with individuals and partners in the conduct of their affairs; seek-
ing rather the protection of stockholders and creditors and the
security of the money invested than the regulation of the busi-
ness in the interest of the general public. If now, under changed
conditions, when her corporations have become so large as to af-
fect the industries of the whole country, it shall seem best to
make special provisions for the protection of the interests of the
public, New Jersey will be glad to join with other states in such
provisions as shall be found best to accomplish this purpose.
New Jersey from the earliest times has adopted the policy
of promoting rather than hindering the aggregation of capital
for business. purposes and from the beginning corporations have
been regarded not as hostile to the public interests, but as a means
of combining the efforts and resources of individuals to accom-
plish large undertakings.
It was the same under the act of 1846 as it is to-day. No
public notice of the intention to form a corporation need be
given. No petition need be presented to the governor nor to any
official for leave to incorporate, nor was it made necessary, as in
Pennsylvania, for example, to obtain letters patent from the gov-
ernor. No limit .was placed upon the amount of the capital stock.
It was not until 1883 that any tax was imposed upon the fran-
chise or privilege of incorporating, and then the tax was a mod-
erate one, imposed not for the purpose of restricting the corpo-
rations, but rather to compel them to contribute to the payment
of the expenses of the government. It was in 1884 that an an-
nual tax was first laid upon the franchise of corporations of cer-
tain classes and both of these acts have remained substantially
unchanged. The amount of the tax was fixed with reference to
the needs of the state and the conditions of corporations organized
for business within her own borders, and it is certain that it had
no reference to the organization of the so-called trusts, which did
not begin until many years afterwards.
It was assumed in the earlier statutes that the business of the
company would, be carried on within the state, but there was no
requirement that any of the directors except the president should
reside there, and as early as 1865, it was expressly declared by
statute that any company might on certain conditions carry on
a part of its business, and have offices and hold property outside
of the state, and it was in 1875, when special privileges of every
kind were abolished, that the act was passed that made it easy for
persons residing beyond the borders of the state to associate them-
selves for business purposes as a corporation under the laws of
New Jersey. This act declared that, if the by-laws should so pro-
387
vide, the directors of any company might have an office and keep
the books (except the stock and transfer books) outside of thu
state, on condition, however, that they should always maintain a
principal office within the state and have an agent in charge there-
of, and the chancellor and the judges of the Supreme Court were
empowered, upon good cause shown, to make a summary order for
bringing all the books within the state upon pain of contempt
and forfeiture of the charter.
There is one provision of the present statute of New Jersey
which is regarded as responsible for the combination of many
companies in one and the existence of the so-called trusts under
her laws. This is the act which declared that it shall be lawful
for any corporation organized under the laws of the state of New
Jersey to purchase, hold and sell the stock or bonds of any other
corporation in the same manner as an individual may do.
This act, moreover, was not passed until 1893, a year after a
similar act was passed in New York, and some of the largest of the
trusts came to New Jersey from New York before 1892, on the
advice of counsel that corporations in New Jersey under their
general power to hold such property as was proper for the purposes
of their business, might purchase and hold the stock of other
corporations engaged in a similar business.
Another important feature in the laws of New Jersey in view
of the present tendency to the undue inflation of capital is the
fact that stock may be issued for property purchased and that
in the absence of fraud in the actual transaction the judgment of
the directors is accepted as conclusive. The issue' of stock for
property was authorized by the act of 1875, which required that
the^property should be taken at a fair and bona fide valuation, and
it was the courts that established the rule that in deciding whether
the stock was fully paid or not, the question is whether the trans-
action was an honest one or not, judged upon the facts as they
appeared to the directors at the time the purchase was made and
not in the light of subsequent experience. The courts will have
still the power to declare that a gross overvaluation of property
is not bona fide and to "set aside the purchase for fraud.
Other features of the corporation laws of New Jersey are in
the main not unlike those of the other states.
The chief points of difference in actual policy between New
Jersey and a majority of the states relate to the supervision of
3 business in the interest of the public, and the modes and ex-
t of taxation. On both of these points the policy of New Jersey
was established many years ago, and it was not until the opposite
policy m other states had been carried so far as to become oppres-
sive that persons began to seek the benefit of organization under
the laws of New Jersey.
The chief characteristic of this policy of New Jersey is that
it is a policy of encouraging rather than discouraging the aggre-
gation of capital. It regards the corporation as a means of bring-
ing the savings of many into efficient use as capital for the devel-
opment of resources and the promotion of industry. It treats the
corporation as an association for the purposes of business, deals
with it as it deals with individuals and partnerships in the conduct
of their affairs and holds that the largest possible freedom of the
individual is for the best interest of the community. It is this
settled policy of the state, and not any recent legislation intended
for the purpose, that has caused the formation of so many corpo-
rations in New Jersey.
Another important fact in determining the choice of the
domicile of a corporation is the permanence or stability of the
legislative and judicial policy of the state. Few changes have
been made in the statutes of New Jersey during a long period and
these were made along the lines of development already laid down.
The decisions of the courts also have been consistent and uniform.
I may add that, perhaps, the convenient situation of New Jer-
sey between two great cities may be the real reason why many cor-
porations come to her instead of to other states having a similar
policy.
It is perfectly clear that the corporations called trusts are
merely associations of individuals in joint stock companies pur-
chasing and owning property and carrying on business under the
ordinary powers that have been freely granted to all who chose to
organize as corporations and under laws that have been in force
for many years.
In any,practical discussion of the question of the nature and
effect of these combinations and of the remedies to be applied it is
necessary to consider the laws under which the large corpora-
tions are formed and to ask what changes, if any, should be made
in the laws that govern them. In view of the fact that so many
of them have been organized in New Jersey, it is natural that
New Jersey should be asked how she can justify the fact that
she permits and even encourages the formation of corporations
which apparently accomplish the same result as the forbidden
trusts?
The fact is that New Jersey has not attempted to .give an an-
swer to this question. She has simply acted under the well es-
tablished policy of encouraging the aggregation of capital for
business purposes, and has found herself suddenly confronted
389
with a new condition arising out of an unexpected development
in the world of trade and industry.
The difficulty is that there is nothing really new in the situ-
tion, except the extraordinary size of the corporations, the large
amount of property controlled and the vast extent of their enter-
prises. Their appearance is alarming, but after all the size is
only the result of unduly rapid growth, and it is not easy at once
to devise means to check over-growth without risk of destroying
the life. Combination of capital has become a necessary part of
the social organization, and it is hard to stop it at any particular
point in its development.
It is true that every state may limit the sphere of the action of
its corporations. It may decline to give them power to hold prop-
erty or carry on business outside of its own borders, it may confine
the privileges of incorporation to its own citizens, it may com-
pel their directors to hold their meetings and transact their busi-
ness within the state, it may even limit the amount of property
which they shall acquire, but unless it is willing to adopt this
policy of close restriction, it cannot control the extent of the
business that they shall carry on, or the number of rival manu-
factories that they shall absorb.
New Jersey might insist on the close supervision of corporate
business, require the filing of detailed reports of debts, assets and
earnings. She might levy taxes in such a way as to expose the
company to the extortion of officials, or to make its business un-
certain and the burdens oppressive, but these are questions of
local policy which concern her dealings with all her corporations
and they are not to be settled with a view only to the effect of her
policy upon the acquisition of property and the control of business
in other states.
On this point I may say, moreover, that the state tax is not
unusually low, and that under her laws as they now stand, im-
posing a moderate and certain tax on the capital stock issued,
few companies survive which are not engaged in actual and profit-
able business, and many apparentlv large companies formed
merely for the purposes of the promoters, are wound up every year
and their franchises declared at an end.
With respect to the publication of reports of debts and earn-
ings, she may well take the ground that the requirements of the
*toek exchange are more efficient than statutes in securing to the
public a proper acquaintance with the condition of such corpo-
vtions as are of public concern, but if it be found that there are
companies that in fact have become so large as to control any large
branch of industry throughout the country and whose stock is
390
purchased for investment by a very large number of persons who
have not ready access to the books of the company, so that the
condition of the company is in fact a matter of public concern,
it would be wise for the state itself to require that the condition
of its affairs and the methods of its management should be made
known to the public not merely in reports made to the annual
meeting, but also in detailed statements filed in the office of the
Secretary of State and printed in some public journal.
One of the most important provisions of the laws of New Jer-
sey in its relation to the formation of large combinations is that
which permits the purchase of stock of other corporations. It
was under this that the Standard Oil Trust and other trusts were
reorganized as corporations in New Jersey, but, as I have said,
the same provision was adopted in New York as early as 1892 and
has since been adopted in many other states, and this privilege is
not necessary to the combination of several companies into one.
One of the inducements to the promotion of large corporations
and the combination of industrial properties is the inflation of
stock, and the creation of fictitious stock is one of the most serious
evils of the whole movement. This can be discouraged, though
not wholly prevented, by the requirement that nothing but money
shall be taken in payment of capital stock. The laws of New Jer-
sey provide that stock may be issued for property purchased, and
the property must be put in at a fair and bona fide valuation, and
in such a case it is impossible wholly to prevent undue inflation of
the stock, but the true remedy is not in forbidding the issue of
stock for property purchased, nor even in limiting it strictly to the
value of the property. Some allowance must be made for the
earning power of the property and business under the control of
the new corporation and some inducement of a speculative na-
ture must be given to tempt capital into new and doubtful enter-
prises. It is stockholders and creditors that are chiefly interested
in knowing what the property for which the stock is given is
really worth, and they have full protection if they can ascertain
what that property really was. The English plan is to punish pro-
moters severely for issuing a false prospectus, and to require the
contract for the purchase of the property to be written in detail
and give to anybody the right to obtain a printed copy of it for
sixpence.
Holding promoters strictly to account would go far tow-mi
preventing fraudulent prospectuses and if every creditor or pur-
chaser of stock could demand and have a full statement of the
basis of the issue of the stock, he would have no just cause to com-
plain if he remained in ignorance of the facts. If these should not
391
be sufficient, there remains the Massachusetts plan of requiring
the contract for the issue of the stock to be submitted to a public
officer for his approval, but there are dangers in this and it is not
in keeping with the New Jersey democratic idea of freedom from
official intervention in business affairs. When the issue of stock
is based upon public franchises, as in the case of companies using
the public streets, stringent provisions should be mad.e against
inflation of the stock, and this has been attempted in the statutes
of New Jersey relating to street railways, but the provisions have
been evaded by taking advantage of certain statutes providing
for combination of existing companies and the fixing of the
amount of the stock of the new company without reference to the
actual stock of the old ones. These acts I think ought to be re-
pealed.
Whatever the remedies may be for the undue growth and in-
creasing power of corporations they must be directed to the pre-
cise evils which it is sought to remove and not to the general
principle of combination of capital in joint stock companies W r e
must be careful that in removing the evils we do not destroy what
is good. We cannot attack in this stage of the world's history the
principle of combination or corporation.
We cannot follow the suggestion that was made upon this
floor that since the trusts are in fact corporations, we must abol-
ish corporations for the purpose of putting an end to the trusts.
It is by means of corporations that we are able to combine the
resources of many for the great undertakings that are necessary
to commerce and industry, and until we find some better means
of combination we cannot destroy those that we have.
For the same reason we shall not, if we are wise, adopt as a
remedy against the evils of the trusts, such regulations of corpo-
rations as are merely vexatious and harassing and tend to cripple
or to discourage combinations for proper purposes. And certain-
ly we cannot adopt the remedy suggested by a speaker who has
preceded me, making every stockholder responsible for all the
debts of the company. This would make combination in corpo-
rate enterprises possible only for the very rich or those who have
nothing to lose.
If the size of the corporations and the amount of the property
they control are the sources of the dangers that are feared, these
can be limited by law.
1 he purposes for which corporations may be organized may
be restricted and the business they are authorized to carry on
may be strictly defined. Legislation in this direction may be
taken without striking at the principle of combination in discour-
se
aging the organization of corporations for proper purposes and
with reasonable powers.
Legislation against the large corporations as combinations
in restraint of trade is of little avail. It has failed to reach the
corporations already organized.
In New Jersey it has been held that in a collateral proceeding
the court of chancery has no power, to restrain a corporation or-
ganized under the forms of law from performing acts within its
corporate power merely because the puruose of its incorporation
may have been to prevent competition and establish a monopoly,
and in a very recent case in the court of errors, it has been held
that although contracts in restraint of competition in the produc-
tion of some commodity in the production and sale of which the
public have an interest are contrary to public policy, yet when
such agreements result in the formation of a corporation with
the powers conferred under the liberal statutes of New Jersey,
it may lawfully buy the business of its competitors and the courts
cannot pronounce a contract for such permitted purchases invalid,
although it may tend to produce, and may temporarily produce
a monopoly.
The court assumes that an agreement among independent
dealers to combine for the purpose of maintaining prices by
avoiding competition and limiting production is against public
policy, but while it is well settled that contracts in general re-
straint of trade are void and not to be enforced, it is not true
that at common law such contracts are unlawful, and if this be so
then, even though the agreement by which it is formed be against
public policy, it cannot be said that the corporation is the re-
sult of an agreement that was unlawful.
It has been insisted that corporations which control the mar-
ket may be held to be illegal as creating monopolies, but no ordi-
nary corporation, however large, possesses a legal monopoly, and
the monopolies, that were declared illegal at common law were the
royal grants giving special privileges to individuals or corpora-
tions. The truth is that there is no real monopoly without special
privilege, and so long as there is perfect freedom of competition,
no actual monopoly can be obtained. There may be an appear-
ance of monopoly, but the courts cannot deal with an appearance,
and it will be found in the long run that competition, or at least
the possibility of competition, will prevent any group of individ-
uals, however they may combine themselves together, from ob-
taining the actual and permanent control from an open market,
Before asking that a radical change should be made in a long
established policy of law relating to corporations, it should be
393
shown clearly that these results do follow the organization of
corporations under those laws. When definite action is demand-
ed, the burden of proof is upon those who assert that it is required,
and for want of the statement of such facts I am inclined to think
that we exaggerate the dangers of the situation.
The conditions of trade and manufacture are very different
from what they have been. The extent of the territory that can
be profitably occupied has become much greater and larger under-
takings can now be more easily controlled under a single manage-
ment.
The great combinations of capital are new, and there has not
yet been time to ascertain by experience what is the actual effect
of uniting many enterprises for the purpose of reducing the cost
of production and regulating the prices of commodities.
The obvious effect is to reduce competition and it is competi-
tion that has been the ruling force in the struggle for existence
in the commercial and industrial world. We have not yet had ex-
perience of the effects of combination on a large scale. N"or do
we know whether in the removal of competition there may not
come the saving of ill-directed energy, the regulation of supply in
accordance with the demand both in place and in time, a saving
in the cost of production and a steadiness and a certainty of in-
dustrial effort and result and the command of all the capital need-
ed for any useful enterprise, and that out of all these there will
not come an increase of actual wealth, a wider distribution of it
among the people as stockholders in the great corporations, and
a decrease of the cost of commodities to the individual man.
EDWAED W. BEMIS.
Bureau of Economic Research.
Prof. Edward W. Bemis, of the Few York Bureau of Economic
Research, was the next speaker. He said :
Many speakers at this conference have sought to remove all
anxiety as to the future of the problem before us, by referring to
the scare and suffering attendant on the introduction of machin-
ery and of the corporation, with their displacement of the individ-
ual hand worker and of the small partnership. As those changes
have on the whole worked to the advantage of society, though in-
troducing tremendous and still unsolved problems of the distri-
tion of wealth and of how to secure continued prosperity and
markets for farmer and manufacturer, and steady employment for
394
labor, so it is argued we should smile at the ignorant fears of the
fast growing number of those that are truly alarmed over the won-
derful growth of the trust.
Now so far as this relates to the department store, so often
classed with the trust, the argument is sound. The department
store does not, like so many trusts, ruin the business of its smaller
rivals by cutting prices, even below cost, in one portion of the
community, while keeping them up for the residents of other sec-
tions. It furnishes alike to all the advantages of lower prices,
which are rendered possible by the economies of a big business,
while it gives its patrons opportunity to buy all their goods, from
bonnets to flour, from needles to lawn mowers, in one store at a
great saving of time and cost of delivery. It permits one payment,
one delivery, and one ringing of the door bell, one payment and
that only on delivery of all perishable goods, as the result of a
day's shopping, and bv reason of its rapid sales can often afford to
furnish a fresher and more attractive assortment of the things de-
sired by the buyer.
The department store, however, differs from the trust vitally
in the fact that having once secured a large market by reason of its
accommodation to the customer, it does not, like the trusts, raise
prices above those that would naturally exist with small com-
petitive stores. The essential feature of the trust, however, is its
monopoly character. While legally it is only a large corporation,
since the technical trust has been changed to the corporate form,
yet in fact there is all the difference in the world between the
change from hand tools to machinery or from the partnership to
the corporation, or from the small store to the department store,
throughout all of which the keenest competition continues, and
the change from the group of competing corporations to the one
giant consolidation, which is possessed of monopoly features by
virtue of its enormous size and of the large proportion of the busi-
ness of the country in its hands along the special line of its work.
It is virtually a monopoly of large capital, or a capitalistic monop-
oly. Professor Jenks has well defined it as such a monopoly as
"so controls the business, whatever it may be, as practically to
regulate competition and to fix the price of its products on the
whole with little reference to competitors, or to the cost of pro-
duction, but mainly with reference to securing the greatest net
results." The trust differs from the so-called natural monopolies,
which I prefer to call monopolies of situation, such as gas,
street railways, water, electric light, the telephone, the telegraph
and railroad, in that while equally natural in its development,
the trust does not primarily depend on specially favored and
895
limited locations of land, but on the enormous amount of capital
requisite for entering upon successful competition. It is not de-
nied that the trust is often favored by affiliation with monopolies
of situation, or by a grip upon such natural resources as anthra-
cite coal mines and oil wells, but in a broad way the distinctions
given above will hold.
I cannot subscribe to the roseate view of Mr. Gunton that
wages have been rapidly rising during this trust movement.
The so-called Aldrich or United States Senate financial report
of 1891, upon which Mr. Gunton relies for his statement that
wages have risen in a certain period 68 per cent or thereabouts,
has been utterly discredited by all careful students who have ex-
amined it. Not only does this report ignore many industries in
which wages have fallen and base its conclusions in other indus-
tries upon the three or more clerks of a single store or employees
of a single business, but throughout it follows a method of aver-
aging which can be best illustrated in this way : Suppose in the
course of ten years the foreman of a given shop has had his pay
increased 20 per cent, while the dozen men under him have not
gained any rise in wages. This Aldrich report argues in such a
case that the average increase of wages in that enterprise is found
by adding 20 per cent rise of the foreman to the zero rise of the
men and dividing by two, giving thus an average increase of wages
of 10 per cent. Such absolutely dishonest, or certainly deceptive
methods of averaging render the conclusions on wages altogether
valueless. A more recent report in a United States Bulletin of
Labor within the current year shows that in a large number of
representative occupations in our leading cities there has been
practically no rise in wages during the past twenty years and an
actual fall during the last ten years. It is not denied that in the
building trades and a few others where labor has been well or-
ganized the rise has been considerable.
Without, however, attempting to connect the wage movement
thus far with the trust question, which is too recent in its develop-
ment to permit of conclusions, it will be noticed that the present
indictment of the trust takes four forms : First, either a direct
rise of prices on the formation of the trust, or in its subsequent
history, as apparently in the case of the Standard Oil, an inter-
ception of many of the benefits of invention and progress in the
arts, cheapening of transportation, etc., which would normally
have had great tendency to reduce the r-rices cf trust goods fur-
ther than the trust has' permitted, as has been so fully the case
in the competitive market. Mr. Byron W. Holt, who appears to
have made the most careful statistical examination of trusts thus
396
far published, for example in the June Review of Reviews, has
informed us during this conference that of four hundred trusts
studied by him, he has thus far only found two that have failed to
raise prices, and believes there are but very few others. Those
two have lowered the quality of their product. Following in
much of this paper the article which I contributed July 20th, to
the New York Journal of Commerce, I would say that in the twelve
years prior to the formation of the Standard Oil trust in 1883 the
charge for transportation of oil to New York and for refining it
fell from 17.16 cents to 5.52 cents per gallon, or 62 per cent, while
the fall during the next fifteen years from 1882 to 1897 was only
from 5.52 cents to 4.04 cents, or 27 per cent, and nearly all of this
fall was due to cheaper transportation through pipe lines which
were first developed by rivals of the great oil company. During
the five years, 1883 to 1887, preceding the formation of the Sugar
trust, the average difference between the cost of raw and refined
sugar was admitted by Mr. Searles before the Lexow trust com-
mittee to have been less than the average of the subsequent nine
years by .128 cent, i. e., the formation of the trust was followed
by an increased charge for refining of one-eighth cent a pound,
or $3,584,000 a year on the 2,800,000,000 pounds of annual out-
put. The public was, however, blinded to this by the greater fall
in the price of raw sugar, which permitted some fall in the
charge for refined sugar, despite the increased toll of the trust.
Mr. Searles defended the increase of price after 1887 by the
claim that the previous five years' business had been conducted
at a loss. He found it difficult, however, to explain in this view
of the case how, on the formation of the trust, the capitalization
of the component companies was swelled from $6,590,000 to $42,-
000,000, or over six-fold. The fact that large dividends have been
paid on such an enormous amount of water is merely another
proof of the extortionate charges.
Mr. Henry 0. Havemeyer, president of the American Sugar
Refining Company, testified before the Lexow trust committee:
"It goes without saying that a corporation that controls 80 per
cent of the product does control the market price up to the im-
porting point, if it chooses to exercise that power." The ques-
tion was then asked : "You do, in fact, control the product and
price in the United States?" To which Mr. Havemeyer replied:
"We undoubtedly do."
Even better proved is the charge against the trust of over-
capitalization and consequent deception of investors and the
public as to the amount of its exorbitant charges and as to its
prospects for a continuance of these profits. No student of th<-
397
problem doubts the evils of this situation, or of the stimulation
given by the trust to a dangerous concentration of wealth and
purchasing power in the hands of the few. When these do not
care to buy the products of our mills and the many can not do so,
frequent depressions and a feverish demand for foreign markets
at no matter what cost of property and life are inevitable.
Much might be written of how the trust often clubs competi-
tors till it drives them from the field. An ordinary competitive
business has similar tendencies, it may be, but it is the trust which
boldly approaches a would-be rival and declares that it will sell
goods below cost until it ruins him unless he will join the great
combine.
Most ominous of all is the danger in the trust to political pur-
ity and personal liberty. Whether we like it or not we are be-
ginning to see vigorous efforts of our law-making bodies to regu-
late city monopolies of light, heat and transportation. The latter
effort has thus far had its most visible result in many cities in
raising the price of the alderman and the legislator. It is to be
feared that this and some malodorous events in the United States
Senate are but a forecast of what awaits us in any really serious
attempt to control the trust. Yet public control in some form of
trusts is the mildest demand of every speaker on this floor. The
support of the trust is so necessary to the bar and the press, its
donations so eagerly desired by the university, the library and the
hospital, that freedom of speech is already endangered.
The entire manufacturing capital of the country in 1890 was
only $6,500,000,000, and may now perhaps be $10,000,000,000,
while the true valuation of our trusts to-day is conservatively
estimated at over $2,000,000,000. The nominal capitalization, ac-
cording to Mr. Holt, in the June Review of Reviews, is about
$8,000,000,000. If, aside from all their water, trusts now control
one-fourth or even one-sixth of the manufacturing capital of the
country, what a political influence they must be able to exert
over their employees. Taken in connection with the fast con-
solidating power of our railroads these aggregations of capital
probably employ to-day one-fourth of our non-agricultural voters.
It was said last night that the most independent class of men
are the organized laborers in well paid employments, but this
ignores the well-known fact that organized labor at present in
America, outside of the glass business, is almost entirely confined
to the railroad .employments, the building trades, cigar mak-
ing and printing, though there are a few other well organized
trades. The vast mass, however, of the machinery industries, such
as are being acquired by the trust, are almost entirely unorganized,
398
and are likely to remain so for some time to come, for reasons
which I cannot stop to enumerate. The power of employers to
influence the political action of their unorganized employees is
too well known to need discussion.
The economies of the trust, however, are not to be despised.
Prof. Henry C. Adams and some large manufacturers here present
believe that the possible economies from this form of organization
are mostly confined to the selling department, but they admit that
here the chances for economy are great. Some of the largest man-
ufacturers in their respective lines in the United States are au-
thority for the assertion that the price that the consumer pays is
often 100 per cent in excess of the cost and of a fair profit for the
manufacturer. Through a saving in the number of traveling
salesmen, in advertising and in the distribution of goods from
the nearest source of supply, and in many other ways, this cost of
distribution might well be reduced one-half. One of the greatest
criticisms of the competitive system is the waste involved, for
example, in the journey through the same street of a dozen dif-
ferent milk carts or ice wagons, stopping at as many different
houses. The manager of the trust adopting unconsciously this
socialist view of the matter, familiarizes us with the arguments
as to the advantages of combination. We are then face to face
with our problem, given on the one hand a new form of organiza-
tion, which has in it vast possibilities of social economy and ad-
vantage, but on the other hand is now being selfishly used to work
great social harm.
What shall we do about the trusts?
First We may leave the entire matter alone in the belief
that many of these trusts will soon go to pieces. The revival of
the copper syndicate in stronger form than ever, despite the fail-
ure of the previous one, and the history of many other such ex-
periences show that while many trusts will doubtless go to the
wall from time to time, the trust movement is likely to become
stronger and stronger if left undisturbed.
Second We may favor the solution which is attracting some
attention in England, where, if I understand the matter aright,
the trust of capital allies itself with a strong labor combination,
and the two together agree to rob the consumer of all they can,
the monopoly profits to be divided in the proportion of two or
more parts to capital to one part for labor. This is the meaning of
the contention of Mr. E. J. Smith, of Birmingham, that when a
combination of capital raises prices 10 per cent, it should raise
wages, which are but one factor in cost, only 5 to 10 per cent. That
such a solution, if really being tried across the water, will ever
399
satisfy our people for any length of time is incredible, although
it may be an improvement over the American method of denying
the right of labor to form its own organization and deal as a unit
with the trust.
Third We may smash the trust, or endeavor so to do. The
trouble with this is two-fold it cuts us off from any possibility
of securing the advantages which under a better social organiza-
tion the general public might derive from the trust, and in the
second place it seems to fly in the face of industrial evolution.
There is more and more evidence that Henry D. Lloyd is right
when he says that "monopoly is business at the end of its jour-
ney." The world is face to face with a new type of competition,
because the development of machinery has required a large
amount of capital and its extreme specialization. Since it is no
longer possible to regulate competition by the easy withdrawal
of unprofitable capital to other employments, competition is
changing to a struggle to the death. The public appreciates the
change by designating it as "cut-throat" competition, or a "war"
of rates. In an industry where all goods are of the same kind and
quality and not known by the brand of the maker, and where
the capital required is very large, there is a tendency for com-
petition to become so keen as to allow no margin for interest
on the necessary capital. Particularly is this true where the
competitors have the corporate form, and the managers who set
the prices do not feel that it is interest on their own capital that
they are imperiling. Suppose that a given quantity of sugar or
oil or matches is, sold for a dollar, and that 75 cents would cover
labor, raw material and other operating expenses, and that 25
cents would be a fair allowance for return on capital, due allow-
ance being made in this 25 cents for depreciation, etc. Under
these circumstances it is quite natural for some factory to try
to secure business from its rivals and obtain command of the
market by cutting the price to, say, 90 cents. Rival establish-
ments will rightly argue that if they also sell for 80 cents, they
will lose 10 cents on every article that they sell, but if they do
not reduce and so lose their trade, they will lose 25 cents on
every article they do not sell, since their fixed charges con-
tinue when business stops. Consequently one cut in prices fol-
lows another, with general resulting demoralization, and injury
to the public, for it increases the hazards of business, and this
renders higher prices necessary in the end, in order to tempt
capital into business, while opportunities for securing investment
for idle capital are lessened. Where, however, the capital neces-
sary to start a factory is small, competition will not long reduce
400
prices unduly, without such a quiet lessening of capital in the
business as will bring back the prices of products to their normal
level. Where the capital required is enormous, it cannot be so
easily transferred.
Where an industry requires special skill and its goods have
made famous the brand of the maker, as in the case of the Elgin
watch and the Columbia bicycle, there is less need of union with
other establishments, although even here combination is begin-
ning to enter. It has been easy at times to consolidate the alcohol
manufacturers or makers of proof spirits, but it has been more
difficult to form a trust among the whisky manufacturers of
Kentucky, whose individual brands are famous. If the trusts
would confine themselves to restoring prices when unduly low
to the level which would leave merely reasonable profits, such
as the same investment, risk and ability would secure in com-
petitive business, and if the other abuses above mentioned could
be eliminated, the trust must be looked upon with comparative
favor. But the tendency of any monopoly in private hands to
abuse its position is beyond question, and the difficulties before
us are enormous.
In some respects the trade union resembles the trust, since
it seeks to secure a monopoly of the labor market, and in order
to secure it adopts many trust methods, such as refusal to deal
with rivals who will not join it. The labor world, like the cap-
italist world, is divided into two divisions those who sell their
products by reason of special superiority, or well established quali-
ties of the seller, as for example, the teacher, lawyer, physician,
artist, and, on the other hand, the great mass of workmen, even
in the so-called skilled trades. In the latter, one workman is
usually considered about as good as another, and the question of
wages is the chief factor with the employer. The men thus are
tempted to cut under each other in an effort to secure employ-
ment, until wages fall below such a point as will properly keep up
the standard 'of living and provide for their children and for old
age. The labor trust is as inevitable as the trust of large capital,
but the former, unlike the latter, gives equal vote to all its mem-
bers, independent of their capital; it admits every good work-
man on equal terms with the organizers of the union, and is an
engine, not of the well-to-do and the wealthy, but of the weak
against the strong. The many points of similarity, however,
between trades unions and trusts render it very difficult to pass
laws preventing the latter that shall not at the same time be
interpreted by the courts as preventing the former.
Fourth A more hopeful attack upon the abuses of the trust
401
consists in the removal of tariffs upon such products as Congress
shall decide to be of trust make. It will not do to leave to the
courts the determination of what are trusts. Congress must make
its own decision of what tariffs to repeal. This has been suf-
ficiently discussed already to render further consideration unnec-
essary at present.
Fifth The notorious and widespread granting of secret re-
bates and other privileges by railroads to large shippers and par-
ticularly to trusts and combinations must be checked in the most
summary and speedy manner, although we are probably forced
by the conditions of public opinion to approach the subject
through public regulation, rather than through ownership by the
people, which I believe will be found in the end the only satis-
factory solution, as has been the case recently in Switzerland.
The railroads cannot very well be controlled by commissions, for
these giant corporations regulate their regulators they insidi-
ously weaken or control the bodies appointed to control them.
The independent shipper, the average business man, is likely ere
long to recognize that the door to the trust problem lies in a
solution of the railroad question. The Interstate Commerce
Commission in its last report declares: "There is probably no
one thing to-day which does so much to force out the small
operator and to build up these trusts and monopolies, against
which law and public opinion alike beat in vain, as discrimination
in freight rates. This problem is so serious that it will soon
attract an attention that has never hitherto been given to it."
Sixth The conference has been several times invited to con-
sider direct public regulation of the trust. This will require in
a large measure preliminary constitutional changes, so as to give
more opportunity than we now have for national regulation of
industries that through their wide area of operations are su-
perior to state control. Prof. Jenks has urged for the protection
of the investor that we should require sworn returns to the stock
exchange, when stocks and bonds of great combinations are
listed there. This report should relate to value of physical plants,
cost of operation, etc. Prof. Henry C. Adams goes farther, and
urges government reports on all the details of business of these
trusts and the fullest publicity with regard to their accounts and
conduct, while the attorney-general of Maryland last night even
went so far as to urge public control of wages, hours of labor, and
the prices of goods. This all sounds very good theoretically, and
it is quite likely that we should work in this direction, for a while,
but in practice it will be found that, as the Massachusetts Railroad
Commission once declared, the placing of ownership in private
402
hands and management in public hands, is sure to result in great
political demoralization. We shall have to devote the most stren-
uous efforts to purifying and strengthening government, if it is to
undertake this vast task.
Seventh Prof. Adams has urged that we restrict the right of
incorporation in the case of all industries which are not, like
railroads, of quasi public character. Further explanation by
Prof. Adams may win us over to endorsement of this proposition,
but at present it looks like taking a backward step, and depriving
society of the almost universally recognized, but perhaps exag-
gerated benefits of the corporate form of organization.
Eighth There is an increased number, though still but a
minority of very intelligent people who believe that the only way
ultimately of treating the trust in an adequate manner is for all
of us to join it, by public ownership and operation of oil refin-
eries, match factories, anthracite coal fields, etc., just as in a
somewhat indirect manner the people own many sugar refineries
in the great province of Queensland, Australia. While the writer
finds himself in growing sympathy with such a solution, it seems
still only a remote possibility. The people must first become
habituated to public operation on a civil service reform basis of
city monopolies, the railroads, telegraph and express business
before they can ever wisely undertake forms of business now
absorbed by the trusts.
Ninth Finally, there is no quick and royal road to the set-
tlement of the trust question. Even Henry D. Lloyd, whose
book on this question is known the countrv over, when asked
by a recent congressional committee for a bill dealing with the
trust problem, replied that he had no legislation as yet to pro-
pose, although he would suggest that a good introduction to more
constructive legislation could be made by opening our prison doors
as readily to receive the rich as the poor criminal, and by punish-
ing the corporate violators of the laws we now have.
We conquered at Santiago and Manila by building our Ore-
gons on a far-off Pacific coast, and training our Deweys in rocky
Vermont, which does not even touch the sea; so before we can
wisely deal directly, or at least adequately, with the trust problem,
we will have to build our battering ram back in the hills, and grad-
ually move it up to the walls of Jericho, getting practice and pre-
paring for the final struggle by overthrowing many obstructions
as we move along. There must b'e such a change in our attitude
that we will not merely envy the trust, because we are not for-
tunate enough to be in one, and the time must come when it
will no longer be possible for our state universities to receive a
403
paltry three or five thousand dollars a year for the investigation
and teaching of all these great economic and social questions,
as is the case in most of our states to-day where monopoly mag-
nates think nothing of securing to their universities ten times
as much a year for the same purpose. Our American states will
have to cease to be contented with commissioners, state attor-
neys, etc., worth two or three thousand dollars a year, and going
out of office with every change of administration, while a sugar
refinery or a railroad is ready to pay five to ten times that amount
for its talent wherewith to oppose or checkmate public control.
The trust problem, like the slavery question, will take a genera-
tion or more to settle, and like the slavery question will entail
endless, trouble unless approached intelligently and with deep
conscientious devotion to the public weal.
JOHN BATES CLAKK.
Columbia University.
The session closed with an address on "The Necessity of Sup-
pressing Monopolies While Retaining Trusts/' by Prof. John B.
Clark, of New York, who said :
I shall confine myself to a single one of the questions asked by
Professor Jenks in his admirable introductory paper, the one,
namely, that referred to the relation of trusts to competition.
I accept and use the loose definition of the term trust that is cur-
rent in popular thought and speech. It is any corporation that
is big enough to be menacing. There is, indeed, an intermediate
form of the trust which allows the companies or firms that com-
pose it to retain a separate existence, though they form a com-
bination, or pool, for the purpose of limiting production and rais-
ing prices. Such forms of the trust can probably be crushed by
law; but the result of this will be to cause many of them to take
the shape of monster corporations ; and it is in this form that you
will finally have them to deal with.
I claim the immunities of a theoretical student when I enter
the realm of prophecy, and, on the basis of laws and tendencies
that are plainly discernible, make a somewhat confident asser-
tion concerning the type of trust legislation that is likely to be
permanent. Very unlike the sweeping prohibitions with which
the statute books of many states have been supplied, is the law
that will survive and will accomplish what we all have in view,
the protection of the public from the extortions of monopolies.
404
It will do in reality what the ordinary anti-trust law fails to do,
for it will have on its side what the ordinary statute has against
it. namely, the power of economic law.
Three distinct things are often confounded and indiscrimi-
nately attacked : The first is capital as such ; the second is cen-
tralization, and the third is true monopoly. Popular attacks on
monopoly often take the shape of attacks on capital itself. I am
happy to say that this has not happened in the present confer-
ence, for we have heard again and again, in the utterance of
speakers who have opposed trusts, expressions that show that they
are not assailing capital. They are assailing aggregations of
capital. They oppose centralization because of the element of
monopoly that at present inheres in it. Poor as is the opinion
that I entertain of many existing anti-trust laws, I must, in fair-
ness, say that they also strike not at capital itself, but at the cen-
tralized form of it. The present effort of the people is to stop
centralization in order to preclude monopoly, while their effort
will . ultimately he to crush the element of monopoly out of
massed capital and let massing continue. The line of cleavage
between what is good and will abide, and what is harmful and
must go, is not between capital and centralization, but between
centralization and monopoly.
If it were impossible to have capital in great masses without
having true monopolies, I would favor a heroic effort to stem the
current of natural progress and keep the general capital of each
branch of business in the shape of separate smaller and compet-
ing capitals. Monopoly is evil, and almost wholly so ; and if the
massing of productive wealth necessarily means monopoly, fare-
well to centralization. We shall do our best to get rid of it, and
shall suffer the loss of productive power that this entails, as the
price that we are willing to pay for being rid of a great evil. The
fact is that massed capital does not need to bring with it a regime
of true monopoly. We shall soon see why this is true, and before
doing so it is well worth while to notice how much will be gained
if we can safely allow the natural and centralizing tendency to go
on. It means the survival of the most productive forms of busi-
ness. It is first and chiefly because it can give more for a dollar
than little establisbments can give that the great establishments
supplant them. They out-do the small ones in serving tbe pub-
lic, and this power of superior service is soon to have a new and
unique field in which to display itself. We are entering on an
era of world-wide industrial connection. Asia and Africa are
incorporating themselves into the economic organism of which
Europe and America are the center. There is coming a neck-and-
405
Heck contest between European countries and the United States
for lucrative connections with the outlying regions. There is
also coming a later and grander contest hetween both America and
Europe, on the one hand, and Asia and Africa on the other, for
the command of the traffic of the world. In this contest victory
involves more than any hurried expressions of mine can indicate.
It means a leading position in the permanent progress of the
world. It means positive wealth, high wages, and intellectual
gains that cannot be enjoyed by those who develop less power.
In the momentous struggle that is before us and that will
yield to the successful the greatest of mundane prizes, I want my
country to come uppermost. To that end I wish it to have every
advantage that it can have in the way of productive power. I
wish it to be able to meet the fiercest competition, not by accept-
ing low pay for its labor, but by creating the largest possible
product. Do you suppose that this is possible if it reverts to the
plan of multiplying little shops, with the wastes that this system
entails? Mechanical invention, on the one hand, and organiza-
tion, on the other, can save us in the sharpest economic contests.
There is a competing power that comes from poverty. Pauper
labor is a dangerous antagonist. We have perceived this at times,
in the rivalries of America and Europe, and shall see it more
plainly when the poorly paid dwellers in Asia shall enter the
manufacturing field and try conclusions with us in an effort to
command the largest markets. If they under-bid us it will be
because they take less than we do for' their labor; while if we
under-bid them it will be because we produce more by our labor.
Against the competing power that rests on poverty is to be
arrayed the competing power that rests on economic strength,
and this strength can come, in a decisive measure, only to that
country that combines with inventive genius an organizing
genius, and so adds to the power of the engine, the dynamos and
the automatic machine, the power of centralized capital. I wish
that successful country to be ours. I wish that our workmen
may excel not in power to live on a little, but in power to create
much, and to offer what they create for a correspondingly large
reward.
Is this possible under a regime of great combinations? I
firmly believe that it is so; though it will not be possible without
the wisest laws, honestly enforced, and backed by all the moral
energy that the present anti-trust campaign is developing.
why is it that trusts have not raised the prices of their prod-
ucts to an undeniable and startling extent? Why has it, until
lately, been almost a debatable question whether they raise them
406
at all? Are their managers filled with an enthusiasm of human-
ity and a desire to scatter gifts among the people? Have they
conscientious scruples against making undue profits? They do
not raise prices very much because they cannot. Why they can-
not do it the public does not altogether understand.
In the lucid intervals in which they tell the truth to the peo-
ple, managers of trusts say that they cannot greatly raise prices
without bringing new competitors into the field. As has been
said, the foundation of a combination is liable to "build mills,"
and so to defeat the purpose for which the combination is formed.
To keep the new mills from coming into existence a wise policy
keeps prices at a moderate level. Within limits it is safe to raise
them, but beyond such limits it is not safe. The competitor who
is not now in the field, but who will enter it at once if prices are
unduly raised, is the protector of the purchasing public against
extortion. He is also the protector of the workmen, for the fact
that he will begin his operations if too many of the old mills are
closed, prevents the closing of them. In technical phrase it is
potential competition that is the power that holds trusts in
check. The competition that is now latent, but is ready to spring
into activity if very high prices are exacted, is even now efficient
in preventing high prices. It is to be the permanent policy of
wise and successful peoples to utilize this natural economic force
for all that it is worth.
At present it is not an adequate regulator. The potential
competitor encounters unnecessary obstacles when he tries to be-
come an active competitor. There are abnormal difficulties and
dangers in his way, and the consequence of this is that he is often
reluctant and tardy in his action ; and the fear of him is a far less
potent influence with the managers of trusts than it easily might
be made to be.
The European competitor is usually a potential competitor
because of the tariff which deters him from becoming an actual
one. Shall we sweep away all duties on trust-made articles?
That would make this latent competition active, and would do
much to keep trusts in check. As a theoretical economist I am
not prepared to favor so sweeping a measure ; but where there are
duties that are not at all necessary for the protection of an indus-
try as such, but are necessary for the protection of a trust in an
industry, these particular duties should go.
A domestic competitor is sometimes only a potential one be-
cause of patents. A trust often sustains itself by securing a
monopoly of the kinds of machinery that are needed in an indus-
try. Shall we abolish patents? Far from it; but we should re-
407
form our patent laws, and while making them afford a greater
incentive than they now do to invention, should prevent patents
from being instruments of extortion or oppression.
Eailroads have the power to handicap the potential competi-
tor, and it is an open secret that they are doing it. Discriminat-
ing rates for carrying freight are an intolerable evil, and they
tend distinctly to build up real monopolies. If legal acuteness
backed by popular energy can secure it, this evil must be sup-
pressed.
These measures have already received attention in popular
discussions and in the discussions of this conference. There is
another type of law that, as I venture to affirm, is of even greater
consequence than any that is before the public. The ability to
make discriminating prices puts a terrible power into the hands of
a trust. If in my small field it can sell goods at prices that are
below the cost of making them, while it sustains itself by charg-
ing high prices in a score of other fields, it can crush me without
itself sustaining any injury. If, on the other hand, it were
obliged, in order to attack me, to lower the prices of all its goods,
wherever they might be sold, it would be in danger of ruining
itself in the pursuit of its hostile object. Its losses would be
proportionate to the magnitude of its operations. Many a small
competitor is in a position to beat a trust in a contest of cut-
throat competition, if only the trust were compelled to make its
low prices uniform for all customers. There is no saving power
in a great capital, if a ruinous competition entails losses that are
proportionate to the capital.
Akin lo the power to make prices low in one locality and high
in many others is the power to reduce the prices of one grade or
variety of goods, and to sustain them on other varieties. My
mill may make only one specialized product, and the mills of the
trust may make that kind of goods and twenty others. If it is
willing to lose money for a time on the goods that I produce, and
to make money on all other kinds, it can ruin me if it will.
Akin to these resources for predatory warfare is the power to
boycott customers who will not give their whole patronage to
the trust, or to make special rebates to those wholesale or retail
merchants who will refuse to buy any goods from independent
producers. Such producers may find most markets closed against
their goods, however cheap and excellent they may be.
The power to do all these things gives to the trust a great and
abnormal advantage which the law can take away.
Predatory competition that is evil and that crushes producers
who have a right to survive rests mainly in one of these three
408
methods of discriminating and unfair treatment of customers.
That power must be destroyed. With a fair field and no favor
the independent producer is the protector of the public and of
the wage-earner; but with an unfair field and much favor he is
the first and most unfortunate victim. Save him, and you save
the great interests of the public. You can do this if you find or
make a way to success in that type of legislation that will prevent
the single evil, discrimination in the treatment of customers.
Put them all under what in diplomacy would be called a "most
favored nation clause"; secure to all of them the benefit of the
best treatment that the trust gives to any of its customers, and
you may forego all other attempts to regulate their charges.
Economic law that acts even now in a way that limits their exac-
tions, will act far more efficiently. It will keep prices and wages
at or near their natural levels and that, too, without sacrificing
the prosperity that a high organization of industry insures.
Carry that policy to success conquer the difficulties that lie in
the way of it and you will secure for our country a happy union
of productive power, that will give us the command of the mar-
kets of the world, and justice, that will develop the manhood and
insure the contentment of our citizens.
A. E. EOGERS.
University of Maine.
In the preparation of this paper which I now have the honor
to present to this convention, it has seemed to me unnecessary
to discuss at any length the results of the present tendency in
the industrial and commercial world towards concentration of
power and control.
It must be admitted at the outset that competition is not
always an -unalloyed blessing, that there are cases, especially in
the great business of railroad transportation, where the advan-
tage to certain individuals resulting from the struggle for patron-
age is more than offset by the disadvantage to the people as a
whole consequent upon the demoralization of a service that is
essentially public in its nature. But that the great combinations
ordinarily termed "trusts" are an evil in our social and economic
life is admitted by the great majority of those who are not the
beneficiaries of them, and who are not the advocates of state so-
cialism. The latter see in these organizations but the prelude
of the destruction of competition of every kind through the pub-
lic ownership and control of all means of production,
409
Indeed, there is no argument in favor of these combinations,
organized to crush competition, to limit production, and to con-
trol prices, which cannot logically and consistently be turned by
the socialist to support his doctrines. If avoidance of waste
resulting from competition is to outweigh any and all consid-
erations of individual initiative and enterprise, and is to be a
determining factor in our social and economic life, then, the more
perfectly our people are organized as a great industrial machine,
the more completely shall we realize our ideal. If this is to be
the condition, however, the socialist is right in his contention,
for it will be safer and better to entrust the control of this ma-
chine to the government, which is responsible to the people, than
to place it in the hands of irresponsible combinations, where, as
both history and recent experience demonstrate, it will not only
be susceptible, but liable, to grievous abuse.
In the social and industrial world, a great and growing evil
is to be checked and destroyed only by striking at the very roots
of it. Spasmodic legislation, however drastic, will generally
prove not only useless, but harmful. In the majority of cases,
such legislation will be circumvented by skillful lawyers em-
ployed for this purpose by interested parties and when, as often
happens, some of its provisions in their application conflict with
fundamental principles of our jurisprudence that have been made
a part of our national or state constitution, the very evil that the
legislation was intended to check tends from this fact to assume
a legitimate character to which it has no claim. Even in those
cases where legislation of this nature effects the purpose of its
framers and reaches the abuses at which it is aimed, it is apt,
from its radical nature, to involve such an excess of inconvenience
and harm as to lead to its early repeal, and thus to create in the
minds of many the dangerous feeling that such evils are irreme-
diable under present social conditions.
Trusts, as they arc commonly called, whether in the form of
trusts proper, or of great corporations, as well as corporations
organized for the purpose of fraud and swindling, are but the
natural results of the vices and deficiencies in our corporation
laws, and it is here that the remedy must be applied, if this dis-
ease in our social and political organism is to be treated ration-
ally.
Investigation of many economic questions, such as rate of
wages, interest, profits, labor-saving machinery, division and spe-
cialization of labor, and the like, often leaves us, after our facts
have been obtained and our theories framed, helpless in the face
these facts and theories. A careful study of the conditions of
410
corporate organization, however, cannot fail to be fruitful in
positive results, for this all-important factor in our social and
economic life is of our own voluntary and immediate creation,
the product of the law. If abuses exist, and intelligence be not
lacking, these abuses can be remedied by the same means that
gave opportunity for their existence ; and not only this, but the
usefulness of the organizations themselves may be greatly in-
creased as we come -to understand and appreciate more fully their
legitimate purposes and functions.
Although the life of our common law has been, as Judge
Holmes says, experience, the organism through which this life
manifests itself is precedent. As is the case in the evolution of
the animal body, some parts of the legal organism that once
served a useful purpose persist after their usefulness has disap-
peared and become a source of disease and danger by impeding
functional activities, essential to life and growth under new and
more complex conditions of existence.
The development of the law of corporations in England and
this country affords a striking illustration of this fact. The fic-
tion of the personality of these organizations served its purpose
in an age when the conditions of business and industrial life were
comparatively primitive and searching legal analysis was un-
necessary and unknown; in those days, it was easier, perhaps
better for the sake of simplicity and clearness of thought, to
attribute to a single fictitious person the special rights and obli-
gations of several individuals associated for certain purposes, than
to consider such special rights and obligations as pertaining to
the individuals themselves.
So long as this question remains a merely academic one, a
theme for legal scholastics, we can look with good-natured toler-
ance on such solemn nonsense as the following, even though it
appears under the guise of a judicial opinion : "None can create
souls but God; but the king creates corporations; therefore they
have no souls;" a syllogism whose conclusion has been of the
greatest use to many reformers in making up for a deficiency of
ideas. But when we find modern legal conceptions and rules, and
modern legislation concerning economic policies of the greatest
moment, influenced and shaped by deductions from this ancient
fiction, and also see reasoned out of practical existence from the
same premise the fact that the historic, legal, and moral justifi-
cation for the existence of the corporation lies in the advantage
to the public to be gained thereby, we may well be excused for
an intellectual revolt on a small scale, and believe that in some
411
respects, at least, our present corporation laws are the develop-
ment, not of fundamental truths, but of fundamental errors.
It is quite unnecessary to discuss here the importance of cor-
porations in our present economic system, for it scarcely need
be said that without them this system could not exist. Until we
go back to the days of the hand-loom, of the sailing-vessel, and
of travel by stage-coach, or come to governmental socialism,
pure and simple, corporations will remain indispensable. The
building and maintenance of railroads, the establishing and oper-
ating of vast manufacturing plants, in short, the thousands of
enterprises of- a like character and magnitude that have made
the past fifty years the most wonderful period in the history of
the human race, demand, from the very nature of these under-
takings, such a continuity in the consistent prosecution of plans
and purposes as cannot be measured by the life of an individual.
The immense amount of capital, also, required in such enter-
prises, must ordinarily involve co-operative investments on the
part of a large number of persons; of these, the great majority
are necessarily excluded from any direct interference or control,
must entrust the management of the undertaking to others;
hence, to effect the aggregation of this capital there must be, to
a greater or less extent, limited liability on the part of the in-
vestor.
The theory that corporate organizations had their origin in
ancient Borne has of late been questioned by some investigators,
who are inclined to look for their sources in the history of the
early Greeks. A comparative study of institutions leads me,
however, to believe that in the solidarity and continuity of the
family, not only among the early Greeks and Eomans, but among
many, if not all, of the races ethnically related to them, is to be
found the source of corporations of every kind, governmental,
ecclesiastical, and lay, aggregate and sole." Whether trusts orig-
inated in Eome or, as has been contended, among earlier races, it
was in Eome, as the power of the central governing authority
became greater, and as the family lost more and more its auto-
nomic character, that the conception of the unity and continuity
of a group of persons extended from the association united by
bond of kinship to other organizations, naturally at first to those
exercising some of the functions of the family, such as colleges
of priests, and afterwards, as opportunity for great enterprises
)f a private nature resulted from the increasing wealth and com-
merce of the city, to organizations whose main purpose was private
advantage.
Fortunately, it is not necessary in this connection to discuss
412
or to attempt to discuss in detail the development of the Eoman
corporation. The main fact here to he noted is, that in this
city, whose laws and whose legal conceptions concerning cor-
porate organizations have had so much influence in shaping our
own views and our own policy, these earlier forms of corpora-
tions precluded the idea of private gain or individual advantage.
In early England, the nearest approach to the modern cor-
poration is the church. But the early ecclesiastical organization,
even, did not consciously base its unity or continuity upon the
succession of individuals; God or the different saints to whom
the church establishments and lands were dedicated were indi-
vidually held to be their actual owners, and the ecclesiastics were
regarded as administering the property in the character of agents
or stewards. But the ecclesiastical law, derived as it was from
the Eoman law, on the revival of the study of the latter, easily ap-
propriated its maxims and doctrines and, as a consequence, the
proprietor-saint was gradually supplanted by a vague personifica-
tion of the church ; the lay courts had only to recognize this fic-
tion to clear the way in the English law for the being so forcibly
described in later times as having "no body to be kicked, and no
soul to be damned/'
Side by side with the ecclesiastical organizations in England
there had existed the local political and administrative organiza-
tions, counties, hundreds, boroughs, towns, and manors, which
Pollock and Maitland in their "History of the English Law"
designate, "for want of a better term," as "land communities."
Under the influence of these, to represent which no fictitious
person had been imagined, and of the ecclesiastical organizations,
we find a new kind of corporations coming into existence, par-
taking of the character and tendencies of both of the earlier
forms. The most important examples of this new type are the
trade and merchant guilds and the universities, the latter showing
the natural predominance of the ecclesiastical influence in the
very name, the word "universitas" being but a Eoman law term
for corporation.
In discussing these new organizations the learned writers
above referred to say:* "The English temporal corporations
when they first appear as ideal persons, appear not in the char-
acter of mere private persons, but in the character, we may almost
say it, of governmental officers and magistrates who hold prop-
erty in the right of their offices. Their lands, their goods, are
few ; what they own is jurisdiction, governmental power, and fiscal
*Pollock and Maitland, Hist, of the Eng. Law, Vol. 1, p. 493.
413
immunities. This is a characteristic feature of our temporal cor-
porations in the first stage of their existence; the artificial per-
son comes into being in order that he may govern and do jus-
tice that he may govern and do justice to the profit and ease of
the memhers of the corporation, no doubt, for no one governs or
does justice without gaining thereby; but it is as much within the
sphere of the public as within the sphere of the private law that
the nascent corporation becomes active."
As in ancient Rome, so in England, with the increase of com-
merce and wealth, the private character of these organizations
was correspondingly developed, but the extinction of all idea as
to their public nature is practically a thing of our own day.
Within the past fifty years, as the result of tremendous eco-
nomic forces that have been called into existence, and of legisla-
tive action facilitating the establishment of corporations, these
organizations have assumed a character in our industrial life that
is almost revolutionary. Seventy-five years ago, the number of
corporations in this country, aside from banks, was so small that
as an economic factor they might be safely disregarded. The
conditions to-day are well set forth in an address delivered by
Justice Field at the centennial celebration of the organization
of the federal judiciary:
"Nearly all the enterprises requiring for their successful pros-
ecution large investments of capital are conducted by corpora-
tions. They, in fact, embrace every branch of industry, and the
wealth that they hold in the United States equals in value four-
fifths of the entire capital of the country. They carry on busi-
ness with the citizens of every state, as well as with foreign na-
tions, Mid the litigation arising out of their transactions is enor-
mous, giving rise to every possible question to which the juris-
diction of the Federal courts extends."*
Legal rules and conceptions wherein transitions and modifica-
tions may gradually take place are easily adapted by the courts
to changing social and economic conditions. But when the rule
or Conception ^ of such a nature that modification or transition
s impossible, if it have the sanction of age it is exceedingly tena-
cious of existence. Courts must adhere to precedent if legal
development is to be orderly and consistent, and legislation must
be m accord with the spirit of the legal development of a coun-
try as it finds expression in the decisions of its courts if the law
is to remain an organic whole.
Through this wise and necessary conservatism, however, an
eous legal conception or rule, harmless, perhaps, under the
*134 IT. S. 742.
414
conditions in which it was first formulated or came into exist-
ence, may be perpetuated under new conditions that will render
it not only an evil in itself, but a source of other evils that will
survive the death of the parent error. The early ecclesiastics of
England introduced into their canon law the Eoman fiction of a
corporate entity, which was soon transformed by them into a
corporate personality. The lay courts grafted upon the English
law this branch, alien not only in origin, but alien in character
and alien in development. Much of the law of ancient Eome
has been made a part of the English law and completely assimi-
lated. But this conception of the legal entity, or the artificial
personality of an organization, as such, was not and is not capa-
ble of assimilation or of beneficent tendencies in a system of
jurisprudence whose very essence lies in the fact that it con-
templates the individual as the legal and political unit.
A corporation is a collection of individuals to whom, as indi-
viduals, special powers and privileges are granted by the state,
the most important and characteristic of these powers and privi-
leges being limited liability and capacity to transmit the special
rights so granted under the same conditions as those under which
they were received. As Judge Finch, of New York, so well said
in giving the opinion of the court in the case of the People vs.
North Kiver Sugar Kefining Company (21 N. Y. 582) : "The
state gave the franchise, the charter, not to the impalpable, in-
tangible and almost nebulous fiction of our thoughts, but to the
corporators, the individuals, the acting and living men, to be
used by them, to redound to their benefit, to strengthen their
hands and add energy to their capital."
Wherein do we find the justification for such a grant, in other
words, for the existence of the corporation? Certainly not in
the advantage accruing to its members from the fact that they
are endowed with special legal powers and privileges by the
state, for it is a fundamental principle of our jurisprudence that
all our citizens are equal before the law. A departure from this
fundamental principle is warranted only when an advantage to
the people as a whole, to the public, is to be secured thereby;
hence, in the securing of such a public advantage must lie the
justification for the existence of each and every corporation.
Blackstone, when writing his famous Commentaries at the
beginning of the latter half of the last century, could say of the
organization of corporations: " it has been found necessary,
when it is for the advantage of the public to have any particular
rights kept on foot and continued, to construct artificial persons,
415
who may maintain a perpetual succession and enjoy a kind of
legal immortality."*
Chief Justice Marshall, speaking in 1819 for the Supreme
Court of the United States in the famous case of Dartmouth
College vs. Woodward, declared : "The objects for which a cor-
poration is created are universally such as the government wishes
to promote. They are deemed beneficial to the country; and
this benefit constitutes the consideration and, in most cases, the
sole consideration of the grant."**
It is clear from the context of this opinion, with succeeding
clauses, that the term "benefit" as used here by Judge Marshall
does not signify the benefit that accrues to the public from the
establishment of any legitimate and honorable enterprise, but
only such benefit as cannot ordinarily be secured through the
undertakings of an individual or of individuals exercising only
such legal powers and enjoying only such legal privileges as per-
tain to citizens generally. This is clearly shown by the subse-
quent declarations: "Charitable or public spirited individuals,
desirous of making permanent appropriations for charitable or
other useful purposes, find it impossible to effect their design
securely and certainly without an organizing act. The benefit
to the public is considered as an ample compensation for the
faculty it confers."
Again, as late as 1850, we find the Supreme Court of Forth
Carolina using these words: "The purpose of making. all cor-
porations is the accomplishment of some public good. Hence
the division into public and private has a tendency to confuse
and lead to error in investigation; for unless the public are to be
benefited, it is no more lawful to confer exclusive rights and
privileges upon an artificial body than upon a private citizen."f
Unfortunately, however, in Dartmouth College vs. Woodward,
which was to have so great an influence in shaping the corpora-
tion laws of this country, the court held to the ancient fiction
of legal personality, declaring: "A corporation is an artificial
being, invisible, intangible, and existing only in contemplation
of the law. Being the mere creature of the law, it possesses only
those properties which the charter of its creation confers upon
it, either expressly or as incidental to its existence."
_ Here the court denies, by necessary implication, the very prin-
ciple on which is based the doctrine that benefit to the public is
the consideration which gives the charter of incorporation the
nature of a contract. If we assume that the corporation is an
entity, a legal person, then the theory that special powers are
*B1. Com., Bk. 1, p. 467. **4 Wheat. 518. {Mills vs. Williams, 11 Iredell.
416
conferred upon it by the state is manifestly illogical, for it is the
very grant of these powers that creates this entity, this person,
prior to the grant, the corporation does not exist ; the grant, then,
must be made to the individuals taking part in the act of incor-
poration; hence, upon these individuals and their successors the
responsibility to the public must logically rest. If we accept the
idea of a legal personality, we can reach the final conclu-
sion of the court that the charter of incorporation is a contract
only on the assumption that a grant of special powers and privi-
leges to certain individuals has for its consideration a benefit to
the public, to be derived from, and resting as an obligation upon,
a distinct individual created by this same grant, hence coming
into existence subsequently to it; a proposition condemned by
the elementary principles of logic as well as of law.
This shunting of public responsibility into space, upon the
man supposed to live in the moon, "artificial, invisible, and in-
tangible," has had its deplorable but logical result in the com-
plete disappearance of the idea of any public responsibility what-
ever on the part of these organizations, for of the two incon-
sistent doctrines, that of the responsibility of the corporation
to the public was ultimately to go to the wall, while that of its
legal personality was to endure and shape not only future judicial
opinions and future legislation, but, through its apparent sim-
plicity, to mould even popular ideas and conceptions. Had the
Supreme Court in this, I had almost said fateful, opinion, looked
beyond the fictitious person to the real persons, whose rights and
privileges and responsibilities arising through the corporation
were to be affected, its reasoning would have been, as its con-
clusion is, incontrovertible, the fundamental doctrine that the
justification of the corporation lies in the fact that an advantage
to the public is to be secured thereby, might have remained a
guiding and formative principle, and many of the evils now ex-
isting might well have been avoided.
It is a legal maxim that where the reason ceases the law
ceases, but at present, in the great majority of cases, either the
doctrine that charters of incorporation are contracts must form
a notable exception to this rule, or the public advantage as a
consideration supporting such contracts must be a fictitious
creature. of the law, even more vague and unsubstantial than the
intangible and invisible personality of the corporation, that has
existed so long in the imagination of learned jurists.
Mr. H. 0. Havemeyer, speaking before the United States
Industrial Commission a short time ago, expressed the logical
consequence of present conditions, if not the generally accepted
417
idea of to-day, when he said : "I maintain that it is immaterial
to the public in what form business is done, whether by an indi-
vidual, firm, corporation, or even a trust. They are merely forms
of conducting a business, in other words, machinery for the
operation of business."
Compare this with the following words, spoken for the Su-
preme Court of the United States in 1865 :
"The purposes to be attained [by incorporation] are generally
beyond the ability of individual enterprise, and can only be ac-
complished through the aid of associated wealth. This will not
be risked unless privileges are given and securities furnished in
an act of incorporation. The wants of the public are often so
imperative, that a duty is imposed on government to provide for
them; and as experience has proved that a state should not at-
temnt directly to do this, it is necessary to confer on others the
faculty of doing what the sovereign power is unwilling to under-
take. The legislature, therefore, says to public-spirited citizens :
'If you will embark, with your time, money, and skill, in an
enterprise which will accommodate the public necessities, we
will grant to you for a limited period, or in perpetuity, privileges
that will justify the expenditure of your money, and the employ-
ment of your time and skill/ Such a grant is a contract with
mutual considerations, and justice and good policy alike require
that the protection of the law should be assured to it."*
The idea that corporations are purely private organizations
in which the public has no concern is the offspring of the ancient
fiction of their legal personality, and its predominance, to the
practical exclusion, if not extinction, of the doctrine that they
are formed to secure some advantage to the public, is due to
patent causes. Enterprises whose main object, at least from the
standpoint of an increasingly large and increasingly influential
body of our citizens, have increased in number and magnitude
during the past fifty years in an almost incredible manner. Leg-
islation, shaped in part by questionable means, and for ques-
tionable ends, and in part by desire to encourage great enterprises,
has too often thrown conservatism to the winds : and, finally, the
character itself of our people has had a tendency in the same
direction, for we are inclined to look upon loose corporation
laws as democratic in their nature, inasmuch as they apparently
offer equal privileges to all persons for all purposes; we 'are apt
to lose sight of the fact that the very essence of these laws is dis-
crimination, the granting to some individuals of rights and privi-
*Binghamton Bridge, 3 Wall. 51.
418
leges which the sound policy of the laws denies to our citizens
generally.
Scarcely less harmful in its results than the trust evil, and
resulting from the same conditions, is the organization of cor-
porations for fraudulent purposes. With but few exceptions, our
different state legislatures have opened the door wide for abuses
of this nature. Every pretense of public need or public ben-
efit is openly discarded, and we have corporations organized to
conduct clothing stores, to sell groceries, to sell drugs, and, in
short, for enterprises that could just as efficiently be undertaken
without the grant of special legal powers and privileges. The
sole object in the great majority of such cases is to limit personal
liability and to avoid that responsibility which the members of
the community should bear, and generally must bear. The fact,
also, that the corporation may be organized without any capital
being actually paid in is an abundant source of evil. Undoubt-
edly, there are cases where the funds for a great enterprise can
be more easily and advantageously secured after the corporation
has been organized. Ordinarily, however, the record, "nothing
paid in," or the fact that the promoters of the enterprise have
not sufficient confidence in it to lead them to invest more than a
nominal amount, is a fairly sure indication that the corporation
laws have been invoked to further speculative or fraudulent de-
signs.
As an illustration of the conditions existing in the state of
Maine, I find in a newspaper taken at random that in this
state there were recently filed on two consecutive days the cer-
tificates of organization of nine corporations whose total cap-
italization was $2,220,000, while the amount actually paid in
was $1,093, or less than one-twentieth of one per cent. One of
these corporations was to deal in drugs and medicines, and of
the sixteen officers whose names and residences were given, eleven
were from another state, where the laws pertaining to the organi-
zations were more stringent.
A newspaper published the same day on which this is written
gives a list of three corporations whose certificates were filed in
this state the day before. Of these, one was organized and incor-
porated to conduct a sporting lodge. Their total capitalization,
$360,000, of which "nothing is paid in."
It may be that every one of these corporations was organized
for a legitimate purpose, but the fact remains that corporations
for fraudulent or swindling purposes might just as easily have
been organized. The sovereign power of the state of Maine, if it
has not been, may easily be, prostituted to further the dishonest
419
schemes of dishonest men through its present system of loose
corporation laws; and this, I suspect, might be said of nearly every
state in the Union.
In our country at large, such a thing as a system of corporation
laws can scarcely be said to exist. From the national standpoint,
we have a vast tangle of heterogeneous statutes which the legisla-
tures of our different states are constantly making more inconsist-
ent and more confusing.
In general, interstate comity has thus far been sufficient to
prevent any state from excluding corporations organized in an-
other from transacting business within its limits, its powers, of
course, not extending to that business which is strictly commerce
between states and with foreign nations, but the tendencies of an
opposite nature are to be seen; it is certainly becoming a ques-
tion, how long a state that is endeavoring to establish a rational
system of corporation laws should continue, to its own detriment,
to respect a sister commonwealth that has no respect for its own
sovereign power.
Though the question as to the nature of corporations is, in a
certain aspect, a purely legal one, it is in another and vastly more
important aspect a matter of grave economic and social interest to
us all. Many of the evils resulting from these organizations had
their origin in an erroneous legal conception, but so completely
have deductions from this conception, the immediate causes of
these evils, become established as a part of our legal system, to a
certain extent by frequent judicial recognition, and still more by
positive legislation, that they are practically beyond the control-
ling influence of the courts. Reform must come through legisla-
tion, and that this legislation may be effective as well as conserva-
tive, it must be based on clear conceptions as to its subject-mat-
teron an appreciation of the fact that a corporation is but an
association of individuals, to whom, as individuals, the state
makes a grant of special legal powers and privileges, of the fact,
also, that this grant can be justified in our system of jurispru-
dence only on the ground that a definite advantage to the public
is secured thereby.
Trusts and fraudulent corporations are the results of vices and
imperfections in our corporation laws. When these are remedied,
and not until then, will the evils of which they are the cause dis-
appear. In the domain of law, which is that of ideas, and prin-
ciples, and reason, ultimate truths are the only safe foundation
on which to build. Legal fictions often have 'highly important
functions m unifying legal rules; they serve, so to speak, as a
ding, useful in raising the structure of our jurisprudence,
420
but constituting no real part of it. In determining and shaping
important economic conditions, however,, fictions, legal or other-
wise, have no place; we must be guided by the absolute facts of
human life and human experience.
As civilization advances, and as science, and wealth, and trade
increase, the public and private relations of the different members
of society become more complex and the problems that our legis-
lative bodies are called upon to solve necessarily demand on their
part increasing skill and intelligence. To understand even a
branch of our legal system has become the business of a learned
and laborious profession. But the great principles, along whose
lines the development of our substantive law should proceed,
must be the business of all enlightened and thoughtful men, if we
are to realize in our jurisprudence that justice so well described
by the Eoman jurist as "the set and constant purpose that gives
to every man his due."
Assuming that the views set forth in this paper embody cor-
rect principles, the next question is: How can we make these
principles dynamic, render them effective in shaping actual legis-
lation?
The first step in this direction is, I believe, an organized effort
to secure uniformity of the corporation laws of the different
states.
At present the great difficulty in the way of the application of
correct and rational principles to the development of our corpora-
tion law, especially in the all-important matter of organization,
lies in the fact that certain states are ready to prostitute their
sovereign power for sake of revenue, and to enter into competition
to secure patronage in this shameless traffic, regardless of their
own honor and of what is rightfully and justly due to other com-
monwealths.
From such a traffic and such a competition not only does there
result a continuous leveling down on the part of the states en-
gaged in it, but almost insurmountable obstacles are placed there-
by in the way of those states seeking to maintain or establish
proper and rightful standards. A general and strongly sustained
effort to secure uniformity would, above anything else, counter-
act these demoralizing influences, and tend to substitute public
welfare in the place of short-sighted selfishness as a determining
factor in our legislation. Undoubtedly a few states might be dis-
posed to resist efforts looking towards reform, but concert of ac-
tion on the part of the others in regard to corporations organized
under the laws of these recalcitrant commonwealths would reduce
their power for evil to a minimum.
421
Approximate uniformity of the corporation laws of the dif-
ferent states being secured, national legislation, also, could be
more intelligently framed for the purpose of complementing state
legislation, and made much more effective in meeting those evils
which because of the exclusive control of Congress over inter-
state commerce the state legislatures cannot reach. Federal legis-
lation, however, as affecting the evils resulting from the abuse
of corporate power and privileges can be nothing more than com-
plementary, the reform must be essentially worked out by state
action.
The American Bar Association has already done most excel-
lent work in securing uniformity of state legislation along certain
lines, notably that of commercial paper, and commissions on uni-
formity of state laws have been provided for in a majority of the
states. It seems certain that if this conference with its great in-
fluence should make an earnest and organized effort in conjunc-
tion with these bodies to secure uniformity of corporation laws
throughout the Union, a high degree of success would be assured
from the outset.
To claim, however, that even the complete success of this ef-
fort would abolish all the evils arising from corporate organiza-
tion would be absurd. Abuses and evasions of th,e law and imper-
fections in the law itself will continue to exist until human nature
and human foresight have reached a far higher stage of devel-
opment than that of to-day. The surest way, however, to meet
and minimize these evils is through a rational and intelligent
application of the fundamental principles of right and justice,
and next in importance to a clear appreciation of these principles
and of their relation to the problem before us, is the removal,
as completely as may be, of the obstacles which obstruct the appli-
cation of them.
HENHY D. BAKER,
Associate Financial Editor New York Evening Post.
Literal accomplishment of what Mr. W. J. Bryan has termed
the Democratic idea that if you make the masses prosperous their
ospenty will find its way up and through every class/' was
sponsible for the increased resources and confident venturesome-
's of the financial and investing classes, such as caused the
recent rapid multiplication of corporations known as "trusts."
he fine crops and high prices of 1897 and 1898 brought vast
the masses, while the relief from silver agitation put
422
vast sums of money that haM been hoarded, into the channels of
circulation. Some of the phenomena which arose during 1898
out of the same conditions so favorable to the growth of trusts
were witnessed in the magnificent success of the popular war loan
of $200,000,000 hurriedly raised without a ripple of disturbance
to general business, the war bonds soon selling at a premium of
9 above par. The United States became a creditor instead of a
debtor nation in its relation to the general world of finance.
Savings banks reduced long established rates on deposits, and cli-
ents of banks of deposit were notified that balances no longer
carry interest. Some localities bought foreign exchange for an
investment ; some communities in the far West became lenders of
money in Europe.
The promoters of trusts were not in evidence, however, during
the period between the blowing up of the Maine on February 14th
and Dewey's victory at Manila on May 1st of 1898. Deals that
had not been successfully finished before the catastrophe in Ha-
vana harbor were sent up the spout.
The glorious news from Manila not only put the nation in
ecstasy of patriotic joy, but it also brought the promoter of trusts
out of the woods. The destruction of Cervera's fleet in July and
the end of the election uncertainty in November marked further
stages in the growth of investment and speculative confidence.
Toward the close of the year not only was prosperity extremely
pronounced in all branches of business, but also millions of dollars
had become added to the value of all kinds of securities. News-
papers were announcing new trusts at about the rate of three a
day; time and call money ranged from 3^ to 4 per cent. Such
conditions of extreme public confidence, of cheap money, of rising
security values, all essential to the successful promotion of trusts,
continued for about the first month and a half of the present year.
Tremendous profits became shown in the underwriting of indus-
trials. In a great many instances, underwriters sold their rights
and made fortunes before it was necessary to pay a cent of cash
on their subscriptions. The belief became prevalent that by
simply signing subscription lists it would be possible to realize
profits of from 10 to 20 points on the rights before there could be
any call for cash. It was the policy of promoters to foster the pre-
liminary speculations in rights by hints or announcements to the
effect that the heavy over-subscriptions would necessitate the pro-
portionate cutting down in the allotments of stock to subscribers.
The purchase of rights by those who wanted to be sure of full
allotments of stock usually more than offset sales of the rights
by those who wanted to take profits before it was necessary to
423
meet the call for cash. Often advances in the underwriting pre-
mium would be accelerated by the scrambling endeavor to buy
back rights after it was discovered or feared that only a part of
the stock would be received which had already been sold for de-
livery "when issued." The economics due to consolidation, natur-
al growth of business, cheapness of money, increase in general
prosperity and absence of political disturbances in all parts of the
world, were argumentative features to which the speculative pub-
lic eagerly listened.
Toward spring of the present year the "trust" movement had
become greatly overdone in the opinion of those who looked at it
purely from the financial standpoint. Despite the unprecedented
plethora of money in the country, money was growing dearer,
owing to the absorption of enormous sums of capital in the nota-
tion of the new industrial issues. Bankers began to entertain
misgivings, and their discrimination against industrials as col-
lateral began to hurt their progress in the stock markets. Several
big promotions then pending became conspicuous failures. In one
or two instances underwriters, fearing losses on their subscrip-
tions, forced the closing of the deals before they could become
consummated by payment of cash. The sudden death of ex-
Governor Flower, who had been the most potent bull leader in
the market for industrials,, hit his own specialties hard and sym-
pathetically wrought injury to industrials as a class. The plan
for effecting the most gigantic combination of the age to include
the Carnegie properties, the Federal Steel Company, the Ameri-
can Steel and Wire Compaq, the National Steel Company, the
American Tin Plate Company and lesser concerns, fell through.
The stock issues of the trusts already created now show losses
in value of from 10 to 50 per cent. The trust promoter to-day
admits that future attempt at trust creation will be exceedingly
uphill work.
It is thus shown that the trust movement has owed its imme-
diate origin to an unprecedented plentifulness of money and to
an exceedingly high state of public confidence such as always
tends to make capital venturesome. Tariffs, railroad discrimina-
tion and lack of publicity may serve to perpetuate the existence
of at least some of the trusts lately created, but have had little
or no relevant connection with their origin. The trust motive has
been the speculative motive to make big profits in quick time.
Perhaps the American people would rather now enjoy prosperity
in which great trusts share with themselves, than endure hard
times m which neither great trusts nor themselves can find meat
whereby to grow and thrive. The nation was sad and horrified
424
over the blowing up of the Maine, notwithstanding the fact that
the disaster interrupted for a time the promotion of trusts.
Equally jubilant and thrilled with patriotic spirit were the Ameri-
can people on hearing of Dewey's triumph at Manila, which was
not diminished by the fact that the victory was the sunlight which
brought the promoters of trusts out of their holes, so to speak.
Payments through the principal clearing houses of the coun-
try are now about 37 per cent greater than a year ago, and 57 per
cent greater than in 1892. East bound railroad tonnage is nearly
double that of a year ago. The number of business failures is
about, half of that of a year ago, and a third as great as in 1896.
The country's gold reserve to-day stands above the $250,000,000
mark. Generally advancing prices in manufactured lines of goods
have attended the increasing prosperity. Although such ad-
vances have not been confined to articles produced by trusts, but
have included furniture, products of the packing house, and other
articles in which trade is unquestionably regulated by conditions
of competition and of demand to supply, yet there is a good deal
of complaint that practically all late advances in prices have been
produced by the trust arbitrarily and for their own profit, and
that therefore they afford no indication of conditions benefiting
the country. It is true that the trusts in nearly every instance
after their recent formations, have marked up prices, and yet
considering the increased cost of raw material entering into pro-
duction and the fact that wages have been generally advanced,
it cannot be correctly said that the trusts have made unfair use
of their trade opportunities. Where they have advanced prices
more than would seem to have been warranted by advances in raw
materials, such advances seem usually to have effected simply an
adjustment of prices to some basis of fixed profits such as had
existed before the hard times period, or as in the case of the
Biscuit Consolidation for instance, before a competitive war had
brought earnings down below the cost of production, and had
threatened practically the whole business with bankruptcy.
In the case of the best managed industrial companies the pol-
icy has been to keep prices of products high enough to allow rea-
sonable profit on capital invested, but low enough to offer no in-
ducements for competitors to enter the business. In the case of
the Glucose Sugar Eefining Company, which is the oldest of the
recent industrials,* President Matthissen, at the annual meeting
of stockholders last year explained as follows the application of
this policy: "There is not at this time a bushel of corn being
ground by any concern except those in our company. We do
"Organized August, 1897.
425
not intend to pursue the policy of making spectacular profit in
the beginning and dwindling at the end. We are in business
for a long pull. For instance, on a ten-year run we might have
raised prices, made $5,000,000 the first year, $2,500,000 the next,
$1,000,000 the next, and down to nothing at the end of ten years.
It is better business to be moderate and earn $2,000,000 a year
for ten years, which would be $20,000,000 in profits, against a
less of $10,000,000 the other way. We did for a short time make
the mistake in the beginning of putting the price too high, but
it did not last long. If we had maintained that policy, we would
have had sixteen or seventeen competitors, against none as it is
now." Generally speaking, from the standpoint of the investor,
it is considered better to own securities of a trust which makes its
money by saving money through especial economies, than it is
to own securities of a trust which is known to make its money
through practicing extortion on consumers. In the case of long-
lived industrial corporations like the Standard Oil Company, suc-
cess seems to have been at least in large measure due to a policy
of lowering rather than raising prices. This fact investors are
beginning to appreciate, and is causing. them to discriminate.
Considerable blame has been thrown on the iron and steel trusts
owing to the enormous advances which have taken place in prices
of products in the iron and steel industry. Quotations on steel
billets are about $37 per ton to-day as against $14.50 per ton one
year ago, while various steel products are quoted relatively the
same. As pig iron, however, is now $24 per ton as against $10 per
ton one year ago, it is evident that the advances in finished steel
products have been legitimate. Practically all the companies
engaged in the iron and steel business now have contracts ahead
which will keep their furnaces active at full capacity for six
months to come. If the general prosperity had not caused an
enormous demand for steel products, the price of pig iron could
hardly have advanced, for manufacturers would not create a de-
mand for more pig iron than they would expect to sell as finished
product from their foundries.
Owing to the fact that the American Tin Plate Company is
about the most conspicuous example of a protected trust, the
sharp advances it has made in prices have drawn down upon it
much aggressive criticism, which seems to be unfair in the ex-
treme, as shown by the following data furnished me by President
Reid of the company late in the month of August. Since the
organization of the company pig tin had shown an advance from
12 1 cents to 33 cents per pound; 15 per cent more was being paid
skilled labor, and 20 per cent more for unskilled labor; the
426
price of acids used in making tin plate had gone up 25 per cent;
steel billets, of which about 10,000,000 boxes were figured as the
company's probable consumption for the year, had advanced one
dollar per box; the increases in the bill for castings, etc., to keep
the plants in repair, would, it was estimated, be about double
what they would have amounted to a vear ago. Yet despite those
great increases in the cost of supplies and labor, finished tin plates
were quoted at only $4.37| as against $2.50 one year ago. As the
protection on tin plate makes the price which would induce im-
ports of tin plate $5.58, it is therefore evident that the company
has not by any means availed itself of the full opportunity allowed
it by the tariff.
The increase in legitimate business in this country during the
past year has resulted in the establishment of a fairly normal ratio
between the supply and demand for money. It has put a limita-
tion on trust promotions, practically ending the movement before
it could cause a financial crash. At the present time the pros-
perity of the country allows opportunity for unlimited business
development of all legitimate kinds. The trust movement was
an early incident of our present prosperity. Trusts are, how-
ever, no longer the product of our prosperity. Whether or not
we would be more prosperous without the trusts is a question con-
cerning which views and theories now may differ and which can
only be definitely and thoroughly settled by the economic data
of the next few years.
JOHN" I. YELLOTT.
Member Maryland Bar.
The "trust" problem is of that character to-day that the
American people are called upon to deal with a condition, rather
than with theories on the subject. The consideration of facts as
they exist in consequence of what the "trust" and the "combine"
are doing with the masses of the American people, is of more
practical importance than any indulgence in nice and finely
wrought-out theories as to what the "trust" ought to do as to
what it can do 3 as to what minor laws found in the trade and
financial circles of business may compel it to do, and what it may
be expected to do for the public good in the future if let alone.
To me, the competent theorist is always entertaining, but I am
ever slow to adopt theories that I know to be contrary to certain
fixed laws, and unsupported by present or past facts.
In the matter of production and distribution, there is one law
427
regulating both the buying and selling interests of civilized man
so fixed and so unvarying in its long operation, that it has been
looked upon as. a natural law. It is the law of competition. It,
in conjunction with the recognized laws of supply and demand,
is the one great force all the time at work for the healthful reg-
ulation of production, distribution, and values. Any system of
production, or of distribution, including -the commanding in-
dustry of transportation, that is in contravention of, or, at vari-
ance with this great law can have but one result, to-wit : injustice
and wrong to the weak and undue imposition upon both the con-
sumer who must buy in the market and the producer of the raw
material who must sell! When you destroy competition in the
production of the finished article required for the use of man,
you destroy two open markets that in which the consumer may
buy to advantage, and that in which the seller of the raw article
may sell to competitors. You do more, you give to the producer
the right to dictate the price which the consumer must pay for
the finished article, and the power to say to the producer of the
raw material what he shall take for the product of his labor ; you
give to that producer the right to dictate and fix the price that
shall be paid for the labor required to convert the raw material
into the finished product. You do what is worse, you make a
favored class of the few chartered producers and transporters, and
give to that class unlimited authority to say to the millions of our
population what they shall pay for food, raiment and everything
used by them for comfort, luxury or necessity, and what every
man shall receive for the product of his labor. A condition of
things abhorrent to the common law, before the American Con-
stitution was thought of.
No legal authorization for, or acquiesence in, any system of
production or class favoritism can be, under the American form
of government, without violation of its every valued principle.
Our government is founded upon the eternal foundation of
human equality. When organized after the vindication of this
principle in the war of the Eevolution, the object of the Govern-
ment was declared to be : "To establish justice" ; "to promote
the general welfare" ; "to secure the blessings of liberty". Later
ir our history the fourteenth amendment to the Constitution was
adopted, which embodied all that statesmanship of the country
had ordained for accommodating the organic law to our then
condition. It provides, "Xo state shall make or enforce any law
which shall abridge the privileges or immunities of citizens of the
United States; nor shall any State deprive any person of life,
liberty, or property, without due process of law, nor deny to any
428
person within its jurisdiction the equal protection of the law."
The meaning of these privileges and immunities has been defined
by the courts as those rights which are fundamental under every
free government, including the right to acquire and possess prop-
erty of every kind, and to pursue and obtain happiness and safety,
subject to such restraints as government may prescribe for the
general good of the whole.
All monopolies in any trade or manufacture are an invasion
of these privileges, for they encroach upon the liberty of the cit-
izen to acquire property and pursue happiness, and were held to
be void at common law as long ago as the reign of Elizabeth.
No State of the Union can have the power to create a monopoly
in any industry by incorporating a number of men into one body,
without doing violence to the Constitution of the country. What
il cannot directly do it is without power to do by indirection.
The incorporation of any body of men with monopolistic power
is in contravention of the spirit and the letter of our form of
government and its written Constitution. If the organized trusts
and combines are possessed of monopolistic powers and have
monopolistic tendencies, then they should be abolished or brought
within legal control, without regard to the fact whether they be
advantageous or disadvantageous. They are an un-American in-
stitution, though nourishing in America only, and should not for
that reason be allowed to grow and multiply.
Now, Mr. Chairman, it would seem that the all-important
questions involved in the trust subject, are:
First: Are trusts and combines as now existent in the
United States monopolies, or of monopolistic character and
tendency ?
Second : Are they of such character in their operation and
modes of business as to infringe upon the Constitutional rights of
the American citizen?
Third : If monopolistic and an invasion of the rights of the
citizen, what is the proper remedy to apply?
I desire to discuss briefly the first two propositions, and in
doing so I hope 'to be pardoned for dealing in facts more than
theories. The origin or birth of the "trust" in our general indus-
tries is a mystery, but necessary to be inquired into in order to
discover the laws that are likely to control its existence and
growth.
One, and perhaps the greatest trust magnate of the land, has
solemnly affirmed that the protective tariff is the mother of the
"trust," but when we remember that it was that magnate's ox that
was gored by the tariff of which he was speaking, this charge of
429
maternity must be accepted with some allowance. I believe this
"Protective Tariff". has enough sins to answer for at the bar of
public opinion without being charged with the motherhood of this
monster.
Protection is but the foster mother, if mother at all, and I
am disposed to yield to it the rightful claim only of being wet-
nurse to the trust; it has surely kept it in vigorous life and pos-
sibly aided at the birth. Others, with plausibility, have advanced
the theory that the "trust" is the result of evolution in trade and
manufacture into which so many improved methods have been
injected. Some ascribe to the great prosperity of our people in
the last few years the life-giving cause, whilst still others claim
the concentration of wealth in the productive industries to be the
result of natural laws of business which demand some saving in
the wastefulness of the competitive system. A few days ago I
read an able article in one of our most valued monthlies, from the
pen of an apparent advocate of the "trust" the Hon. George E.
Roberts, Director of the United States Mint, which came nearer
to my views of the causes constituting the true parentage of the
American "trust" than anything I have elsewhere seen. I beg
to quote briefly from the article, page 305, "Review of Reviews,"
for September. The writer says: "Let us inquire about the
forces that have brought on this general movement of the indus-
tries into combinations. It is a primary fact that the impelling
motive has been the low returns recently earned by capital. It
has been difficult to make profits when competition has been open
and active." The writer then proceeds to assign other causes
for concentration, but the first of the forces at work, as stated
by him, is the one great power, which is, in effect, that money,
finding it could no longer get satisfactory returns from its accus-
tomed user, determined to concentrate in the form of the trust
or the combine for the purpose of nullifying the natural law of
competition, and exacting from the masses of the people such
profit as it might dictate. Practical monopoly only, can destroy
competition, and if that be the object of combination in the indus-
tries, it follows that whatever the trust of to-day be, the very law
of its existence will develop it into "odious" monopoly.
Again, the trust of to-day, which is doing its work of ruin
amongst the masses, is an incorporated body, and is made up of
the smaller corporations generally. It is a man-made machine
sent forth into the world of the industries to compete with the
human being, with unlimited power to acquire wealth and seek
gain in the particular field for which it was made, without one
of the finer instincts with which the natural man is endowed;
430
without soul to be saved or body to die, or conscience to restrain,
it is actuated by one human instinct only greed for money!
I am the friend of the corporation honestly created for a
legitimate purpose. For centuries it has been a necessity in civ-
ilized society, and has done and is destined to do more for its
advancement and full development, but none is blind to the
fact that the corporation needs to be properly regulated and con-
trolled by law. It has little regard for individual right and in-
dividual privilege unless conscious of the fact that the violation
of the one or the invasion of the other invites inevitable legal
responsibility.
Such being the constituent parts of the five hundred or more
giant corporations which have taken control of about all the in-
dustries of the land, it follows that if absolute monopoly will give
them greater gains for their stockholders, there will be no hesita-
tion in establishing it. If the smaller corporations can combine
for monopolistic piirposes, the larger ones will not be slow in
combining for the establishment of actual "monopoly" in all
industries.
I do not contend against the belief, or the fact, that as a
general rule production on a large scale is cheaper than on a
small one. This is a rule of general application, but, sir, I do
contend that if the producing agency, by reason of its great pro-
portions, be removed from the field of competition, there is no
incentive to the economic saving in production that is required
in the competitive field. Economic improvement and invention
result from the necessities growing out of competition. Destroy
this necessity, and you banish the incentive to improve and invent
and adopt cheaper modes of production. It is less trouble, easier
and safer to profit ~by increase of price or adulteration, when it
is known the consumer must buy your article, whatever its cost or
its quality.
But, sir, conceding the trust and combine can produce cheaper
than the individual, or company on a smaller scale, there is no
known law of unvarying application by which the consumer will
be benefited, or the seller to the combine be protected. The buy-
ing market must depend solely upon the conscience of the trust
producer for any share in the benefits of cheapened production.
The producer, of monopolistic character, has no interest in allow-
ing the general public to share in such benefits. If it be an
incorporated producer, there is no conscience to regulate the sell-
ing price, except loyalty to the stockholder in its concern, and
that conscience points with constant finger to fat dividends, be
the stock T)ona fide or fictitious! The advance in the price of
431
nearly all trust productions, from the moment the trust got full
control of the production, may be cited in support of the truth
and the soundness of what I have said.
Coming to a consideration of a legal remedy, for the correc-
tion of the trust evil, it is passing strange, in the light of the his-
tory of monopoly in England and France, that an invention is
to be sought in America where the individual and the protec-
tion of his every right are the boasted purposes of government.
When we recall what English courts, an English parliament, a
French statesman, sustained by a French king, have done to
correct and restrain the evils of monopoly when concentrated
money capital oppressed the individual; when we recall the fact
that the English common law is the boasted inheritance of the
American people, there is awakened a train of thought resulting
in conclusions by no means flattering to American legislation and
American courts! As far back as the case of Hurdis in llth
Coke, an English court, without republican sympathies or dem-
ocratic bias, adjudged in the case of a corporate company, by no
means so monopolistic as our Sugar Trust, that the citizen had
the right to have his cloth dressed by whom he pleased, and in
that, he could not be restrained to certain persons, "for that in
effect would be monopoly and therefore void." It has been deter-
mined by a long list of our State courts, and by the Supreme Court
of the United States as well, that whatever tends to injustice or
oppression, restraint of liberty, or trade or commerce, and natural
or legal right, when made the object of a contract, is void. It
has also been determined by many State courts that all combina-
tions between men or bodies of men to elevate or depress the mar-
ket, or increase prices, are injurious to the public interests and in
restraint of trade.
Chief Justice Fuller, delivering the opinion of the Supreme
Court in the Sugar case, 156 IT. S. Rep., p. 16, says: "Contracts,
combinations, or conspiracies to control domestic enterprise in
manufacture, agriculture, mining, production in all its forms,
or to raise or lower prices or wages, might unquestionably tend
to restrain external as well as domestic trade." The court says
on same page : "All the authorities agree that in order to vitiate
a contract or combination it is not essential that it should be a
complete monopoly; it is sufficient if it really tends to that end
and to deprive the public of the advantages which flow from free
competition."
In what precedes, we have the concession of the highest court
in our Nation, that, if the facts exist, as conceded by more than
69,000,000 in a total of 70,000,000 of people, the American trust
432
is an illegal thing and cannot exist! Yet we find it growing in
numerical and individual strength, and oppressive power. How
can a thing that is under the bane of public condemnation and
the bane of the law as well, so nourish and multiply? On the
hustings, inflammatory but conclusive answers could well be
given in an assemblage of this character, a briefer, and one sub-
ject to less criticism can be supplied, and that answer may be
thus framed: Great moneyed wealth by means of unhealthy
economic legislation has been concentrated in a few hands, and
it can, if allowed, secure greater gains by means of the trust and
combine, than by investment in more legitimate enterprise ; that
the Supreme Court of the United States, having declared and
adjudged in the case just cited, that there is no law existing, and
can be none under the Constitution as it now stands, to prevent
the concentration of capital for the purpose of having the few
wealthy exploit the many not so fortunate, by means of the trust
and combine, those means of multiplying wealth will be naturally
resorted to.
Is it true? On the 2d of July, 1890, Congress passed "An
Act to Protect Trade and Commerce against Unlawful Kestraints
and Monopolies." That act was apparently drawn so as to pre-
vent any form of trust or combine in restraint of trade, or, that
would destroy competition. Sec. 3 of the Act declares "Every
contract, combination in form of trust or otherwise or conspiracy
in restraint of trade * * * is hereby declared illegal/' and
a severe penalty was fixed upon any person who should make such
contract, or engage in such combination.
This far-reaching act of Congress, as shown by the record,
restrained the formation of trusts and combines from the date
of its passage, and the addition to the number of existing trusts
was small until January, 1895, when the Supreme Court, not
without protest from a sitting member, judicially declared that
whilst the act was not unconstitutional, it was ineffective, and
that the Congress of the United States was without constitutional
power to attain the purpose sought. This was, for reasons
strongly stated by Justice Harlan in his dissenting opinion, a
startling decision, and has given birth to the hundreds of trusts
that now afflict the American people. The decision is one to
which the American citizen must bow in submission, though with
some feeling of shame and humiliation, inasmuch as the court
admits the trust to be an evil thing, and an unlawful thing, but
a thing which the United States Congress is unable to deal with
under our Constitution as it now exists! In this case we have the
judicial declaration of our highest court, that the United States
433
government is not strong enough to control the trust and the
combine, and will not have the strength until there is a consti-
tutional revision!
The English Parliament in the time of James I. declared:
"That all monopolies and all commissions, grants, licenses, char-
ters, and letters patent to any person or persons, bodies politic
or corporate, of or for the sole buying, selling, working or using
anything within the realm * * * were contrary to law and
utterly void." By this act the Englishman was protected against
the imposition of the trust and combine. The courts before that
had held such bodies to he void under the common law of the
realm, and that same common law is the basis of all American
jurisprudence, our Congress of the united colonies having, in
1774, declared it to be a part of our "indubitable rights and lib-
erties." But in the matter of trusts, our Supreme Court has
decided that the people have no remedy either by statute or com-
mon law, and that all the remedy they can hope for under the
Constitution as now framed, must be through state legislation and
state courts!
When concentrated wealth and monopoly invaded the rights
of the Frenchman, that great French statesman, Turgot, pre-
pared an edict which was issued by Louis XVI. in the year of the
declaration of American Independence, which reads: "God, in
creating man with necessities, has compelled him to resort to
labor, and has made the right to labor the sacred unproscriba-
ble right of man. Therefore, it is ordained that the arbitrary
institutions which prevent the indigent from living by work;
which extinguish emulation and industry, and make useless the
talents of those who do not belong to a corporation or company;
which load industry with burdens onerous to the subject without
benefit to the state; which by the facility which they afford to
the combination of the rich to force the poor to submit to their
will, and to create conditions that enhance the price of the most
necessary articles of subsistence, be abrogated."
It is impossible to draw a more exact picture of the American
trust than that given by Turgot, and which the French king
banished from his kingdom because of its injustice to and hard-
ship upon the citizen! The American government is powerless
to do so much for the protection of the citizen as the French king
did for his subject.
The decision of the Supreme Court in the Knight case, de-
termines that we must have a constitutional change if the gen-
eral government is to deal with the trust problem. This enabling
434
amendment must be made, or we nrast rely upon state legislation
for a remedy. What view the Supreme Court may adopt as to
the constitutionality of any State legislation that undertakes to
deal effectively with the subject, remains to be seen. There are
now pending one or. more cases in which this problem may be
solved.
Kecent litigation and observation leave no room to doubt that
the trusts of the country have in operation a cunningly devised
system of what can be termed nothing milder than corruption.
The head of one of the largest of these bodies unblushinglv ad-
mitted before a recent investigating board that his company freely
contributed to the campaign funds of Democrats and Eepubli-
cans alike to Democrats in Democratic States, and to Kepubli-
cans in Eepublican states. This is one grievous evil of the system
working in a dangerous direction, and should be curbed by com-
prehensive and well digested state legislation that would prevent
the evil.
Under the almost undefined and limitless police power of the
State, the states of the Union can do much to restrain if not
destroy the oppressive power of the trust and the combine.
Under the general law the corporation formed in any one state
is a resident of that state, while it has power to do business where
it pleases. "West Virginia and New Jersey, notably, create cor-
poration of any character where the projectors are willing to
pay the required fees.
Such corporation can claim the judicial protection in any state
where it may do business, but so far as its existence is concerned,
no court outside of the State where it is created can affect it. If
a corporation doing business in States other than where created
should be required to become a resident of such other States for
all purposes, and on equality with other citizens of the State, as a
condition precedent to doing business therein, the State courts,
governed by the principles of the English common law, would
exercise a healthful control over them. Such legislation could
be framed without violation of the restrictive provisions of the
Federal Constitution, and would tend to give more general effect
to such legislation as has been adopted in Illinois and other States.
Again, the taxing power of the state is a largre one, and a wise
exercise of this power would do much to control the too powerful
trust, including the department store.
Public policv ever favors fair dealing, enterprise, and free
competition, and the courts h^ve declared all combinations whose
object is to destroy or impede free competition in business as void.
435
In such cases there must be some evidence of the object and
purpose of the combination. Change the rules of evidence so as
to make shown the effect of the combination, or of the trust that
has taken its place, evidence of the purpose for which formed,
and the trust will be made more amenable to the law, both in civil
and criminal proceedings.
In the light of State attempt to successfully deal with the trust
evil it may be concluded that the question should come within
the domain of the general government, and to accomplish this
there must be one or more amendments to the Constitution. The
further increase in the number of monopolistic aggregations may
be easily met by state legislative action in the future; but it is
with the evil that now exists with its power for future develop-
ment without increase in numbers, that the people are called upon
for decisive action.
It is argued that the whole subject will settle itself to the
mutual advantage of capital and the people if left alone. No evil
will correct itself so long as its intended purposes are attained by
growth and development! There is no law of trade or produc-
tion that will cure the trust evil by its inherent force. One of the
great authorities on the trust subject has voiced general sentiment
in this language : "It has come with none of the careful delibera-
tion that usually attends the investment of great aggregations of
capital. It has been guided by no precedent experience. It is
no gradual result of a natural evolution. It is a reversal of all
that economists have accepted as fundamental axioms of trade.
It is an undeliberate revolt against the most essential force in
the regulation of production, distribution, and values the
natural law of competition."
It being true that the trust is a thing born in defiance of law,
no known law can cause it to develop into a good thing in business
that must be controlled by natural laws or legislation.
I admit that in the business affairs of men there is at work
a leveling force which brings about a reciprocity of benefit and
a sort of equality; but this is a natural force, and there is no
place for its operation when the business belonging to the natural
man is turned over to the unnatural monopoly. The condition
then becomes too abnormal for the application of natural laws
and usual forces. And when we know that the abnormal condi-
tion has its birth in the purpose of the powerful few to impose
upon and oppress the millioned many, we know, without close'
reading from cause to effect, that the law of birth will develop
Strength and power in the purpose of origin.
436
If the trust evil as it now exists is to be corrected, if the
future evils that must ensue, are to be averted, there must be
legislation that can come from one source only and that is a
legislature, State and National, composed of men who are truly
American and above all undue corporate influence!
E. C. IRWIN.
President National Board of Fire Underwriters.
As a proper understanding of this question involves more or
less technical or expert knowledge, possessed only by those en-
gaged in the business, it may be well, for the benefit of those
of other callings, briefly to explain those fundamental principles
of underwriting which are indispensable to a correct conclusion
from a community standpoint.
It is perhaps unnecessary to explain that the "premium" is the
price paid an insurance company for assuming the risk of fire;
that the "rate" is the charge per $100 of insurance, fixed accord-
ing to the construction of the building, its occupation, environ-
ment and facilities, public and private, for extinguishing fires;
and that the "policy" is the contract, a unilateral one, written
and issued by the insurance company to the property-owner.
It is not generally understood that a policy of insurance is not
an agreement to pay a stipulated sum by way of liquidated dam-
ages in the event of the destruction by fire of the subject insured,
which would be a wager, and contrary to public policy, but is
simply an undertaking on the part of the insurance company to
indemnify the owner to the extent of his loss in actual value dam-
aged or destroyed; the amount of insurance named in the policy
and paid for at the rate of premium being the limit of claim, and
not a measure of it.
The rate of premium or price charged by the company is not
based upon the expectation of burning of a particular risk in-
sured, but upon the number of risks of like kind which would
be burned or damaged out of say a thousand in any single year.
At a rate of 1 per cent, for illustration, a thousand risks, each
insured for $1,000, would yield $10,000 in premium. If ten
risks out of the thousand should burn in a year, the entire
amount of premium would be required to pay the loss. It is evi-
dent that a smaller number than ten must burn, or a higher rate
than 1 per cent must be obtained, to provide for expenses as well
as losses.
The proper rates of premium for the various kinds of property
437
dwellings, churches, schools, stores, and manufactories are
based, therefore, upon the observed number of risks and amount
of loss in each class which burn out of a thousand of like kind in
a single year. If the business of fire insurance is conducted on
proper lines, the element of luck or chance does not enter into it.
While nothing could be more uncertain than the probabilities
of escape from loss by a single risk, nothing can be more certain
than that the average loss in thousands of risks of the same
hazard, environment, and conditions will be the same year by
year; but to ascertain this average percentage of loss, a com-
parison of the experience of all, or nearly all, of the companies
engaged in the business is necessary, certainly in the case of most
hazards, for the obvious reason that no one company would have
enough of most classes on its books, outside of such large classes
as dwelling houses, farm buildings, etc. especially in single
states to indicate the expectation of what might be termed the
fire mortality, or the loss on any one class.
This consideration indicates the twofold mistake of confining
the business of an insurance company to a single city or limited
territory, as it would deprive the company of a sufficient average,
and, therefore, any legislation prohibiting the conference of com-
panies for comparing their experience in other states, in order to
ascertain an adequate rate, would be subversive of the principles
of insurance. It might happen that a single company in a single
state, or, for that matter, a single company throughout the United
States, would show a loss on a certain class of hazards, while the
experience of all companies put together would show a fair profit
at the rate obtained. The co-operation of insurance companies
in order to ascertain correct rates is, therefore, necessary.
Take the risk of whisky in brick warehouses, for example. A
large company, having an exceptionally broad general experience,
incurred losses on this particular class during a five-year period
in the two states of Kentucky and Tennessee in excess of the pre-
miums taken. Such an experience would seem to indicate that
the rate obtained of 90 cents per $100 was too low, whereas the
experience of all the companies doing business in the two states
named proved that it was sufficiently high, and the rate was not
raised. This same company during the same period in another
section of the country the Middle States lost nothing on the
same class; an experience which, taken alone, would seem to
indicate that the rate obtained was for that locality too high,
which was not a fact, however, for the experience of all the com-
panies doing business in the territory showed the rate had been
properly fixed and that the experience of this single company
438
was simply exceptionally unfortunate in the one territory and ex-
ceptionally profitable in the other.
The argument so frequently made by some property-owners,
that they have paid insurance for a long term of years without
collecting a single loss, and should, therefore, have a lower rate,
is based upon ignorance of the principles of fire insurance, and
overlooks the fact that at a rate of 1 per cent it would take nearly
forty-one years for a sum of money like the premium paid at the
beginning of each year to equal the amount insured and a total
loss, compounding the interest at 4 per cent, and this without
any allowance for the expense of conducting the business. Any-
one can verify this computation for himself, and cannot afford to
be ignorant. It is best for the individual to entrust this branch
of his worldly affairs to those who understand it, for the same rea-
son that he entrusts the erection of his building to the mason,
carpenter, and architect. Cannot the state safely conduct the
business of insurance for its citizens?
Theoretically,' yes ; but practically nothing would be gained,
the chances being largely in favor of a higher cost to citizens and
poorer management than would result from the conduct of the
business by men engaged in it for a livelihood. The state would
need the same executive and clerical labor as an insurance com-
pany. It would require inspectors, adjusters, bookkeepers, and
men qualified for the various branches of the business to the same
extent that insurance companies would, but with this difference,
that they would too often be appointed for political reasons,
rather than because of personal qualifications for the duties to be
discharged. There is no more reason why the state should con-
duct the business of insurance than why it should conduct any
other business that of groceries, dry goods, or manufacturing.
It is safe to say that in the distribution of labor in a community
the community will regulate itself. No single calling can se-
cure an undue amount of profit without attracting to it enough
competitors from other callings to keep the prices at a proper
level.
What would have been the burden of the citizens at large of
the two states of Illinois and Massachusetts if they had been
called upon to pay the losses of their two cities of Chicago and
Boston in the years 1871 and 1872? Fortunately for them, the
citizens of the entire country, almost of the entire world, con-
tributed, through the fire insurance companies, to pay the mil-
lions that were required for the purpose.
Co-operation in fire insurance is not a "trust" in the modern
acceptation of the term. There is not and never has been any
439
"pooling" in the business of insurance. The rates obtained are
sufficient simply to insure the payment of losses and a moderate
profit on the capital. No combination, in any business, can pos-
sibly be injurious to the public which furnishes to the public
the article produced at the lowest price consistent with fair
return upon the capital invested and proper remuneration for
the labor employed. The statistics of all the companies engaged
in the business through a long series of years show that the profits
of the business of insurance have been less than 3 per cent of the
premiums collected, and dividends in excess of that per cent
made to stockholders have been received from interest returns
on capital and invested surplus an increment which would have
come to the owners of such assets without placing them at the risk
of fire.
The laws of the various states require detailed statements on
the part of insurance companies, showing every item of income
and every item of expense; the amount of their premiums re-
ceived and of losses paid. There is, in fact, no other business
whose methods, income, expenses, losses, and profits are thus ex-
ploited for the information of the public. There are no trade
secrets in fire insurance. If the business is conducted at un-
necessary expense or with undue profit, the result will be known,
and invite other companies to enter into competition, especially
from foreign countries, and it is impossible for any single com-
pany, or any number of insurance companies, to maintain any
form of monopoly.
It is doubtful if any mercantile or manufacturing business
could live if obliged thus to publish at the end of each year, for
the information of competitors and customers, the fullest details
of its transactions. Indeed, if the laws now in force for the regu-
lation of the business of fire insurance the compulsory publica-
tion of accounts, etc. were applied to other branches of busi-
ness, manufacturing and mercantile, the present war against so-
called "trusts" and combinations in those branches would be un-
necessary.
What, then, has been the protection of the business of fire
insurance that it has been able to survive this public exhibit of
all the details of its methods and its exact profits? It has been
the fact that the profit of the business has been so low as not to
encourage the organization of companies. Does not the simple
fact that the public shows its unwillingness to invest in insur-
ance stocks on other than a 6 per cent basis indicate what the
published figures of the business clearly prove, that there is no
abnormal profit in it and that investors recognize the element
440
of risk and have an apprehension of the facts, or surely the stocks
would find purchasers on a better basis than 6 per cent? The
stocks of well-managed railroads are selling to-day on a 4 per cent
basis.
In connection with this should be taken into consideration
that new companies can be easily organized. They have to ac-
quire no "right of way," no franchise, or the construction of a
valuable building plant ; there are no patent rights or copyrights
involved; the necessary capital and the law does not require a
large one with a little office furniture and stationery, is all that
is needed to launch a new fire insurance company. Surely the
written and unwritten law of trade and the rules of competition
can be relied upon to regulate the profits of such a business with-
out legislative interference.
As already stated, the ascertainment of the average percent-
age of loss, to be correct, involves comparison of experience, in
the interest of the property-owner as well as in the interest of
the insurance company, for an inaccurate estimate would be as
likely to be too high as too low. If it is too high, the property-
owner will be called upon to pay an excessive rate of premium;
if it is too low, the company will lose money; and as capital is
simply an incident of security, grossly inadequate if the premium
should prove insufficient for the risk run, the property-owner
would not secure the indemnity he is paying for. The total cap-
ital of all the fire insurance companies, domestic and foreign,
reporting to the New York Insurance Department at the close of
1898, was less than ninety millions ($89,476,981), while the
amount of premiums held by them for their insurance in force
was one hundred and two millions of dollars ($102,872,081),
whereas, the losses paid for the single year named were seventy-
one millions ($71,781,247), a sum, it will be observed, which was
nearly seven-eighths of the total capital of all the companies en-
gaged in the business.
This simple computation shows how important it is for the
community at large that the average rate of premium of the com-
panies should be high enough to pay the losses and expenses, and
that it would not do to rely upon the capital invested as a security.
State laws recognize this fact, and require that whenever the re-
serves of a company are not equal to its liabilities and its capital
becomes impaired, the company must immediately make its capi-
tal good or retire from business.
Competition, which is claimed by some to be the life of trade,
is the death of insurance if it results in inadequate prices or rates.
The proper conduct of the business, therefore, in the interest of
441
all concerned, involves accurately ascertained and equitable rates ;
a cheap price for insurance always implies reduced security, or the
absence of that which it is intended to purchase, and inadequate
rates must sooner or later result in worthless policies.
It should not require argument to demonstrate that, since all
the companies having policies on a burned property must incur
the same percentage of loss, and also the same percentage of ex-
pense, they should get the same rate, and that the property-
owner may well be suspicious of a company offering to write at
a lower rate than the majority of companies are willing to accept.
The buyer of merchandise, who secures possession when he ac-
quires title of an article of whose value he is a competent judge,
may felicitate himself on a good bargain if he gets it Below cost.
With the merchandise in his possession, and sure of its value, he
has no reason to care whether the seller lost money on it or not,
but it is not so with insurance. Insurance is not a "good deliv-
ery" until the policy has expired, or, in case of fire, until the loss
has been collected; and he who secures it at a rate below cost
and flatters himself that the other customers of the company "do
not secure the same terms, or overlooks the fact that, if they do,
his insurance is likely to be worthless, would do well to keep his
money in his pocket or deposit it in a savings bank.
It should be borne in mind that the payment for a fire by an
insurance company simply distributes the loss of the individual
upon the entire community; it does not restore anything. Such
drains upon the resources of the country are to a large extent pre-
ventable, and intelligent inspection and discriminating rating by
insurance companies would secure this end.
Any system of insurance rating which does not discriminate
between safe construction and unsafe construction and between
carefulness and negligence, is an injury to the community and a
gross injustice to that better class of citizens who build securely
and manage their affairs prudently.
It may safely be asserted that the enormous fire waste of the
country, costing at present at the rate of more than one hundred
and twenty-five million dollars per annum, or more than ten mill-
ions a month, would be materially increased but forthe inspections
and suggestions of insurance companies, enforced by higher rates
charged to those property-owners who are careless or indifferent
as to fire, and would be materially decreased if legislative restric-
tions in various states did not prohibit the co-operation of insur-
ance companies for so laudable a purpose directly in the interest
of the community.
It is as short-sighted to compel companies to write at inade-
442
quate rates as it would be to require savings banks to pay 6 per
cent interest and invest their deposits at 3 per cent.
Animosity toward corporations grows largely out of misap-
prehension in regard to them. The individual citizen does not
and should not lose his rights by becoming a member of a cor-
poration any more than by becoming a member of a partnership
firm. It is in the power of any citizen to become a shareholder,
even though his means are limited. One hundred dollars will
buy a share in a new insurance company. He is thus enabled to
engage in a business which he may not understand and to secure
intelligent management and expert knowledge which he does not
himself possess.
Corporations thus enable people of small means, by joining
forces and uniting their savings, to secure the same advantages
for business purposes that millionaire capitalists enjoy, and a cor-
poration thus becomes a poor man's opportunity. Among the
stockholders of insurance companies, thousands in number, are
widows and orphans, who are thus enabled to keep their modest
capital employed and to have an active partnership in commercial
undertakings.
It is, perhaps, not unnatural that property-owners, having in
mind only the simple process of writing a policy of insurance by
an agent of an insurance company and the delivery of it by him to
the assured or property-owner, should regard the expense of trans-
acting the business as merely nominal. They overlook the fact
that a greater number of persons of various qualifications must
be employed and remunerated before the policy of insurance can
be written and delivered, and that the percentage of the premium
required to pay the expenses of the business (about 35 per cent),
is not greater than that involved in the sale of merchandise, a
piece of calico, for example, which includes the profit to the
planter who raises the cotton; to the compress that presses it;
to the commission merchant who sells it ; to the common carrier
that carries it to the mill; to the mill-owner who manufactures
it into cloth, including his operatives; to the dye and print es-
tablishment that prints it; to the commission merchant in the
distributing center of a great city who sells it; to the wholesale
merchant, who in turn sells to the retailer, who in turn delivers it
to the consumer. All of these processes involve separate remuner-
ations and an aggregate percentage of expense fully equal to that
of the insurance business, which requires the agent in the town,
who writes and delivers the policy of insurance ; the expert who
inspects the building from time to time during the term of the
policy; the rating expert who fixes the rate, recognizing every
443
point of construction, occupancy, and environment; the adjuster
who must adjust the losses; the accountants and bookkeepers in
the offices of the company, and, lastly, the executive officers, who
must employ all of these men, supervise their work, and attend to
the investment of the assets and reserves of the company, not
forgetting office rent, stationery, blank books, printing, postage,
and last, but not least, taxes the latter seldom less than 2^ per
cent of the premium, to be paid whether the company makes
money or not. So that it is doubtful if any business involves
greater necessary outlay or requires higher executive ability or a
broader education as to the methods and hazards of all other occu-
pations.
Charles Sumner, when United States senator, wisely said, "a
tax upon insurance is a tax upon a tax, and, therefore, a bar-
barism." As the insurance company must collect enough from
property-owners to pay its losses and expenses and yield a living
profit, it is clear that the citizens of a state, after all, have to pay
the tax, with the expense of collecting it added which is a farce.
A tax upon the profits, on the other hand, is a tax upon the in-
surance company, and one that it should pay without complain-
ing. A tax upon the premium is a tax upon the assured property-
owner, and one he ought not to pay. No insurance company
would complain of being taxed 2-| per cent on that portion of the
premiums taken out of a state after payinsr the losses and expenses,
and this should be the basis of taxation everywhere.
This may be expected to be 55 per cent of the premium.
The largest and most successful companies have experienced not
less than this percentage of loss as the result of the years they
have been in business. If this percentage be added to the 35 for
expenses, there will be left 10 per cent 5 of which should be
accumulated, as already stated, for sweeping conflagrations, and
the remaining 5 per cent will probably not be regarded by those
engaged in any other business as an abnormally high profit, leav-
ing out of consideration the great risk run by those whose capital
is invested.
No legislation more inimical to the interests of the community
or injurious to the business of fire insurance has been enacted of
late years than so-called "Valued Policy Laws," which require,
in the event of the destruction of a building, that its owner shall
receive the full amount for which he has effected insurance upon
it, even though it be more than the actual cash value of the
property destroyed. As already stated, an insurance policy is
not an undertaking to pay a stipulated sum in the event of loss,
but a contract of indemnity or protection, so that when a prop-
erty owner pays, say, $50 for a $5,000 insurance policy, he is pay-
ing $50 for $5,000 worth of protection against loss by fire for a
given time the term of the policy, one year, three years, or five
years. If during that period a loss occurs, he will receive the
amount of the loss, not exceeding the amount named as the limit
of insurance. He may have five or more partial losses on the
same property during the time for which the policy is written
and receive pay for each of them, and still not exhaust the whole
amount of protection, unless the aggregate sums paid equal the
amount of limit in the policy.
The standard, legal form of an insurance policy contracts to
insure the property-owner in the following words :
"Against all direct loss or damage by fire to an amount not
exceeding five thousand dollars/'
Overlooking these unmistakable terms, some property-owners
and legislators infer that the agreement is to pay $5,000 in the
event of the destruction of the property, though it might not be
worth more than $1,000. They also overlook the fact that the
policy may be written for one year, or, as is often the case, for
five years, and the value of the building, by age, use, decay, etc.,
may be greatly less at the end of the term than at its beginning.
A "valued policy" law would in such case work most unjustly.
The argument is made by those advocating such laws that in-
surance companies should investigate the values of the properties
they insure if they do not wish to pay for the full amount of the
insurance, and that it will be their own fault if they are mulcted an
undue amount. This argument overlooks the fact that to properly
ascertain the actual cash value of a building requires a careful ex-
amination by expert builders, masons, carpenters, etc., who would
charge for their services in many cases especially in the case
of the buildings of small value of the poorer classes, and particu-
larly farm buildings in the country, which they would charge
extra to visit as much as, or more than, the whole premium paid
for the insurance. Such expensive expert examinations ought to
be necessary only in case of a fire to ascertain the amount of loss,
and, therefore, only in the one case of a burned property out of
the hundreds which do not burn. A "valued policy" law, there-
fore, works most oppressively upon the property-owner of small
holdings, and least oppressively upon the properties of larger
value, whose owners do not, as a rule, obtain an undue amount of
insurance, and the requirement entails that the same labor and
expense shall be incurred as to each of hundreds of risks to pre-
vent the single property-owner who may have a loss from collect-
ing more than he is entitled to receive.
445
The argument in favor of valued policy laws also overlooks
the obvious fact that an honest claimant is sure to receive the full
amount of his loss in any event, since no intelligently managed
insurance company would be so short-sighted as to refuse to pay
an honest claim, realizing that, in case it should, it would be
forced to do so at law, for courts and juries never sympathize
with corporations, but always with the individual. Moreover,
all insurance policies contain a clause which provides that in case
of differences between the owner and the insurance company, the
matter in dispute shall be left to disinterested appraisers, chosen
by each, who in turn shall select a third as umpire. A man is
thus entitled to have for his appraiser any neighbor in whom he
trusts. It would with 'this provision be impossible for an insur-
ance company under its policy to escape paying all to which any
claimant is entitled. Insurance companies are not litigious ; they
cannot afford to go into courts except with clean hands and with
claims of unmistakable justice. The statements of the companies
reporting to the New York Insurance Department show that a
sum less than 2 per cent of the amount of losses paid by them
during the past year was in suit at its close, and as those losses
in suit were the result of an average of at least three years' busi-
ness, it follows that the losses contested by companies are less
than 1 per cent of the whole amount of the losses incurred.
When it is remembered how many fraudulent claims are made
upon insurance companies, it becomes a serious question, not
whether too many claims are contested by them, but whether
enough are resisted to protect the interests and insure the security
of their more honest claimants.
The man who injure? his building knows better than anyone
else what it is worth : he is not obliged to pay for more insurance
than would protect him for its full value. If he does, he con-
templates a fraud upon the insurance company, and should not
be a^isted in consummating it by the operation of law on the plea
that he should receive the full amount of the limit named in the
policy simply because he voluntarily paid for more than he knew
was nere==nrv to protect him against honest loss. A valued
policy law is in reality a premium upon fraud and an incentive
to incendiarism or burning for gain, imposing unnecessary bur-
den? upon honest citizens, who must be taxed in higher rates of
premium to pay for the exaggerated claims of an unprincipled
few.
"Few persons realize to what importance insurance has grown
as a factor in the commercial world. It is to-day the security
on which most enterprises rest, without which their projectors
would hesitate to engage in them. The lender could not afford
to trust the borrower if the ability of the latter to pay the debt
was liable to be cancelled by a fire. The last census report showed
that the real estate mortgage loans of the United States amounted
to more than six thousand million dollars ($6,019,679,985.) Of
this enormous sum the citizens of Illinois alone had borrowed
three hundred and eighty-four millions; Massachusetts three
hundred and twenty-three millions; New York sixteen hundred
and seven millions; Pennsylvania six hundred and thirteen mill-
ions. It is safe to say that all of these loans are based upon in-
surance policies held as collateral security. Can anyone estimate
the consequences if these mortgages should be called in by the
lenders, deprived of their insurance collateral and unwilling to
trust their money to the contingencies of fire! Can anyone doubt
that such action would be taken if fire insurance capital should
be withdrawn from a business made unprofitable by the burdens
which mistaken legislation is increasing year by year!
There is probably to-day not an enterprise in the business
world which does not depend upon the security of fire insur-
ance. It protects alike the dwelling of the laborer and the palace
of the millionaire ; the business of the retail dealer and the aggre-
gated values of the largest manufacturers. Without the assur-
ance which its protection affords it is doubtful if the enterprise
of those possessing capital would be exerted sufficiently to give
employment to the wage-earner or to keep the wheels of trade
and manufacture in motion. Commerce would be paralyzed,
for credit would be withheld where confidence would be wanting
in the ability of the purchaser to pay. It is the handmaid of com-
merce and the guardian of industry. Ventures are made without
hesitation which would appall those embarking in them if liable
to miscarry through a single fire ; large values are boldly collected
to meet the requirements of commerce where an accidental con-
flagration might destroy them in a night, merchants sell their
goods on" extended credits, knowing that although the misfortune
of fire may overtake the purchaser, his insurance indemnity will
enable him to pay for them not less readily than before; vast
industries giving employment to thousands of operatives and
supporting whole towns by their enterprise, testify not more to
the courage of their projectors than to the confidence they repose
in the protection which insurance gives to their undertakings;
and, to-day, insurance is as certainly a necessity of commerce
and manufacture as is the railroad or telegraph or steam power
itself; it is as essential to the commercial system of the world
as the woof thread to the fabric of the loom.
447
Probably no more eloquent tribute to the spirit of insurance
is to be found than the utterance of the French jurists, at the
close of their report to the council of state, on the subject in the
code of commerce:
"Insurance may justly be deemed one of the noblest crea-
tions of human genius. From a lofty height it surveys and pro-
tects the commerce of the world. It scans the heavens; it consults
the seasons ; it interrogates the ocean, and, regardless of its terrors
or caprice, defines its perils and circumscribes its storms. It ex-
tends its cares to every part of the habitable globe, studies the
usage of every nation, explores every coast, and sounds every har-
bor.
"To the science of politics it directs a sleepless attention; it
enters the council of monarchs, watches the deliberation of states-
men, weighs their motives, and penetrates their designs. Found-
ing on these vast materials its skillful calculations, secure of the
result, it then addresses the hesitating merchant: 'Dismiss your
anxiety and fear; there are misfortunes that humanity may de-
plore but cannot prevent or alleviate. Such are not the disasters
you dread to encounter. Trust in me, and they shall not reach
you. Summon all your resources, put forth all your skill, and
with unfaltering courage pursue your adventures. Succeed, and
your riches are enlarged; fail, and they shall not be diminished.
My wealth shall supply your loss. Rely on me, and for your
sake, at my bidding, the arm of your enemies shall be paralyzed,
and the dangers of the ocean or the flaming- pile cease to exist.'
The merchant listens and obeys, and is rewarded. Thousands,
tempted by his success, follow his example. Those whom it had
long separated, the ocean now unites. The quarters of the world
approach each other and are bound by the permanent ties of
mutual interest and mutual benefit."
We trust we have explained the relation of insurance to the
community in such manner as to secure a negative to this im-
portant question. We trust we have established as facts :
First That fire insurance is a commercial and community
necessity.
Second That a policy of fire insurance is a contract of in-
demnity; and
Third That the reliability of the indemnity depends upon
the sufficiency of the rate of premium, because
1. State laws properly require that if the capital is impaired
it must be made good, or the company must cease doing business.
If companies cannot pay their losses and expenses and secure a
fair profit return on the capital adventured they will neither be
448
organized nor continue in business if already organized; there-
fore, capital is only an incident of the business and an adequate
rate is indispensable.
2. Adequate and equitable rates are necessary for the protec-
tion of the policy-holder as well as for the protection of the stock-
holder. Otherwise the burden of insurance will be unequally
distributed and one man's property will be protected, if insured
below a proper rate, at the expense of another. Insurance capital
must and should have a fair return for the risk run a law of
community.
3. As inspection and supervision necessary for the ascertain-
ment of correct rates can be as cheaply performed for one hun-
dred companies insuring a single building or risk as for any one
of them, co-operation is advisable to reduce the expense per-
centage. At the same time it would reduce the loss percentage
by securing correction of faults which would cause fires and by
encouraging proper construction which would tend to prevent
their spread, and so result in cheaper insurance to property-own-
ers. In this view, co-operation of insurance companies is directly
in the interest of the community and should be encouraged and
not prohibited. Laws which prevent companies from co-operat-
ing in this way, and compel each company to inspect each build-
ing for itself, must increase the expenses of transacting the busi-
ness and result in unnecessarily higher rates of premium.
4. As the labor required to ascertain and fix proper and
equitable rates for a building and its contents can be performed
by the same expert in the same time for one hundred companies
who insure it as for any one of them, co-operation to ascertain
and fix rates would result in a saving of this expense also, and so
further cheapen the cost of insurance to the property-owner and
be directly in the interest of the public.
5. As rates of insurance are based upon the experience of the
companies through terms of years on the various classes of haz-
ards, most of which are so few in number that there would not
be enough of a class in a single state to determine the experience
cost of insuring them, the statistics of experience should be col-
lated from the whole country, in justice to the owners of such
risks, and not based upon the abnormal loss rate of a small class
in a single state, which would indicate the necessity for an exorbi-
tant rate on the class in such state, when in fact it might not be
necessary.
6. The burden of insurance rates should be graded according
to the percentage of insurance carried to value, just as municipal
and state taxes are based upon uniform assessments of the same
449
percentage of value, and the property-owner who insures a proper
percentage of his value is entitled to a lower rate than one who
insures a small percentage on the same principle that wholesale
prices should be lower than retail prices. Otherwise one class of
citizens would be securing insurance at a lower cost than an-
other. Co-operation of companies, therefore, is necessary to pro-
vide for this in percentage co-insurance clauses in all policies.
It follows, therefore, since co-operation is necessary
To ascertain cost;
To ascertain and secure adequate rates for indemnity;
To prevent fires and thus cheapen the cost of insurance;
To divide and lessen expense and so to further cheapen the
cost of insurance;
To secure that the same percentage of insurance should be
carried by all owners or a difference in rate made the principle
of co-insurance or average which has always been a feature of
marine insurance;
That the conference of companies and co-operation must be
in the interest not only of the insurance companies themselves,
but of their customers, the insuring public.
Insurance is, therefore, not a "trust," in the modern and
ordinary acceptation of the term, by which is meant a combina-
tion of those engaged in a particular business to extort improper
prices from their fellow-members of the community and so to
obtain an undue share of community benefit. The ease with
which any number of citizens can organize an insurance com-
pany will always prevent a monopoly of the business, and those
engaged in it can always be relied upon, in their own interests,
to regulate their prices with reference to this important fact.
Exorbitant rates and abnormal profits always attract competition,
which results in inadequate rates, and those engaged in the busi-
ness thoroughly understand this. Managed on true underwriting
lines, an insurance company is simply a great machine for distrib-
uting the burden of the fire loss of the individual citizen among
his neighbors throughout the entire country, so that the burden
of helping one who is unfortunate will be lightly felt by all. It
is the truest and most sensible method of carrying out the scrip-
tural injunction, and it is amenable to the laws of trade which
automatically regulate the profits of all commercial enterprises
so that no one class of citizens can long retain any undue advan-
tage of their neighbors or any improper share of the community
wealth.
450
EVENING SESSION, SEPTEMBER 15.
With W. Bourke Cockran and William Jennings Bryan an-
nounced as speakers of the evening, the conference on trusts
was the one event of importance in the city of Chicago Friday
evening. The afternoon session had not adjourned before the
doors were besieged by ticket holders anxious to secure their
places for the evening. By 7 o'clock State street was packed with
a struggling crowd working toward the doors of the hall where
the conference was to convene an hour later, and when Chairman
Howe's gavel fell at 8 o'clock the auditorium was packed from the
parquette to the outside edge of the upper gallery and there were
ten thousand people clamoring in the street for admission. The
boxes were filled with a brilliant audience of society people, and
the delegates made way in their seats for scores of gaily dressed
women, while the aisles were utilized to accommodate as much of
the overflow as possible. Altogether the audience was as bril-
liant and intellectual a gathering as ever assembled in Chicago,
and bore testimony to the interest of all classes in the question
under debate.
While the audience expected to hear both Mr. Bryan and Mr.
Cockran speak, the program was changed after the arrival of Mr.
Bryan that afternoon, and he was assigned Saturday morn ing.
In spite of the crowd and the trouble of seating it, there was
no delay in opening the evening session, and the chairman intro-
duced William Dudley Foulke, of Indiana, who spoke on "The
Problem of Trusts and Some Proposed Remedies."
WILLIAM DUDLEY FOULKE.
I confess I have not yet been able to see my way clearly
through the whole labyrinth of complicated questions which arise
in connection with this problem of the trusts. Nay, more, I believe
that if anyone to-day thinks "he knows it all" that he has found
a complete remedy for every evil involved he will learn that he
is mistaken ; and if he could awaken sometime far into the nex
century and look upon the great transformation wrought by the
mighty agencies that are being organized at the present time,
he would perhaps be as much surprised as if he had arisen in
paradise and found that the gates were not of pearl, and the
streets were not of gold, and that the angels were playing upon
instruments with which he was wholly unacquainted.
The question we are called to consider dwarfs in importance
all other issues now before the country or the world. When
Dreyfus shall have been forgotten, when the war in the Philip-
pines shall be regarded only as one of the episodes of history,
when men shall speak no longer of the tariff or the currency, the
present era may well be remembered by coming generations as
the epoch of that great organic change when the system of com-
petition began to give way to the system of co-operation a
change leading inevitably (whether for good or ill we cannot
clearly see) to the radical reconstruction of the world's industrial
and social life.
The organizers of the trusts, in their eagerness to put a stop
to wasteful and ruinous competition, have been rushing in head-
long haste to realize the immediate, personal benefits of increased
economy and power offered by these great unions, with little
regard to ultimate consequences. Their thought has been, "After
us the deluge/'
On the other hand, those who have been thrown out of em-
ployment or ruined by the suppression of competition, together
with that vast conservative element in our population which fears
a leap into the dark, are lifting their voices in warning, and some,
it may be added, in rather indiscriminate abuse.
Let us consider first the competitive system which seems to
be diminishing in importance in our industrial life, and next
the co-operative methods which are so largely taking its place.
First, what has competition done for the world?
It has been, perhaps, the most prominent factor of our indus-
trial progress. Competition between buyers has enhanced the
price to the producer. Competition between sellers has stimu-
lated improvements in the quality of the product, has quickened
invention and skill, has reduced the cost to the consumers and
multiplied their number, and thus stimulated production to sup-
ply the enlarged demand. It has increased the employment of
labor, enhanced the wages of the workmen, and improved the
condition of the laboring classes.
But competition, although immensely valuable and necessary
as a phase in industrial development, has certain grave disad-
vantages. Essentially based as it is upon the principles of self-
interest, it promotes the development of selfish characteristics of
452
skill and energy, indeed, but often also of heartlessness and
indifference to the welfare of others. It is part of the great
struggle for existence. It follows the law of organic life the
survival of the sharp eye, the swift wing and the keen talon and
the merciless beak. And it has resulted just as natural evolution
results, in the destruction of lower and feebler forms of existence
and in the survival of those only who are best fitted to carry on
the work of the world. But this has been accomplished, like the
development of organic life, at immense waste and sacrifice.
Thousands qf smaller creatures have perished to make the food
of one. A far greater effort than that which is required for pro-
duction itself is often expended in the mere fight for a market.
Each year the struggle has grown more intense. By steam
and telegraph distant points became united, and the industry
which originally feared no competitor outside the limits of its
own town was perhaps overthrown by some rival in distant part
of our country, or even beyond the seas. The margin of profit
became smaller, the outlay for putting goods on the market con-
stantly increased, vast sums were spent in advertising or paid
to commercial agents and travelers, or consumed in the useless
reduplication of plants and of expenses of administration, all of
which could be saved under a more perfect system. The very
thing to be developed by competition cheap production was
in a measure defeated by the struggle which competition re-
quired. The only remedy then was for industries engaged in the
same branches of business to unite so as to reduce the cost of
production, if not also to increase or maintain the price of the
product. The law which led to this is as much a natural law as
that which brought about the competitive system itself.
But there are evils incident to these combinations which may
outweigh their advantages. When the aggregations of capital
become very great, when competition is virtually suppressed, and
when the combination becomes practically a monopoly, it may
exercise its powers to the injury, not only of competitors, but of
the public. It may dictate terms to the world. Whenever there
is only a single buyer of the same material, he dictates the price
to the producer. Wherever there is a single seller of the finished
article he makes his own price with the consumer, perhaps an
exorbitant one, and diminishes thereby the numbers of coi
sinners and thus restricts production and curtails
ment of labor and the wages paid for it.
In practical experience, the actual economic evils are i
less than are generally supposed, far less indeed than those which
are theoretically possible. In point of fact monopolies do not
453
often increase the cost of the product very greatly, since if they
do this they will curtail the consumption of their goods too much,
or their extravagant profits might often induce new competitors
to enter the field. The monopolies which are under the wisest
management have therefore kept prices at figures which are not
unreasonable, and they often show, as in the case of the Standard
Oil Company, and the Sugar Trust, that there has been an actual
decrease both in the price of the product and in the cost of the
manufacture. But there is reason to doubt whether this dimin-
ished cost is due to monopoly, or is indeed anything, like as great
as it would be under a free system of competition with the im-
proved methods which the progress of civilization continually
introduces.
Therefore, while the monopoly may pay somewhat less for the
raw material and may charge somewhat more for the product than
would be possible under competition, this evil is by no means the
greatest which is involved. The restriction of the output and the
displacement of labor by these new organizations also occurs, but
this is not an unmixed evil when their greater economy is con-
sidered. It is of much the same character as that which follows
the introduction of labor-saving machines and of labor-saving
organizations of industry everywhere.
Indeed, monopoly may often be of advantage to labor organ-
izations. Under the present system a demand for increased
wages may fail, or wages may be reduced because the employer
cannot afford to pay them without destroying his business, and
depriving himself of the power to meet his competitors on equal
terms. To pay the higher rate of wages he must carry on his
business at a loss, hence he suffers his plant to lie idle.
But a monopoly can always afford to pay the increased wages.
It can always recoup itself by increasing the prices of its product.
So the only question to be considered is whether labor of the
same kind can be procured on better terms elsewhere. The
workmen skilled in certain branches of industry are often limited
in number, and under proper organization such workmen are
likely to receive a continually larger proportionate share of the
product.
But the political and social effects of monopolv are far more
menacing to society than its economic results. Tbe great con-
solidations of capital are fast seizing the avenues of power that
lead to the control of the government, and are seeking to rule
the states and the nation, often through procured legislatures
and corrupted officials.
Yet the monopolies are here. A great part of our manufactur-
454
ing industries and a considerable fraction of our commercial
business is already in their hands.
When the Sugar Trust controlled 98 per cent of the produc-
tion of the country it was idle to say that the remaining 2 per
cent could offer any substantial competition. And the present
tendency is for all these great organizations to draw closer and
closer to the ideal of a perfect monopoly, though none of them
has yet entirely reached it.
If this present tendency remains unchecked, it is easy to see
that each of the important branches of manufacture will be con-
trolled by a single company, and the people naturally look for-
ward with alarm to the time when in each branch of industry a
single monopoly shall control the trade.
Nay, the combining and recombining will not stop even here.
A single company is likely to control many branches of industry.
The department store already absorbs nearly all the branches of
retail trade. The great anthracite coal fields are practically under
the control of two or three railway companies, and it is impossible
to say that even the wheat fields of the Northwest, or the cotton
fields of the South may not in the future share the same fate.
The railroads indeed have undertaken many other branches of
industry as feeders for their great lines. The summer hotel
business seems to be passing largely into their hands, as well as
much of the grain elevator business, the shipping and other
agencies of transportation. Who can say indeed what branch
of industry may not be the feeder for a railway?
As the great nations of the globe are becoming fewer and
fewer until now there are four or five at most which control the
future destinies of mankind, so the tendency of industrial organ-
izations to aggregate is such that I can see in fancy four or five
great companies which shall control practically the whole output
of the country.
Nay, since all industries are now indissolubly united, who
can say (if the present movement should go on unchecked) that
a single gigantic organization may not sometime control all pro-
duction?
This will be a form of socialism, and yet it may not be at all
the socialism which fancy pictures in the dreams of the disin-
herited.
Socialism may take many forms. The industrial organiza-
tion of society may be for a time separated from its political or-
ganization, but not permanently. Socialism does not necessarily
mean equal shares to all in the joint property, or returns.
may be divided according to the services rendered or capital con-
455
tributed either by the actual stockholders or their predecessors in
title, just as private property to-day consists of that which a man
earns and acquires as well as that which has come to him by gift
or inheritance. It is, however, clear that the mass of the people
must have a sufficient interest in the co-operative commonwealth
to give the structure a broad base and prevent its toppling over.
That it should remain in possession and control of only a few
millionaires would not long be tolerated. And yet equality
might be found as impossible in a co-operative state as under the
competitive system. So long as men are unequal in skill, indus-
try and ability, the greatest prizes will always be won by com-
paratively few.
Most of us would look with great apprehension upon such
a radical change in the social order, although we cannot fail to
see that many steps toward this change have already been taken.
Our chief apprehension comes from two sources:
First, we realize how inadequate are our government agencies
even for the smaller problems which confront us in city, state,
and national administration. How utterly impotent then will
they be for the management of our whole industrial life!
But perhaps one of the reasons why they are so inefficient
at present is owing to the very fact that they are not important
enough. The great prizes which the world offers to-day are gen-
erally to be found in industrial life, and our best and ablest men
will therefore not devote themselves to politics. But if the power
of the commonwealth embraces all things, if it becomes the only
agency through which men can reach success, our best life must
inevitably flow thither.
But the second great objection to the socialistic form of gov-
ernment resides in the fact that men believe that it will be de-
structive of individual independence, that it will take away a
great part of the incentive to exertion, that it will be fatal to the
development of character by making each individual, in the
words of Governor Pingree, only a single cog or rivet or bar in
the great machinery of the state, rather than an independent
being with aims and interests of his own. Has this not already
been the effect upon the great masses of workmen in many of the
vast industries heretofore established? Each laborer has become
the producer of an infinitesimal part of some great product. ^ He
has been turned from a man into an automaton. Will not this be
the case in a much greater degree when all society is organized
for the development of a common industry? But I am advancing
further into the future than is permitted to human foresight.
Of one thing, however, we may be sure, that the present tendency
456
HENRY WHITE
W. P. POTTER
A. E. ROGERS
.JOHN I. YKM.OTT
.JOHN W. SPKNCEK
F. E. HALEY
toward the combination of capital, if it be not arrested somewhere
m its course either by natural law or by artificial means, will lead
in the end to some form of socialism.
But is the present tendency to continue indefinitely? Will
the operation of this law be like that of the law of gravitation
which has condensed the vast nebulous mass of the solar system
into one great central orb, with a few planets and their satellites?
Or will if be like the motion of the pendulum, like the current of
the waters to the sea, coming always back to their source? Will
we return again to the competitive system, or even to the indus-
trial periods which have preceded it?
Many of our profoundest thinkers believe that aur present
industrial development will take care of itself. Following the
analogies of organic life, they say that wherever an organization
becomes too bulky to do its work successfully, that it will give
way in the struggle for existence to smaller and more efficient
organizations, just as the monsters of the Saurian era have van-
ished from the world, while so many of the minuter forms of life
still remain in healthy activity. Some of these men have even
shown us what they consider the law which will guard society
against the evils of accumulated capital. I was much impressed
with a recent article in the September number of the Review
of Reviews, entitled, "Why the Trusts Cannot Control Prices,"
from the pen of Hon. George E. Roberts, Director of the Mint. He
insists that there is in the world a leveling force which continu-
ally operates to reduce the value of what has been inherited or
accumulated in the past, and to enhance the importance of the
ability to do things in the present ; that the profits and earnings
of capital have been declining on account of the rapid accumula-
tion of capital itself, and that this loss has been distributed by
means of lower prices to the multitude ; that the amount of wealth
seeking investments will constantly and rapidly increase, and
that all efforts to fence up the several fields of industry for quiet
possession by a few with extraordinary returns, are inevitably
doomed to failure; that accumulating capital can only find em-
ployment through the increased purchasing power of the masses ;
that the abnormal profits of the successful trust must be invested
and the beneficiaries would constantly encroach upon their neigh-
bors' preserves; that therefore these new combinations, if they
seek extraordinary profits, are opposing a force greater than them-
selves, that will persist forever ; that the trusts are therefore bound
to divide their profits with the consumers rather than sacrifice
them in a hopeless attempt to buy off an endless succession of new
competitors; that the more rapidly capital increases in the hands
A*n
457
of investors, the greater the pressure to find employment at even
nominal terms, and the more difficult to maintain a profitable
monopoly ; and that the new capital coming into the market to-
morrow will protect the public against the combinations of the
old.
But even if we do not concur in the conclusions of Mr. Kob-
erts, even if we see in the present tendency a menace to our social
. life, still I fear that it will be found impossible entirely to eradi-
cate the present tendency of our great industries toward combina-
tion and monopoly.
The numerous laws which have already been enacted to break
up trade agreements, pools, and technical trusts, have been inef-
fective. They have resulted in the organization of larger cor-
porations which are more permanent and more dangerous in their
character than the things which are prohibited by statute. If
it were possible to break up these corporations, which may well
be doubted, the men who compose them would unite perhaps
in partnerships or other forms of union to accomplish the same
objects. If you break up these there are infinite varieties of or-
ganization which will take their place. The tendency of men to
associate for the accomplishment of a common purpose is like
the law of gravitation, and no statute will be found effective
against such a tendency.
I should like to consider in greater detail the reasons why the
trusts cannot be entirely overthrown. But you have not come
here to-night to hear me, but to listen to a far abler and more dis-
tinguished gentleman, and I will close.
I wish, however, to refer to another fact which has passed into
history, and which may guide your judgment. Trades unions
were illegal at the common law just as the monopoly of consoli-
dated capital is to-day. Every combination of laborers to advance
wages was punished as an offense against the so-called law of free
competition in the labor market. But competition had to give
way to co-operation, and who shall say that the condition of the
workingman has not been improved? Will not the legal barriers
which failed before organized labor be found equally ineffective
against organized capital? Organization is part of the world's
progress, even though we cannot fully see whither that progress
tends. This much is surely evident, that if legislation cannot
overthrow the present tendency to combination, it is worse than
useless to enact for that purpose laws which shall cripple the
productive agencies of the country while they fail to accomplish
the end they have in view.
The present consolidating tendency of our industrial life is
458
largely beyond our control. We can guide it only a little way
upon its journey, for the most part we shall have to stand aloof
whether we will or no, and see the salvation of the Lord And
: better things develop than we dream, it will not be the first
instance in the evolution of our race where good has been the
final outcome of apparent evil, and where the agencies which
seemed to portend disaster and ruin have been in the end the min-
isters of prosperity and happiness.
Mr. Foulke was in the midst of his paper when Mr. Cockran
entered and made his way to the seat reserved for him on the plat-
form. The audience made a demonstration of welcome, while
the speaker smilingly suspended his remarks. He resumed, but
had not concluded when Col. W. J. Bryan entered and another
outbreak of applause followed. Smiling at the interruption,
Mr. Foulke said :
"I perceive you have come to hear some one else."
There were prolonged applause and cheers for the speaker
with cries of "Go on! go on!" and Mr. Foulke concluded without
further interruption.
EDWARD ROSEWATER.
Publisher Omaha Bee.
Edward Rosewater, of Nebraska, was the next speaker, and
said:
We are confronted by grave problems generated by the indus-
trial revolution of the nineteenth century. The trust is but the
outgrowth of natural conditions. The trend of modern civiliza-
tion is toward centralization and concentration. This tendency
is strikingly exhibited in the congestion of population in large
cities, the building of mammoth hotels, tenement blocks, sky-
scraper office buildings, the department store and colossal manu-
facturing plants.
The monopolistic combination of corporate capital known as
trusts has its origin in overproduction and ruinous competition.
Honestly capitalized and managed with due regard for the well
being of their employees and operated economically for the bene-
fit of consumers of their product these concerns would be harm-
less. Within the past decade the trusts have, however, for the
most part,- degenerated into combinations for stock jobbing.
Nearly every trust recently organized had its incentive in the
irresistible temptation held out by the professional promoter to
capitalize competing plants enormously in excess of their actual
value. This fictitious capitalization constitutes the most dan-
gerous element of the modern trust. In nearly every instance
overcapitalization becomes the basis for raising the price of trust
products and invariably lays the foundation for bank failures,
panics and all the ills that follow in their train.
It has been asserted from this platform that fraudulent capi-
talization is an evil that will cure itself and at the very worst con-
cerns only the stock speculators who voluntarily assume the risk
of investment in over-valued trust securities. Experience has
exploded this .delusive theory. Nearly all the so-called "indus-
trials" are on the market and the owners of over-valued plants
either dispose of their holdings or place them in banks as collat-
eral for loans negotiated for speculative schemes financiered on
the baloon plan. The inevitable outcome in cases of money strin-
gency or panic is shrinkage and collapse of the concerns involved.
Banks rarely loan their own money, but that of their depositors,
and when the banks go to the wall the whole commercial and
industrial fabric is involved in wreck and ruin. This means the
destruction of confidence and wide-spread distress to the toilers
in every field of industry. Fraudulent capitalization is, more-
over, not merely a menace to the well being of the present genera-
tion, but also endangers the future of generations yet unborn.
It is an open secret that life insurance funds held in trust for the
widows and orphans of policyholders are invested in industrial
securities resting on a foundation of sand and water.
It is a matter of history that every panic that has ever occurred
in this country was brought about by inflation. The panic of
1837 was caused by wild land speculation and inflation of land
values. The panic of 1857 was precipitated by the enormous
inflation of paper currency issued by wildcat banks and conse-
quent overspeculation and inflation of values of all classes of
property. The panic of 1873, ascribed to the failure of Jay
Cook and the collapse of the Northern Pacific, was in reality due
to the inflation caused by an almost unlimited issue of green-
backs and consequent reckless speculation in railway stocks and
other securities that had been fraudulently inflated. The panic
of 1893 was again caused by the enormous inflation of securities
issued by railroads and industrial concerns of every description,
among which the trust securities were quite prominent.
The imperative duty of this conference is to devise measures
460
that will make the trusts harmless. With this end in view it
should recommend :
First The creation by act of Congress of a bureau of super-
vision and control of corporations engaged in interstate com-
merce with powers for its chief similar to those exercised by the
comptroller of the currency over national banks.
Second Legislation to enforce such publicity as will effectu-
ally prevent dishonest methods of accounting and restrict traffic
and competition within legitimate bounds.
Third The abrogation of all patents and copyrights held by
trusts whenever the fact is established before a judicial tribunal
that any branch of industry has been monopolized by the holders
of such patents or copyrights.
Fourth The enactment by Congress of a law that will com-
pel every corporation engaged in interstate commerce to operate
under a national charter that shall be abrogated whenever such
corporation violates its provision.
Fifth The creation of an interstate commerce court with
exclusive jurisdiction in all cases arising out of the violation of
interstate commerce laws.
Sixth The revision of the Constitution of the United States
by a constitutional convention to be called by two-thirds of the
states at the earliest possible date, as provided by article V of the
federal Constitution, which reads as follows: "The Congress,
whenever two-thirds of the states shall deem it necessary, shall
propose amendments to this Constitution, or on the application
of the legislatures of two-thirds of the several states shall call a
convention for proposing amendments which in each case shall be
valid to all intents and purposes, or part of this Constitution
when ratified by the legislature, if three-fourths of the several
states or by conventions in three-fourths thereof as the one or
the other mode of ratification may be proposed by the Congress."
It will be noted that the initiative for the adoption of separate
amendments to the Constitution must be taken by Congress while
the initiative for a revision of the Constitution can be taken by
the states through their legislatures and when two-thirds of the
states have endorsed the proposal it becomes mandatory on Con-
gress to call a constitutional convention and submit its work for
ratification. Manifestly, the revision of the Constitution is more
certain by a convention called by the states than would be an
amendment proposed by Congress, which is not likely to pass the
ordeal of a two-thirds vote of the United States Senate so long as
its members are not elected by the direct vote of the people. In
my judgment, the time is ripe for such a revision of our funda-
461
mental law as will make it conform to the changed conditions
wrought by more than a century's marvelous industrial evolution,
commercial growth and territorial expansion.
While the trusts might be reached by a single amendment to
the Constitution, I doubt very much whether anything could be
gained by such patch-work, since the Constitution contains many
other provisions that would constitute a bar to effective enforce-
ment of the interstate commerce law. The mode of procedure
for securing a single amendment is, if anything, more cumber-
some and ratification thereof more difficult to obtain than would
be a complete revision of the organic law of the land.
If you will examine the Constitution you will see that it lies
within the power of the states to call a national constitutional
convention whenever two-thirds have concurred in such call,
whereas the ordinary amendment requires the concurrence of
two-thirds of each of the houses of Congress, which is very diffi-
cult to procure in view of the tremendous influence exercised over
the Senate by the confederated corporations.
Take, for instance, an amendment to elect United States
senators by popular vote. Do you believe that the Senate will
ever vote for an amendment that would bar out two-thirds of its
members? Do you believe that a trust-made Senate will ever
vote a constitutional amendment that would abolish the trusts?
W. BOURKE COCKRAN.
Perhaps twice or thrice in the lifetime of a brilliant and popu-
lar speaker does he receive such an ovation as was accorded
Bourke Cockran when he stepped to the rostrum and bowed his
acknowledgments of Chairman Howe's introduction. It was
several minutes before he could do more, but finally the cheering,
applauding, handkerchief waving assemblage became calm and
Mr. Cockran began :
No person who has listened to the papers read from this plat-
form during the last three days can doubt that the object of this
gathering is an honest search for truth. I think the country is
to be congratulated upon some of the contributions to this discus-
sion, particularly those from the representatives of the trades
unions, and of the National Grange.
As I realized the sound conceptions of economic law which dis-
tinguished many of the addresses delivered by delegates from
462
labor organizations, I became convinced that the laborers who
spoke to us understood these laws much better than their employ-
ers. Indeed, I believe some recent events in our history would
have been impossible if every element engaged in production
understood the true relations of employer to employee as well as
one element showed that it understood them this very day.
The precise question which we have been called to consider is
the effect produced by combinations, whether of capital or of
labor, upon the general prosperity of the community. The first
step towards a solution of this problem is to ascertain just
what we mean by prosperity. One of the great difficulties in the
way of philosophical inquiry into economic subjects is a very
general tendency to use vague, sonorous and misleading phrases,
which instead of making a difficult problem clearer serves to
becloud it, obscuring its outlines, and magnifying its dimen-
sions. In the controversies which have arisen over this
industrial question, certain expressions have become perverted
from their original significance and have acquired a strange
power of provoking men to excitement, if not belligerency, so that
oftentimes we find ourselves embarrassed in discussing facts which
concern us 'by words which excite us. The word "trust," for
instance, a word originally of highly respectable significance, has
become discredited apparently by association with millionaires
so that its application to a business enterprise is now the signal
for discarding the sober language of argument and for invoking
the violent epithets of denunciation.
For the purpose of establishing an intelligent basis of discus-
sion, free from terms likely to provoke passionate declamation, I
shall define prosperity as an abundance of commodities fairly dis-
tributed among those who produce them. Now, this is not to
state two separate and distinct conditions, but rather two aspects
of one condition. For, my friends, I hope to establish before I
conclude that there cannot be abundant production of commodi-
ties without an extensive distribution of them in the form of
wages wherever industry is based upon freedom. Whether that
distribution be as general as we might wish, is a question which
we will consider hereafter; meanwhile we can all agree that
distribution can be extensive only where production is abundant.
We must have commodities in existence before we can distribute
them in the form of wages or of profits. If this definition of
prosperity be correct, it must follow that any industrial organiza-
tion or system which operates to swell the volume of production
should be commended, and any that operates to restrict it should
be condemned. For my part, I could never understand why a sen-
463
sible man should grow excited either to approval or resentment
over a combination as such. A combination may be good or bad,
according to its effect. A combination for prayer is a church.
All good men would subscribe to the success of it. A combi-
nation for burglary is a conspiracy. All good men would call out
the police to prevent it.
Whether combinations of capital operate to raise prices or to
reduce them is a subject about which there has been a wide diver-
sity of opinion, not merely in this hall, but wherever economic
questions are discussed. While I am fully conscious that the
movements of prices depend upon many forces, or perhaps I should
rather say, upon every force, upon the fertility of the soil, upon
the sun that quickens the seed, upon the rains that refresh it,
upon the rivers which facilitate the transportation of the crop
harvested on the surface of the earth, and of the minerals yielded
from its bosom, upon every element of nature as well as upon
the industry of man. I think it is beyond question that some
combinations of capital operate to cheapen .commodities and some
operate to make them dearer.
Ladies and gentlemen, I believe there is a very simple test by
which we can always determine the effect on prices of any success-
ful industrial organization, and that is to ascertain whether it
flourishes through government aid or without it. You must see,
my friends, that an industrial enterprise which dominates the
market without aid from government, must do so by cheapening
its product, or, as it is commonly described, by underselling com-
petitors. An industry which at one and the same time reduces
the price of its product and swells its own profits can accomplish
that result in one way, and one way only, and that is by in-
creasing the volume of its production. On the other hand,
an industry which flourishes through the aid of govern-
ment, direct or indirect, cannot, in the nature of things, be a force
to lower prices, because if it could dominate the market by under-
selling competitors in a free and open field it would not need
government favor. In that case, any interference of govern-
ment with its business would be an injury, not a benefit.
The prosperity of an enterprise enjoying government favor, de-
pends not on the excellence of its service, but on the inability of
people to purchase elsewhere. Such a corporation, or combina-
tion, never operates to stimulate the volume of production, but
always to restrict it, because a government's aid to industry is
effective only when it is exercised to extort from the public a vol-
ume of profit which without it could be gained only by a larger
output. Whatever may be our opinions of industrial enterprises
464
dominating the market by cheapening products, I believe we
are unanimous in condemning as detrimental to prosperity every
concern whose revenues derived from consumers forced to deal
with it on its own terms are not profits earned by substantial
service, but tribute exacted from a community made helpless in
its hands.
There are three ways by which in this country government
interferes with the trade of individuals. One is by patent laws.
It is not my purpose, ladies and gentlemen, to intensify differ-
ences of opinion among us, but to emphasize the points on which
we can agree, and, if possible, to extend the field of our agree-
ment. Questions which cannot possibly be settled or even
affected by anything which this conference might do or advise, it
would be utterly useless to discuss. I will not waste time, there-
fore, in considering the effect of exclusive patents on industrial
conditions.
Another method of government interference with trade is by
tariff laws. Every person must concede, whether he believes in
high tariff or free trade, that a protective tariff fosters combina-
tions to control the market in one way. It restricts competition
in any commodity to those producing it in this country. Under
a condition of free trade every article seeking a market, wherever
produced, is exposed to the competition of the whole world.
Obviously the control of a market by a combination or trust is
facilitated where the field of competition is artificially limited,
since it is easier to combine the producers of one country than
those of all countries; to that extent the tariff encourages trusts.
It is proper to say, however, that according to the protectionist
the exclusion of foreign competition develops a domestic com-
petition much keener and in some mysterious way, more benefi-
cent. I do not understand his logic, but I think that is a fair
statement of his proposition.' The tariff has been discussed in
this country for some eight or ten years, and the question is still
unsettled. " As it has become a party question we cannot hope to
settle it here, and therefore we will relegate it to the forum in
which all political issues must be decided.
There is a third and very serious form of government interfer-
ence with trade which I think we can discuss profitably and which
in my judgment has had a wider influence in promoting indus-
trial combinations than the tariff. I refer to special favors
extended to certain industries by great corporations exercising
public franchises. I call this form of discrimination government
favor, because these corporations are essentially agencies of the
government although their stocks are owned by private individuals.
465
No person can enjoy a favor at the hands of any company exercis-
ing a public franchise except at the expense of another. This is
true in every instance where government extends special favor to
an individual. I have said in many places, and I say here, that
government cannot at one and the same time be a fountain of
generosity and of justice. Government cannot of itself
create anything. It cannot by any exercise of its own
powers, compel the boards that constitute this desk to become a
useful article of furniture; it cannot summon the elements of
this building from their original places and command them to
become a durable edifice; it cannot cause two blades of grass to
grow where one grew before ; it cannot make a barren field fruit-
ful. Now, if government cannot create anything it has nothing
of its own to bestow on anybody. If then it undertake to enrich
one individual, the thing which it gives him it must take from
another. A government cannot be just and generous at the
same time, for if it be generous to one it must be oppres-
sive to another. If it have a favorite it must have a victim, and
that government only is just and beneficent which has neither
favorites nor victims. Government is always just and always
beneficent when it is absolutely impartial. Not merely must its
own hands be impartial, but, to paraphrase Lord Bacon, the
hands of its hands must be impartial; not merely must its laws
be impartial, its courts impartial, its executive officers impartial,
but the agencies which it empowers to discharge functions essen-
tially public, must be impartial in their service to every human
being within the limits of the state.
It must be clear that if one person obtain rates of transporta-
tion unusually favorable, in other words, if his goods be trans-
ported for less than the service costs, other men using the same
means of transportation must make good the loss. Discrimina-
tion of this character is destructive of free competition. The
producer who gets the benefit of it is able to undersell his com-
petitor, not by the superiority of his product, but by the favor
of the government agency. Profit is the object of all industrial
e'ffort. If the favor of a corporation be a shorter pathway to
it than efficient service to the public, the ingenuity, enterprise
and talent of men will be diverted from the wholesome competi-
tions of industrial skill to debasing and corrupting intrigues for
corporate favor. Is there any remedy for this form of oppres-
sion? Some gentlemen have suggested municipal ownership as a
cure for corporate misconduct. Ladies and gentlemen, I have no
irreconcilable quarrel with that suggestion. I concede the prin-
ciple of municipal ownership.
466
Any public service which the government can authorize a cor-
poration to perform, it can perform itself. The only excuse for
empowering a private corporation to discharge a public function
is the belief that it will perform the service more efficiently. The
question of municipal ownership then is a mere question of
expediency.
Can a government through the machinery of its civil service,
administer a railway, a gas company or a telegraph system, as
efficiently as private individuals inspired by hope of extensive
profits, and with the peculiar capacity developed by years of expe-
rience in a particular calling? I won't debate that question here,
because if municipal ownership of public franchises be a remedy
for existing evils, it is such a remote one that to discuss it would
be to discuss the interests of our children rather than of ourselves.
There are many grave obstacles to be overcome before mu-
nicipal ownership could be reduced to practical operation, even
though we should set about establishing it to-day. On what
basis of valuation would we compute the interest of the present
owners? Should it be fixed on the basis of what these enterprises
can earn or on what it would cost to reproduce them? To take
them on a valuation fixed according to their present earning
power would be a very hazardous speculation. It is exceedingly
doubtful if under the administration of public officials they could
be managed as economically as they are now under the manage-
ment of specially trained experts. But if the cost of operation be
increased, the rates charged for service must be raised. If the
rate of fare from New York to Chicago were increased or the
quality of the service impaired, the result would be none the less a
public calamity because it was a feature of municipal ownership.
If it should be decided to limit the compensation of the pres-
ent owners to the cost of reproducing existing railway, telegraph
or gas plants, another and more difficult question would arise.
Has the state, after allowing and encouraging the original grant-
ees of these franchises to dispose of them to innocent holders on a
valuation based on their earning power, any right to take those
franchises back upon a different valuation?
Moreover, questions involving the powers of municipalities
under special constitutional provisions would have to be set-
tled, before one step could be taken in the reduction of this
plan to practical operation. On the whole, while the theory of
municipal ownership is highly ingenious and highly interesting,
yet, like the suggestion of a convention to frame a new constitu-
tion for the United States, as a remedy for pressing evils it
somewhat remote.
467
Can this conference, then, suggest any practical remedy which
could be put in force to-morrow, by any legislature that may be in
session? My friends, it seems to me there is a very effective
remedy and a very simple one. It would not be necessary to
frame a law prohibiting special privileges to individuals from
public corporations; that is the law to-day. The remedy is sim-
ply to prescribe a definite penalty for violation of it, and to pro-
vide for publicity in all the transactions of a corporation exer-
cising public franchises. No fines, no judicial rebukes, no de-
nunciations from platforms, no legislative enactments merely
declaring things to be reprehensible will eradicate the evil, but
a simple statute giving every shipper, every person using a public
franchise of any kind, the right to have disclosed to him at any
time every contract and agreement made with any other person
for a similar service and declaring the grant of a special rate by a
corporation a felony punishable by a long term of imprisonment,
will cure it effectually.
My friends, there is no disproportion between the offense of
which we complain and the remedy suggested. Discrimination
in the rates charged for a service essentially public is a crime of
the first magnitude. The corporation, exercising powers con-
ferred by the state for the benefit of all which denies one man
opportunities enjo} r ed by others, robs him, if not of property in
his possession, of the opportunity to acquire property.
Publicity of corporate proceedings would accomplish more
than the prevention of discrimination in rates. It would go far
towards curing the most conspicuous and the most crying evils of
corporate management.
We have heard much about the evils of over-capitalization.
Indeed, it is one of the subjects which this conference is called to
consider. In one sense, I do not regard over-capitalization as a
matter of importance; in another sense, I think it has a serious
aspect. The nominal capitalization of an enterprise in itself is a
matter of little moment. If an enterprise earning ten thousand
dollars a year is capitalized at one hundred thousand dollars, the
stock would probably sell at two hundred; if it were capitalized at
four hundred thousand dollars, the shares would sell at fifty. In
either case, the actual value of the stock would be two hundred
thousand dollars. That value is established not by the rate of
capitalization, but by the opinion of the public, and that value
would remain undisturbed no matter what the nominal capitaliza-
tion might be.
The gentleman who opened this conference, Professor Jenks,
in his admirable statement of the questions to be considered, pre-
468
sented this question of over-capitalization by means of a very
striking illustration. He mentioned the case of a newspaper
earning one hundred thousand dollars a year, and pointing out
that according to its earning capacity it represented a capital of
at least one million dollars, although one hundred thousand
would reproduce its presses, its huilding and its entire plant, all
except the editor, he asked this conference to say at what
sum would it he fair to capitalize such an enterprise. It
seems to me the answer is very simple. Tell the public to whom
you offer the shares candidly and frankly the whole truth about
the property, and capitalize it as you please. If you capital-
ize it for more than the public believe it to be worth, your
shares will sell at a discount; if you capitalize it for less they
will sell at a premium. The nominal capitalization is the asking
price of the seller, the market value of the stock is the price
actually paid by the buyers. If I ask a million dollars for a build-
ing and take one hundred thousand for it, nobody is injured by
the price demanded, and nobody has a right to question the price
which I receive provided no element of fraud or misrepresentation
has entered into the bargain.
A high rate of capitalization even of a corporation exercising
public franchise, is not necessarily an injury to the public. 1
can imagine a case where an increase of capitalization without any
investment of additional capital might be a great public benefit.
Assume for a moment that the Western Union Telegraph Com-
pany should reduce its rates to five cents per message, and that
instead of being diminished its profits were doubled thereby,
should anybody object to an increase of its capitalization based
on such an improvement of its service? If it undertook to
swell its profits by increasing the cost of telegraph service, then
every weapon, legislative and executive, should be invoked to pre-
vent it. The injury to the public would not be the increase of
capitalization, but the increase of rates.
The idea that high capitalization forces corporations to charge
excessive rates in order to pay dividends, is wholly erroneous. A
corporation always strives for the maximum profit, regardless of
its capitalization" An attempt to exact excessive profits defeats
itself by discouraging consumption and encouraging competition.
Skill in business management is shown by capacity to fix that rate
for a product which yields the largest margin of profit consistent
with the greatest stimulus to consumption. The rate of capital-
ization has no relation to the cost of the product, and, therefore, it
in no way affects the consumer. It concerns merely the holders of
the stock, that is to say, the owners of the enterprise. It is, there-
469
fore, a question between partners, in which the community as a
whole has no interest.
In all this, however, I am assuming that the public have been
treated with absolute candor, and that the property capitalized
has been truthfully described. There are instances, too com-
mon, unfortunately, in which over-capitalization of corporations
has been made an effective engine of fraud. The capitalization,
for instance, at five millions of an enterprise which cannot pay
dividends on one, by men whose names are accepted as guarantees
of solvency, honesty, and capable management, often leads the
public to buy the shares at a fictitious value without any direct or
specific misrepresentations. To deceive by indirection or sup-
pression is as much a fraud, as to mislead by positive falsehoods.
A false pretense by which a dealer on the Bowery is cheated out of
a pair of shoes, is called a swindle, but misrepresentation on "Wall
street by which the public is cheated out of millions, is often called
a financial operation. When a swindle is called by its proper
name and punished as such, whether it be perpetrated on the
Bowery for a few cents, or in Wall street for millions of dollars,
whether it be in the crude form of breaking a window to abstract
valuables, or in the more dangerous form of inducing thousands
to part with money for worthless certificates, swindling will be-
come rare.
If in every instance the promoters of a corporation were com-
pelled to state the whole truth about the enterprise offered to the
public, it is plain that swindling by over-capitalization would be
impossible. For this species of fraud, as, indeed, for all other
frauds growing out of corporate management, the remedy, I re-
peat, is publicity, publicity, publicity.
While on this subject I may dwell for a moment on what to
many seems an unaccountable phenomenon the public dislike
and distrust of corporations. Ladies and gentlemen, I don't share
that hatred and dislike, but I understand it. While I don't think
it is wholly justified, yet I believe the history of corporate manage-
ment in this country explains it. Indeed, I hold it is indisputable
that whenever in America a general opinion on any subject is
found to prevail, there is always pretty good ground for it.
The distrust of corporations arises not, in my judgment,
from a general opposition to corporate organizations, but
from profound distrust of corporate administration. My
friend from Texas whose eloquent periods moved this body
profoundly on the first day of our session, was careful in his
denunciation of corporate oppression to distinguish between cor-
porations which served the public faithfully and those which
470
oppressed the public. I am not quite sure that I understood all
his words, but I think he and I sympathize in our feelings. We
do not object to the principle of co-operation. The corporation
is the natural evolution of the partnership. It is a scheme by
which many men, strangers to each other, can co-operate in various
fields of industry with a limited risk to each, while partnership is
essentially the co-operation of a few men well known to each other,
who are compelled to devote all their time and pledge all their
resources to the success of their joint enterprise. A man by hold-
ing stock in different corporations may participate in many
enterprises without risking all his capital in any one, while the
liabilities and conditions of partnership are such that few, if any,
men could afford to be concerned in more than one. As every
device which facilitates the industrial co-operation of men" pro-
motes the volume of production, corporations possess enormous
capacity for swelling the tide of human prosperity, and they have
promoted the well-being of every community in which they have
been encouraged, in spite of the fact that the management of cor-
porations has been the blackest page in all our history.
You need not look further back than the panic of 1893 and
the corporate management which preceded it to find abundant
cause for indignation, distrust, and alarm. It is a dreary, shame-
ful story of trusts betrayed, of stockholders deceived and plun-
dered, of corporations wrecked and looted their treasuries
emptied by faithless officers through devices ingeniously fraud-
ulent, until, deprived of property, of resources, and of credit,
they were driven over the precipice of insolvency in a condition
so rotten that their fall was almost noiseless. But this is not all.
The corporations which trusted these faithless agents were not the
only sufferers. The people at large were defrauded of untold
millions. Worthless securities were marketed not, it is true, by
specific misstatements, but by devices still better calculated to de-
fraud. Interest was paid upon bonds where it had never been
earned. Dividends were declared upon preferred stock when the
actual revenues showed deficits instead of profits. The people,
deceived by these evidences of prosperity, bought the securities,
only to find when the collapse came, when the min was complete,
that in nine cases out of ten the architects of these frauds were
appointed by the courts receivers of the enterprises which they
had wrecked, enabling them to control the process of reorganiza-
tion and to conceal the proofs of their crimes. The worst feature
of this miserable story is that all these perfidies, all these frauds,
all these infamies, have not brought one hour of shame or pun-
ishment to those who perpetrated them. These engineers of ruin
471
are walking the streets to-day, their heads high in the world of
finance. Their misdeeds bring upon them no popular condemna-
tion, because their operations have been shrouded in secrecy.
To the best informed the story of their crimes is only partially
known, to the vast mass of the people it is a sealed book. The
masses of the people feel instinctively that corporate management
has been frequently a fountain of oppression, of fraud and of
corruption, but the lack of specific information has caused the
public indignation which ought to be visited upon the officers
responsible for this shame to be turned on the corporations who
have been its victims.
We hear much about the corruption of municipal corpora-
tions. Well, probably they are corrupt ; certainly they cannot be
more so than they are believed to be. But the govern-
ment of industrial corporations has largely escaped public
censure, notwithstanding the recklessness and fraud which have
characterized it. W'hat we punish as corruption in politics, we are
inclined to encourage as talent in finance. The courts of nearly
every state record prosecutions of public officers for bribery. I
don't believe that in the whole history of our jurisprudence an
officer of a corporation has been compelled to answer at the bar
of a criminal court for corruption or fraud perpetrated by the
indirect and insidious methods which I have endeavored to
describe.
Mr. Gompers mentioned to-day the complaints which labor
organizations make against the courts for interfering in disputes
between employer and employee by the writ of injunction. The
expression "government by injunction" has become a political
phrase, and so we must exclude it from these discussions. But,
ladies and gentlemen, I will say that to me it has always been a
source of profound regret that the courts which have displayed so
much ingenuity in devising methods to prevent corporations from
being disturbed by their employees have not shown half that
ingenuity in devising methods to prevent them from being robbed
by their officers.
Wherever we discover corporate abuse we find that it
originates in secrecy, that it is developed in secrecy, and that it is
maintained in secrecy. Special favors could never be granted in
the light of day. Misrepresentations would be useless if all the
facts within the knoAvledge of corporate officers were imparted to
the public. Fraud upon corporations by the directors would
never be attempted, if their operations were conducted within full
view of the stockholders and of the public.
Everybody who has discussed corporate misconduct on the
472
platform has agreed that it is encouraged by the secrecy sur-
rounding corporate management. Surely, then, we may hope that
this conference will be unanimous in recommending publicity.
What objection can there be to publicity? We are told that
corporate management is private business. This certainly is not
true of corporations engaged in operating public franchises.
Such corporations are government agencies, and the right of the
people to full information concerning the operations of public
agencies cannot be questioned under a republican form of gov-
ernment. Corporations of every kind are created for the purpose
of encouraging industry and promoting prosperity. Wherever
they become engines of fraud or oppression they are perverted
from their original purposes. Secrecy being the source of evil,
publicity is its natural antidote. An officer of a corporation acts
not for himself, but for others. Whoever acts for others will not
shun publicity but court it, if his conduct be governed by honesty.
The desire for secrecy is the infallible badge of fraud. The pre-
tense that publicity would injure the interests of stockholders is a
device to plunder them. Under the cloak of secrecy stockholders
have beea robbed quite as extensively as the people have been
oppressed. No man who seeks to render another a service fears
the light of day. It is only the rogue who seeks the cover of dark-
ness for his operations. Whenever any person seeks to lure you
up. a dark alleyway on the pretense that he wants to serve you, be
sure that he means to cheat you. Do not parley with him for a
moment. Call a policeman on the spot if you want to preserve
your property and your character.
The final argument in favor of publicity as a remedy for cor-
porate misconduct of every character is its simplicity. It is not a
suggestion of new laws, but of more efficient machinery to en-
force existing laws. Before leaving this branch of the subject I
will venture to outline a system for securing such publicity of cor-
porate administration as would effectively prevent favoritism to
.individuals, oppression of the public, and fraud on the corpora-
tions themselves.
Every person using a public facility should have the right to
know the terms on which the same service is enjoyed by every
other person. Every stockholder should have the right to ex-
amine the books of a corporation and to learn every detail of its
operation. If it be objected that to allow the holder of a_ single
share in a corporation capitalized for millions, to examine _ its
books at pleasure, would disturb its business, the answer is sim-
ple. If a corporation doesn't want a great number of stockhold-
ers it need not have them. It has but to divide its capital stock
473
into shares of five hundred or a thousand or ten thouBand dollars
each in order to reduce the number of its shareholders. Cor-
porations divide their stock into a great number of shares because
it is easier to raise money from many persons contributing each
a small sum, than from a few persons each contributing a large
amount. If the corporation enjoy the advantage of such a subdi-
vision of its capital., it should accept a corresponding responsi-
bility to every individual shareholder. Indeed, under existing
laws, every stockholder has a right to examine the books of a cor-
poration, if the courts would enforce it. In this respect the only
new legislation necessary is an act compelling the courts to grant
as a matter of right, what to-day they grant as a matter of discre-
tion.
Every corporation should be compelled to file with the secre-
tary of state at its organization a statement of all the property,
franchises, goodwill, and assets of every description on which its
capitalization is based.
It should be compelled to make a full report every year of all
its business to some department of the state. This is the law to-
day in nearly every state, but I believe that it is evaded in all of
them. The reports are invariably misleading, when they are not
incomprehensible. It would not be difficult to make provision
for such clear, specific statements as would enable everybody to
understand the exact financial condition of every company doing
business under a corporate charter. The public could then esti-
mate the value of its shares and no man need be defrauded, no
matter what its nominal capitalization might be.
The powers now exercised in almost every state by the depart-
ment of insurance and the department of banking should be
extended so as to make it the duty of some public authority to
examine the condition of every corporation, to scrutinize its opera-
tion, and to institute criminal proceedings against any officers
attempting to practice fraud or concealment in preparing the
reports exacted by law. The failure to place the law in motion,
against them would then be accepted by the public as proving the
honesty of their management.
Finally the violation, evasion or disregard of any of these pro-
visions should be punished by long terms of imprisonment.
Where great sums are to be gained by disobeying the law, fines
will not secure obedience to it. Under such circumstances fines
are too often regarded as mere taxes on financial operations, to
be collected subsequently from the public.
With these simple remedies prescribed and rigidly enforced,
no form of corporate corruption or oppression could be practiced,
474
and I promise you that when honesty governs corporate officers
the distrust and dislike of corporations now so general will dis-
appear from the minds of a liberty-loving people, who are always
seeking justice even through their prejudices.
In prescribing the limits of publicity a distinction must be ob-
served between corporations which enjoy no favor from the state,
except the right to do business under corporate forms, and those
specially chartered to perform public functions. To compel a
private corporation to disclose its processes of manufacture would
be to confiscate its property. The methods by which such a cor-
poration conducts its business concerns itself alone; the results
of its business, tKat is to say, the nature and extent of its prop-
erty, concerns the public; they should be disclosed so that the
people to whom its shares are offered could form an intelligent
judgment of their value.
Corporations exercising public functions should have no se-
crets whatever. They are public agencies. Every feature of their
possessions, every detail of their administration should be public
property.
I have discussed government interference with the affairs of
the citizen at this length because I want it understood that to
monopoly dependent upon government favor in any shape or form
I am as firmly opposed as any gentlemen in this body even from
Texas. I confess that I envy Texas its breezy rhetoric, when I
want to denounce that form of government oppression. But,
my friends, when we come to consider an industrial organiza-
tion which dominates the market not through government favor
but through the cheapness of its product, we are face to face with
a force in production which is of a radically opposite character.
To denounce any organization as a trust or a monopoly is
neither to state an objection to it nor to suggest a method of
dealing with it. Avoiding the use of all such exciting and mis-
leading phrases, I will state simply that any form of industrial
organization which cheapens a commodity necessary to my com-
fort commends itself to my approval. I confess that I would
rather pay forty dollars for a good suit of clothes to a large in-
dustrial organization, than fifty dollars for an inferior suit of
clothes to an individual dealer. Now, this may be a confession of
total depravity. If it be, ladies and gentlemen, I hope you will
regard the candor which impels the confession as some extenua-
tion of the offense. I am so constituted that I prefer good serv-
ice to bad service, and I cannot quarrel with any organization or
system which improves my condition, even though you call it a
monopoly. Monopoly is a word which suffers from a very bad
475
name, and deservedly so. It lias been associated for ages with
the very worst form of governmental practice. During nearly all
the history of the world, indeed, I may say until this generation,
monopoly meant control of the market by some favorite of the
government through a patent conferring upon him the exclusive
right to deal in certain articles of general consumption. This was
practically a license to prey upon the necessities of the com-
munity. In operation it led to such abuses, oppressions and in-
famies, that the word used to describe it very naturally acquired
an evil significance, which to this day awakens the indignation
of every justice-loving freeman.
I do not believe there is an organization doing business in this
country without government favor which can be called a monop-
oly, in any fair interpretation of that term. The Standard Oil
Company, which is generally deemed a monopoly, supplies only
about 62 per cent of all the oil consumed in this country. Such
concerns have been described here as "partial monopolies/' I
confess I am unable to understand that term. A "partial mo-
nopoly" is about as intelligible an expression as a "partial whole."
It seems to me corporations of this character would be better
described as dominating industrial enterprises, than as mo-
nopolies. Each may be said to dominate the market for its prod-
uct, because, although it does not furnish the total amount con-
sumed, it does furnish the larger proportion of it. However, I
will not quarrel with words. I don't object to the institution
which gives me clothes or food the cheapest, even if you call it a
monopoly. I care little about the terms in which it may be
described, while I am deeply concerned in the service which it
renders.
Let us examine the objections to these industrial enterprises
which through aggregations of capital or efficiency of manage-
ment, or any other cause independent of government favor are
able to dominate the market. It is said such an organization de-
stroys competition, but this is manifestly illogical. It does not
destroy competition; it is itself the inevitable fruit of competi-
tion. It is not possible to have competition without competitors,
and if there be competitors, one must prevail. Where a number
of persons engaged in the manufacture of shoes, or cloth, or ma-
chinery, compete in a perfectly open field, and one succeeds in
producing his commodity cheaper than the others, and offers it
to the public at a lower price, he will always be the first to dis-
pose of his product. While he can supply the demand no one
will pay a higher price for the same article to another producer.
He will therefore have a monopoly. He who sells cheapest must
476
always dominate the market, for in economics the domination of
the cheapest is the survival of the fittest. If the man who pre-
vails in the competition is not allowed to enjoy the fruit of his
victory, that is to say, the control of the market, he will not com-
pete; nobody else will; and then there will be no competition
whatever.
The competition of men in any department of human endeav-
or, if it be absolutely free, always develops excellence. But ex-
cellence is monopoly. It would not be excellence if it were not.
Surely you would not call that excellence which is shared by
many. As the producer of the best commodity must dominate
the market for his product, so will the possessor of conspicuous
excellence dominate any other field of endeavor. At the bar
the most capable lawyer obtains the best clients. In medicine
the most skillful physician obtains the most desirable patients;
in literature the best writer obtains the widest circulation; each
dominates his calling and in that sense he is a monopoly. The
leading orator always draws the largest audiences, indeed,
there is a gentleman here present who in this respect is an abso-
lute monopoly, as many of us know to our cost who have attempt-
ed to divide public attention with him.
Ladies and gentlemen, I am reminded by the presence of the
gentleman whose name has evoked this great demonstration,
as, indeed, it provokes enthusiasm everywhere that his promi-
nence is itself the direct result of free competition, and the most
striking illustration of its essential tendency.
Three years ago a convention met in this town, and as the
great majority of delegates were strangers to each other, a few
among them who had already attended many similar gatherings,
hoped through their wider acquaintance to manage its proceed-
ings and to control its conclusions. They succeeded in directing
its preliminary stages, but differences over the platform led to a
struggle so fierce that each side was compelled to call on its
strongest champions. Factional exigencies thus threw the debate
open to free competition, and a young man unknown to the ma-
jority, so outshone all rivals that in an instant he was lifted upon
the shoulders of shouting, excited delegates into the absolute
and unquestioned leadership of his party.
The views which he represented were not mine, but without
undertaking to discuss their soundness everybody must admit
that the leadership most capable of expounding and maintaining
them was developed from the open competition of that debate.
While the convention was controlled by the management, as it
was during its preliminary proceedings, that young man could not
477
have been chosen a temporary officer. It was then a field of re-
stricted competition in which prominence was to be achieved not
by ability but by the favor of the leaders. When it became a field
of free competition, its leadership passed to the man who had
shown himself able beyond all others to voice its hopes and to de-
fend its opinions.
Wherever free competition prevails, pre-eminence must be
achieved as Mr. Bryan achieved it by shining and conspicuous
merit in that particular field. And the preeminence established
by merit must be maintained by merit. The lawyer must estab-
lish eminence and maintain it by excellence in advocacy; the
physician by skill in checking the ravages of disease; the orator
by supporting the popular side of every public question, with the
most persuasive arguments, clothed in the most attractive words,
just as the successful producer must maintain his control of the
market by affording the public at all times the best article at the
lowest price.
If, however, prominence at the bar depend on the favor of the
court, the leading lawyer will not be the man who excels in
forensic ability, but the one who is most proficient in the base and
servile arts of the courtier. If patients must be secured through
social influences, the leading physician will not be the man- who
labors most assiduously in the laboratory or the hospital, but the
one who cultivates most successfully the favor of the drawing-
room; if the largest audiences must be secured through flatter-
ing the follies of the crowd, the leading orator will not be
the man who displays the most eloquence in defense of truth,
but the one who shows the greatest aptitude for the wiles of the
demagogue. If the control of the market depend on the favo-r of
government, the successful manufacturer will not be the man
who excels in production, but the one who excels in corruption.
The same enlightened sense of interest that impels us to de-
fend monopoly based upon excellence, should lead us to over-
throw monopoly based upon favor, because while free competi-
tion leads to the domination of the best, restricted competition de-
velops the domination of the baser, if not of the basest.
It is objected, however, to the .great industrial combinations
which dominate the market through the cheapness of their prod-
ucts, that their success in serving the public operates to throw
men out of employment. To this there are two answers. First,
it is not true, and in the second place, if the statement were true,
it would not be a sufficient reason for suppressing an industrial
development of great benefit to the body of the community that it
worked hardship to a few individuals. The man who says that
478
any system of organization deprives him of employment because
he cannot compete with it successfully, admits that somebody
else can perform his job better than he can, and if that be so he
should be ready to surrender it.
It has been said here by one gentleman that these combina-
tions of capital have been so effective that thirty-five thousand
commercial travelers are no longer necessary to the sale of com-
modities. We have no particular evidence that his statistics
are accurate, and we must take his word for the statement that
his single voice expressed the feelings of such a multitude. Sup-
pose it to be true, must we hold back the car of progress until
every human being can get aboard? If so we must diminish its
speed from the rate of the lightning express to that of the lum-
bering ox-wagon. It seems to me it would be cheaper for the com-
munity to pension middlemen directly from the treasury than to
restrict the efficiency of the capable in deference to the lamenta-
tions of the incapable. I may add that until there ;s a prospect
of a pension, I doubt very much whether we could find thirty-
five thousand unemployed commercial travelers in the country.
I know of nothing that prolongs life or multiplies a species so
effectively as a pension or a prospect of a pension.
As a matter of fact, industrial organizations which increase
production have never thrown anybody out of employment even
for an hour, and, in the nature of things, they never can. Pro-
duction has never been increased without increasing the number
of hands engaged in it, and to increase the number of laborers
cannot operate to throw anyone out of employment.
A period of industrial transition is always a period of appre-
hension, vociferously expressed but never realized. While the
substitution of steam for hand labor was impending, loud lamen-
tations were heard on all sides from laborers who believed that it
meant their ruin. After it had been effected, nobody was found
to be injured and everybody realized that he had been benefited.
While the application of machinery to manufacturing was
in course of preparation and before it was completed, operatives of
every description bemoaned their fate, believing the change
would reduce them all to starvation. The cobbler in his cellar,
the weaver in his back room, both believed that the scanty
crusts on which they supported existence, would be filched from
their mouths by this new force in production. Now the only way
by which machinery displaced hand labor was by placing goods
in greater abundance on the market, that is to say, at cheaper
rates. But to make these goods human hands were necessary,
and no hands were so efficient as those which had already acquired
479
familiarity with the articles to be manufactured. Hence the first
person employed to operate the machine for making shoes was the
cobbler who had dreaded its advent. The first to manage the
steam loom was the weaver who had believed it would be the en-
gine of his destruction. The cobbler was displaced from his cel-
lar by himself, and the weaver from his back room by himself,
each was taken from miserable, fetid, degraded surroundings into
a well-lighted, wholesome factory, where he earned better wages,
and where in a short time he organized unions and demanded
still better wages.
The stage coach drivers believed to a man that the establish-
ment of railroads would deprive them all of occupation, but as a
matter of fact, railroads from the first hour of their operation
increased the demand for drivers. By the time the railroad had
reached such a degree of efficiency as to preclude competition
with the stage coach the necessity of distributing the greatly in-
creased traffic in passengers and merchandise from railroad sta-
tions had created a wider demand for drivers and horses than
had ever been known before. It is quite true that occasionally
a man who had been accustomed to drive a coach with four horses
thought there would be some loss of dignity in consenting to drive
a less splendid but more useful vehicle drawn by one or two horses,
even at better wages, but surely it would not be contended that
the progress of the human race should have been blocked out of
sympathy, not for the necessities, but for the vanity of an occa-
sional stage coach driver.
And so I take leave to doubt the statement that thirty-
five thousand commercial travelers hav been reduced to
idleness by increased efficiency in business management. The
object of consolidating corporations must be to increase sales.
But an increase of sales involves an increase in salesmen, and as
these commercial travelers are considered the best salesmen, they
will be the first beneficiaries of the change. Of course, I speak
of those who promptly seek employment under the new system,
not of those who spend their days bemoaning discarded methods.
It has been said that competition is cruel, pitiless, and de-
structive. Our friend, the socialist, whose interesting addre-s
delivered this morning should make his name familiar throughout
the country declared that competition was warfare. Let me pro-
test against that statement. Competition is not warfare in the
sense of being destructive. Competition is the best method of as-
certaining the place of greatest utility for each individual. Be-
lieve me, every man has special aptitude for some occupation. A
man who is defeated in one field of competition is not excluded
480
from the whole field of production, but he is transferred from a
neld of lesser to a field of greater efficiency. Competition pre-
vents a misdirection of powers. A man qualified to be a farmer
might wish to be a lawyer. Competition by depriving him of
bread if he persisted in following a profession in which he would
be useless, drives him to agriculture, where he enjoys greater
chances for achieving prosperity and efficiency.
A few days ago, in the waters around New York, a number of
boats competed for the honor of defending America's cup against
the foreign challenger. In that competition the Columbia was
successful. Did they break up the Defender as useless because
another by outsailing her had excluded her from the international
races? No, the Defender is retired from that particular field, but
one of wider usefulness is open to her. She will cease to be a rac-
ing craft, but she will remain a swift and useful boat. She will
join the Puritan, the Vigilant, and the other vessels which
formerly were champions, but which are now ministering to the
pleasures and the necessities of men. This competition has not
caused the destruction of any craft. It has assigned each to the
field in which it will be most useful, while it has determined the
one which in point of speed is best fitted to defend for our coun-
try the trophy she has held so long of supreme excellence in mak-
ing ships and in sailing them.
Attempts to excel otherwise than by superiority are not com-
petition, although that word is often used to describe them. If
in that preliminary competition of boats which I have men-
tioned, one of them had undertaken to succeed by fouling, that is
to say, by running into another, or if an industrial organization
undertook to outstrip a rival by throwing obstacles in the access
of its product to the market, by imposing penalties on reta il mer-
chants who offered its goods to the public, or by any means what-
ever except the superiority of its product, it would not be en-
gaged in a competition, but in a conspiracy to prevent competi-
tion.
If predominance monopoly call it what you will, resting on
excellence be reprehensible, how are we to prevent it? The dis-
tance between excellence and mediocrity can be obliterated only
by reducing the superior to the level of the inferior. The process
cannot be reversed. It is impossible, bv any device of lerrislation,
to make the unskillful equal to the skillful man, but it is entirely
possible for government to limit the efficiency of the skillful by
hampering his industry. But if it be advisable to obliterate the
difference between efficiency and inefficiency in material produc-
tion, it must be equally advisable to obliterate distinctions be-
481
tween capacity and incapacity in other fields of human endeavor.
If I must be prevented from obtaining a good suit of clothes from
a large concern for thirty dollars and forced to pay fifty dollars
for an inferior suit to a smaller but less efficient dealer merely to
maintain him in business, why should a litigant be allowed to
employ the best lawyer while a number of inferior lawyers are
eager for the retainer and ready to give everything in return for
it except equally good advice? Why should a sufferer be per-
mitted to consult the leading physician while the neighborhood
abounds with practitioners less skillful, but fully as virtuous, and
who are ready to experiment on his system with greater enthusi-
asm, though probably with less success ? Why should the leading
orator be allowed to crowd the largest hall with delighted audi-
tors, while hundreds of others equally patriotic are bursting with
noble sentiments to which nobody will listen?
If the preeminence or monopoly of merit be reprehensible in
itself, every attempt to establish it must be equally reprehensible.
If it be wrong for a manufacturer to strive for control of the mar-
ket by the superiority of his product, it must be equally wrong to
contend for preeminence in the learned professions. Must the
capable lawyer, then, sacrifice a certain number of cases deliber-
ately, that is to say, betray a certain number of his clients,
lest he excel the incapable attorneys who lose causes through
stupidity ? Must the physician who possesses skill use it to destroy
a few lives, lest he be more successful than others who destroy
them through lack of skill ? Must the leading orator reduce the
splendor of his periods lest he outshine duller speakers?
If we are to suppress monopoly resting on excellence we must
begin by suppressing the excellence which establishes it, and this
would be to arrest all human improvement.
To ascertain conclusively the effect of any industrial system
upon the condition of a country, we must examine its effect on
wages. In my judgment, there is but one test of prosperity ab-
solutely infallible, and that is the rate of wages paid to labor. I
beg you to believe that this statement is not made through any
profession of special love for the man who works with his hands.
I don't claim to hold the laborer in any greater affection than the
lawyer, or the doctor, or even the capitalist. I say the condition
of the laborer in any country is an infallible test of its prosperity,
because wages, being that part of his own product which the
laborer receives in compensation for his toil, it is plain that the
more he produces, the greater the fund from which he draws his
compensation. If a laborer engaged in making chairs produce
five chairs worth twenty dollars every day, and his wages be four
482
dollars a day, the rate of his compensation is equivalent to one-
fifth of his product. In effect he receives one chair out of the
five which he produces. Instead of taking home with him every
day a chair which he could not divide among the various persons
on whom he depends for the necessaries of life, he takes its
equivalent in money, which he can divide, that is to say, he takes
four dollars. If by an increase in his own efficiency, by a better
system of organization, or any other cause, that laborer produced
ten chairs every day instead of five, and his wages were still a fifth
of his product he would receive two chairs or eight dollars a day.
The difference between the larger product and the amount of his
wages being thirty-two dollars, while the difference between the
smaller product and his wages was but sixteen dollars, it is clear
that the more highly he is paid the greater the profit of his em-
ployer. This explains why those industries are the most pros-
perous in which the highest rate of wages prevails.
But the laborer cannot increase his own product without caus-
ing an increase in the production of others. An increase in the
production of chairs involves a corresponding increase in the pro-
duction of all the articles that enter into its manufacture, in the
production of lumber, of glue, and of tools. Nor is this all. The
manufacturer would not increase the production of chairs without
an increase in the demand for them. Demand for an article in
the economic sense does not mean a mere desire for it. It means
that people are ready to offer other commodities in exchange for it.
An increase in the production of one article would be unprofitable
unless there be a corresponding increase in the production of other
articles. Abundance of chairs would not profit me if there be
not an abundance of clothes, an abundance of shoes, an abundance
of tables, and other things which could be exchanged for them.
Abundance, therefore, is impossible, unless it is general. An
abundance of commodities necessarily causes an extensive demand
for labor to produce them. An extensive demand for labor
always causes a high rate of wages, and that is what I meant when
I said in the beginning that there cannot be abundant produc-
tion of commodities without an extensive distribution in the form
of wages.
As it is impossible to increase profits and at the same time
lower the price of a product in any other way than by increasing
the volume of production and as an increase in the volume of pro-
duction must increase the rate of wages, all industrial combina-
tions which operate to lower prices; or, in other words, those
which flourish through excellence are powerful forces to promote
the general prosperity.
483
Mr. Gompers said to-day that the movement of industry has
steadily tended to a higher rate of wages, and I am glad to concur
in that statement. The movement of wages is upward and must
be upward under the immutable laws governing production.
Any discussion of wages would be incomplete which did not em-
brace the effect of Trades Unions on industry, and, therefore, if
you will bear with me I will say a few words on that subject.
What I am about to say will sound strange to most of you. It
may perhaps shock a great many who approved what I have said
before, but with opinions an honest man must do one of two
things express them or change them. I can't change mine, so I
must express them and explain them. Labor unions, in my judg-
ment, have no direct effect whatever upon the rate of wages. I am
aware this proposition conflicts with an opinion which is almost
universal, yet, I believe it will be justified by a very slight ex-
amination of economic laws. I do not mean by this to say that
trades unions have not exercised a great, even a decisive, influence
on social conditions. They are the most effective agencies yet
discovered for facilitating the intercourse between employers and
employes concerning the conditions of their common industry.
The loyal discharge of this function helps to maintain industrial
peace, upon which depends, in a large degree, the industrial
efficiency through which this republic is destined to exercise a
wider, a better^ and a more lasting influence upon mankind than
the great republic of antiquity. The rate of wages, however,
does not depend on agreements between employers and employees
or upon concessions by one to the other. It is fixed by immut-
able laws which neither the employer nor the employee nor both
combined could disturb. The wages of the laborer depends on
the value of his product and nothing else.
The employer cannot pay the laborer any more than the value
of his product and he cannot pay him any less. Eecurring to
the illustration of the chair, it must be plain that if I undertook
to pay the laborer who finished it any more than the value of his
product, in a very short time I would be reduced to bankruptcy,
when I would be unable to give him any employment or pay him
any wages whatever. If I succeeded in inducing him to accept
less than the value of his product, the onlv effect would be an in-
crease in my profits. But if capital engaged in the chair-making
industry showed unusual profits, other capital would be attracted
to it from different fields of industry. It would compete with my
capital. Its competition would take the form of drawing away
the best laborers by offering higher wages. I must meet this
484
competition by offering equally high wages or I must abandon the
industry.
The standard of wages then is fixed by two forces acting on
each other; the competition of laborers for employment, operat-
ing to make wages lower, and the competition of capital for profit
operating to make wages higher. It may seem strange to many,
but it is nevertheless true that the competition of capital for profit
is keener than the competition of laborers for employment, be-
cause it is easier and cheaper for capital to move from place to
place in search of higher profit than for a laborer to seek a field
of higher wages.
It would cost a laborer at least fifteen dollars to move from
Chicago to New York, but you can send millions of dollars from
Chicago to Hong Kong for a postage stamp. It would take a
laborer two days to go from here to Boston, but you can send any
amount of capital to the other side of the globe in an instant by a
cable dispatch. Moreover, capital has no family affections; it
is indifferent to climate; all languages are alike to it. But the
laborer has domestic ties deeply implanted in the fibers of his
being which none but very powerful motives can induce him to
disturb. It is doubtful if a difference of 15 per cent in the rate
of wages would be enough to cause a movement of laborers from
Chicago to New York, but a difference of an eighth of 1 per cent
in the rate of interest would start capital all round the world.
The competition of capital for profit being keener than the
competition of laborers for employment, the force which operates
to advance wages is stronger than that which operates to lower
them; the result is a steady rise in the rate of wages, and a steady
fall in the rate of interest.
Wages being fixed by the operation of these two forces, it is
plain that the rate cannot be determined, altered or changed by
any agreement between the employer and the employee. If I be
a capitalist engaged in the production of chairs, the wages of the
laborer who finished that chair and the profits of my capital must
both be paid from its proceeds. Not merely must he be paid his
wages and I my profits, but every person who has furnished any of
the materials or who has contributed in any degree to its produc-
tion must be paid from the sum realized by the sale of it. There
is no other fund from which their compensation can be drawn.
The wages of each laborer who contributes to it is determined by
the proportion which his labor bears to all the labor expended in
its production. My laborer and I cannot by any agreement be-
tween ourselves change the proportion of that chair to which each
of these other laborers are entitled. We cannot even change our
485
own proportion. That is fixed, as we have seen, by the competi-
tion of laborers for employment on the one hand, and of capital
for profits on the other. But while we cannot by any agreement
between ourselves change the proportion of this particular chair
to which each is entitled, there is one method, and only one, by
which we can both increase our earnings he his wages and I my
profits and that is by increasing the number of chairs produced
by our joint industry.
Nothing can be further from the truth than the degrading
notion so widely entertained that wages are a species of alms
depending on the moral attributes of the employer that good
employers pay high wages and bad employers low wages. The
wages of the laborer depend on his own efficiency. Wherever a
man labors, he creates the fund from which he must be paid. Be-
fore his wages can be increased that fund must be increased and
by his own hands. Whether he be driving a locomotive, handling
a brake, mending a track, or guiding a ship across the sea, making
chairs, tables, or shoes, building houses or planting crops, arrang-
ing for the sale of commodities in the market, or for the dis-
tribution of their proceeds among those who produced them, the
only method by which his wages can be increased is by an increase
in the efficiency of his own labor.
It is quite generally believed that there is an essential and
irreconcilable conflict between employer and employee that the
laborer cannot increase his wages except by reducing the profit on
capital, and that capital can increase its earnings only by decreas-
ing the rate of wages. If the amount which human industry
could produce were a fixed and immovable quantity, the theory
that the share of the laborer could be increased only at the ex-
pense of the employer, and vice versa, would have some basis of
justification. But the whole history of the world shows that the
productive capacity of man is practically limitless. It has in-
creased from day to day. It is greater now than it was a year ago.
It is probably ten times greater at the close than it was at the be-
ginning of this century. In the course of the next century it is
likely to grow beyond our capacity to conceive at this moment.
Wages have never increased except as production has increased.
An increase in wages is but the distribution of an increased pro-
duction. A reduction of wages is the distribution of a dimin-
ished production. Employer and employee cannot prosper sepa-
rately, or at the expense of each other. The prosperity of each
flows from the same fountain. The rate of wages cannot be in-
creased at the expense of capital, and the profits of capital cannot
be .swelled at the expense of wages, but the prosperity of both can
486
be increased by an increase in the yield of human industry and the
division of that increase between them.
We have been called to consider the effect on industry of com-
binations of labor as well as of capital,, and yet little, if any, atten-
tion has been bestowed on the strike, that most dangerous form
of civil war, ever threatening industrial communities, most
threatening where prosperity is widest. The disasters of war
have at least the compensation that those who suffer from them
are brought together in bonds of closer union by the recollection
of calamities which they have shared, and by the necessity of
cooperating to repair them; but the strike leaves behind it no
memories except those of hate and injury, leading to wider dis-
trust, further recriminations and fresh disturbances. War arrays
nations against each other, but it draws the people of each nation
closer. The strike tends to resolve society into its original ele-
ments each hostile to all others. It is more dangerous than
foreign invasion or domestic insurrection, as <the cancer which
corrodes the vitals is more deadly than any injury to a single
limb.
Compulsory arbitration has been suggested as a remedy for
industrial disturbances. Ladies and gentlemen, compulsory arbi-
tration is inconsistent with a condition of free labor. That man
is not free who cannot decide freely whether he will work or
whether he won't, without any semblance of coercion. Arbitra-
tion to be effective must be binding on both sides. If the tribunal
have power to fix a rate of wages, it must have the right to enforce
obedience to its decree by the laborer as well as by the employer.
To compel laborers to work upon any terms would be to reduce
them to servitude. To compel an employer to pay higher wages
than his business will permit would reduce him to bankruptcy,
and deprive him of the power to pay any wages. I know of no
means by which a court could determine the exact value of a
laborer's product. Moreover, elaborate devices for the suppres-
sion of strikes are wholly unnecessary. Strikes must be pre-
vented by removing the causes which produce them, and I think
it can be demonstrated that strikes spring not from inherent and
irreconcilable difficulties between employers and employees, but
from a misconception of their true relations.
This misconception can be traced to the very general but none
the less erroneous idea that employment involves the relation of
master and servant. The word "service" has come down to us
from the days of the old Eoman Empire, when all labor was slave
labor. The capacity of a mere word for mischief has no stronger
illustration than the train of evil consequences which have flowed
487
frem the application of this word "service" to free labor. It has
bred contempt in the employer for the employee, and distrust in
the employee for the employer. We have seen that the one source
of prosperity for employer and employee is the prosperity of the
industry in which both are engaged. That being so, the relation
between employer and employee is not one of service, but of part-
nership. The partners may be changed, but the partnership must
continue while industry is active. The employer may discharge
his laborers, that is to say, he may change his partners, but he
cannot prosecute his business unless he employs other laborers
who at once become his partners. The partnership of all free
men engaged in industry cannot be changed. It is fixed by laws
as immutable as those which regulate the movements of the
planets, or the course of the seasons.
If employers and employees realized that they were partners
with common interests as they are it is impossible to believe
that either could ever be led to interrupt the operations of the
industry on which the prosperity of both depends. The gravest
disturbances to industry have arisen, not from disputes about
wages, but from the refusal of employers to discuss conditions of
employment with agents selected bv their employees, or, in other
words, with labor unions. These refusals have been based on
various pretexts, but I think they all sprang from the same
source a feeling on the part of the employer that there would be
some abasement of dignity in treating a laborer not as a servant
to be commanded but as a partner to be consulted.
Conceding for the sake of argument that the organization of
unions or the appointment of walking delegates be unwise or un-
profitable, the fact remains that the laborers insist upon dealing
with their employers through these agencies. We have seen that
the laws governing industry fix the rate of wages according to the
value of the product. The employer must determine that value
at the peril of bankruptcy, or at least of loss. While he alone
determines the rate of wages, what difference can it make to him
whether he announces his conclusion to A or to B, to each work-
man separately, or to a labor union representing all his workmen?
If the employer and the employee could be induced to reason
together, they could not quarrel. It is true that the demands
of laborers are often unreasonable, but the best way to defeat an
unreasonable demand is to insist that it be formulated. The
striker has but one weapon, and that is public opinion. If he be
compelled to state his grievance before the public and his posi-
tion be unreasonable, public opinion would be as quick to con-
demn him as it has been to support him when the attitude of his
employer was believed to foe unjust or intolerant. We hear much
about the boycott. It may be a good weapon or it may be a bad
one. It may be justifiable or it may be unjustifiable, but certain
it is that a boycott depends absolutely on an overwhelming public
opinion, A mere majority could not make it formidable. It is
effective only when the whole population is practically unani-
mous in enforcing it. The day that industrial issues are dis-
cussed in public, the workingmen compelled to define their
demands and employers forced to deal with these specific de-
mands, excluding all collateral questions, strikes will become
impossible and boycotts will be unknown.
I say that discussion will obviate strikes because it would be
difficult to unite employees in an unjustifiable demand, and im-
possible to enlist public opinion in support of it. A laborer who
demands more than the value of his product is invading, not the
rights of his employer, but the rights of all the other laborers
his unknown partners scattered all over the globe who have con-
tributed to the industry in which he is engaged. If one laborer
gets more than his share of a product to which many have con-
tributed, some other laborer must get less. If the man who
finishes that chair obtains an undue proportion of the proceeds,
the man who felled the trees in the forest, or who transported the
materials or who furnished the tools, or the glue, must get less
than his share, for there is nothing to divide between them except
the proceeds of the chair. On a railway system everybody must
be paid from the earnings. If one gets more than his share some-
body else must get less. If the locomotive engineer is paid more
than his fair proportion, the switch-tender, the brakeman, or the
fireman, must get less than his share of the fund produced by
them all. These principles are so plain that if expounded with
frankness and good temper an attempt by any class of employees
to obtain unwarrantably high wages would appear at once to be a
raid not on the profits of the employer so much as on the wages of
other laborers. A public discussion would make this plain and
would enlist against them on the spot the unanimous opinion of
the community. No laborer could make an effective appeal to
force either the active force of weapons or the passive force of
the boycott when the question between himself and his em-
ployer had been fully discussed with the entire community for a
tribunal and an audience.
Let no man think that in what I say here I undertake to ex-
cuse violence under any circumstance. I believe that the laborer
and his employer are partners, and that full and fair discussion
of all questions between them is essential to the prosperity of
489
the partnership. But if one of the partners undertake to become
violent, I would be the first to condemn him, to restrain him, if
necessary, to punish him. There is something more important
than the success of any particular partnership, and that is the
preservation of the public peace, on which depends the industry
of the whole community.
Having said this, I hope I will not be misunderstood if I add
that, in my judgment, whenever a strike occurs the master should
be held responsible to public opinion. I don't say this because
I believe workmen are always reasonable, always loyal, always
obedient, or always industrious. I say it simply because the
existence of a strike on any industry shows that the person in
charge of it is unable to manage men. This is not necessarily a
reflection upon his moral character. His inability to manage his
employees may proceed from the excellence of his moral qualities,
but the fact remains that no man should be suffered to remain
in control of laborers who is unable to manage them. This is
but applying to the management of men the test now applied by
all owners of industrial enterprises to the management of mules
or horses. If a man engaged to drive a pair of mules repeatedly
allowed his animals to become entangled with the wagon which
they were harnessed to draw, do you suppose he would be main-
tained in his employment, however unimpeachable his moral
character? Would he be heard for a moment to charge the fail-
ure of his industry upon the perversity of the mules? No; his
employer, recognizing his sobriety, his truthfulness, his honesty,
and his general excellence, would nevertheless replace him by
some person, perhaps of inferior morality, but of greater dexter-
ity in the handling of mules. And surely a test of capacity ap-
plied to the management of animals should be applied more
rigidly to the management of men.
The person in charge of a great industry, like the captain on
the bridge of a ship, should be held responsible for the safety of
his charge no matter what the peril which may "beset it.
When some years ago the St. Paul ran ashore on the New
Jersey beach, a passenger undertook to console the captain by
saying it was well understood that the accident was caused by a
mistaken report of the officer in charge of the soundings, but that
loyal seaman answered, "I am the captain of this ship. I am in
control of every member of the crew, from the stoker in the hold
to the lookout at the masthead, and responsible for all of them.
I alone must bear the blame for this disaster." So when a great
industrial enterprise lies paralyzed through the quarrels of those
whose cooperation is essential to its efficiency, the man in charge
490
of it, the captain on the bridge, should not be allowed to divide
his responsibility with any one; the collapse of his industry
should be taken as conclusive proof that he is unable to manage it.
We have seen that compulsory arbitration is not a remedy
which can be enforced in a free country. Can the state, then, do
nothing to promote among employers and employees a proper
conception of their relations, and prevent these industrial dis-
turbances which by interrupting all production, work irreparable
injury to them and to the whole community? Directly the
state can do nothing, indirectly it can accomplish a great deal.
In a free country where an enterprise is of a private character,
whether conducted by individuals or corporations, the state
cannot interfere wi'th the management of its business. But
where a corporation chartered to discharge public functions is
forced to suspend its service by a strike of its employees, it is the
right and it should be made the duty of the state to bring pro-
ceedings for the revocation of its charter, while every citizen in-
convenienced by its breach of duty should be given a right of
action against it for substantial damages.
Where, however, it could be shown that the corporation at all
times had been ready to discuss with its employees through any
agency which they thought proper to select, all questions at issue
between them that fact should be a complete defense to any
actions by the state or by individuals. No matter what the sub-
ject of dispute might be, whether it were a question of wages, or
hours, or anything else, so long as the corporation could show that
it had been ready to discuss it fully with its employees directly or
with anybody designated by them, it should be held blameless.
With such a law on the statute book discussions would be
certain to precede hostilities between corporations exercising
public franchises and their employees. For the reasons already
stated this in itself would be sufficient to maintain industrial
peace between them. The fear of strikes is a spectre which con-
stantly haunts industry, causing capital to hesitate and enter-
prise to lag. Corporations exercising public franchises are the
largest employers of labor. Any system of managing employees
imposed on them which proved effective in avoiding labor dis-
putes would be adopted voluntarily, aye, eagerly by private em-
ployers and the gravest danger to civilized society would be
greatly reduced, if not wholly averted. This remedy would
not be a radical innovation on our system of jurisprudence,
but merely a provision for the better enforcement of funda-
mental principles. A distinguished judge in New York some
years ago entertained an application for a mandamus against
491
a railway company, the operation of whose system had been
suspended by a strike among its freight handlers, and the prin-
ciple on which he acted would justify such a law as I suggest.
These, then, are my suggestions for the cure of such evils as
affect the body politic : equal rights to a}l men in the enjoyment of
all facilities furnished by the government directly or by agencies
of its selection ; publicity of every detail in corporate management
affecting the community; penalties for the interruption through
strikes or other industrial disturbances of any public service
which a corporation is chartered to perform, unless the corpora-
tion can show that it had always been ready to discuss matters in
dispute with its employees through agents of their own selection.
These remedies are not ambitious plans for the reorganization
of society, but merely suggestions to promote the industrial
cooperation of men by a fuller recognition of certain immutable
and eternal laws governing the human race. It is said that the
closer cooperation of man, tends to destroy individualism. In-
dividualism is another of those phrases which appear to have
been invented for the special purpose of bewildering the mind.
It disguises an argument for barbarism under an expression with
a humanitarian sound. Individualism in its last analysis is
savagery. The savage depending on himself alone for his shelter
and his food, treating all his fellows as foes to be shunned or
killed, is the most complete instance of individualism conceiva-
ble. Individualism is isolation or savagery. Association or
cooperation is civilization. The badge of savagery is the weapon
of destruction by which the savage maintains his isolation. The
badge of civilization is the implement of production by which
each man enlists the cooperation of many men for the benefit of
all. All civilized men are engaged in a great scheme of coopera-
tion, in which the activity of every man's hands is of vital impor-
tance to all the rest.
If socialism would result in a more abundant yield of the
earth I would be a socialist. I don't believe that in the present
condition of the race a man would labor as zealously or as effec-
tively for the common good as he does now for his own profit and
therefore I believe socialism would restrict rather than promote
the volume of production.
Again, we are told that closer cooperation among men tends
inevitably to socialism. This conference will not have been held
in vain if it result in dispelling to some extent that fog of
phrases which so often overhangs economic discussions, causing
men to lose sight of the object which they have undertaken to
consider. The matter that concerns us is the system which best
492
promotes the fruitfulness of industry, not the term in which that
system may be described.
Socialism and individualism are features of our existence
now. No one can attempt to gratify individual desires without
serving society at large. Wherever a man labors to improve his-
own condition, he contributes to the welfare of the entire race.
Can you or I do one thing' for individual benefit without bene-
fiting all our fellows? Can vanity indulge itself, can pride
gratify itself, can appetite satisfy itself, without paying a tribute
to the universal partnership in which we are all engaged? The
man who builds a palace to gratify pridej must employ ten
thousand hands in every quarter of the globe. The woman who
buys a robe to indulge vanity, must employ hundreds of her
fellow-creatures throughout the world. The miser, seeking to
raise the rate of interest on his capital from 5 to 6 per cent
must serve his fellows in doing so. There is but one way in
which he can increase the profits of his capital, and that is' by an
increase of its productivity. If his capital be employed in mak-
ing tables, more tables must be produced; if in building, more
houses must be erected; if in agriculture, the area of tillage must
be increased. In doing all these things more labor must be em-
ployed, and thus hundreds of dollars will be distributed in wages
for every one that is gained by cam'tal. Our pride, our hopes,
our fears, our ambitions are but illusions which spur us to activity
in the service of others, traces that bind us to the car of human
progress, making of all our activities forces to move it onward
and upward. The questions which perplex the civilization of
this age arise from free'dom and the ever-swelling tide of
prosperity, of which freedom is the fountain. The triumph of
Christianity led inevitably to the establishment of this republic.
A government based on the equality of all men in the eye of the
law was the necessary fruit of a religious belief in the equality
of all men in the sight of God.
The economic effect of Christianity was the substitution of
free labor for slave labor. The removal of manacles from the
hands of man has worked an extraordinary change in his condi-
tion. It has wonderfully increased his productivity, extended
the scope of his powers, multiplied his possessions, lengthened
the span of his days, widened the horizon of his ambitions. But
out of the very prosperity which it has created, a difficulty has
sprung. The slave was willing to accept from the hands of hi?
master a crust of bread as a reward for his labor, glad to escape
the lash, but the free laborer demands a fair share of the property
493
which has been created by his toil. The adjustment of this de-
mand, the fair distribution of the commodities created by the
cooperative industry of every man, is the problem of this age.
I do not think it is an insuperable or even a very difficult ques-
tion. Its solution in my judgment, will be found by recognizing
in our industrial systems, the partnership of man as we have
recognized in- our political system, the equality, the brother-
hood of man. While the relations of men are governed by the
principles of justice and morality which underlie this govern-
ment, and indeed the whole fabric of Christian civilization, I
have no fear of the future. Words cannot disturb me while every
fact in history encourages me. This civilization which has cre-
ated our marvelous prosperity", will defend it and maintain it.
I have no sympathy with those timid souls who see in our splendid
growing civilization a dizzy eminence from which the race is in
constant peril of falling back into the darkness and ignorance
from which it has risen. I prefer to regard man as a reasonable
being, pursuing by the light of experience an ever-ascending path-
way of progress, proving by what he has done, his capacity for
greater deeds, surveying from the heights which he has
achieved, with courage, with determination, and with confidence,
the still nobler heights which are accessible.
WILLIAM JENNINGS BEYAN.
Several times during his address the speaker was interrupted
by bursts of applause, but especially was this noticeable when he
referred to Col. Bryan in a brief but glowing eulogy. As he took
his seat the demonstration was punctuated by calls for the noted
Nebraskan who, after much pressure, stepped forward and said :
I am denying myself a great pleasure when I refuse to respond
to your very cordial invitation. When I came this afternoon and
found that Mr. Cockran and I were to speak together this evening,
or it had been so announced, I consulted with him and with those
who were in charge, and it was the decision that anything like a
debate would not be in keeping with the purpose of this con-
ference.
"We are not here to arouse partisan feeling by standing as
representatives of different ideas. We are here to take part in a
conference, to give expression to our views, and to gather as much
information as we can from the views expressed by others, and it
4M
was decided that it was better that Mr. Cockran should have this
evening by himself and that I should speak to-morrow at 10
o'clock and give my views. And while, as I say, I am denying
myself a great pleasure in refusing to speak to this magnificent
audience, I am sure that you upon reflection will agree that our
decision is the correct one and that the purpose of this conference
shall be carried out and that we shall avoid as far as possible any-
thing that might seem like partisanship or an attempt to array one
part of the body against another part.
"I don't know to what extent Mr. Cockran represents the views
of the delegates here. I don't know to what extent I represent
the views of the delegates in what I shall say, but to-morrow at 10
o'clock I shall submit some remarks in regard to the subject of
monopoly and make some suggestions as to methods by which
monopoly can be eliminated. I am one of those who believe that
monopoly in private hands is indefensible in a free country.
"While I agree with much that Mr. Cockran has said to-night,
agree with some of the remedies proposed, I cannot fully agree
with all that he has said, and to-morrow instead of attempting to
answer any part in which I may differ, I expect to present this
subject as it appears to me in order that I may contribute my part
toward the solution of this great question/'
/
At 10 :50 o'clock the conference adjourned until 10 :30 o'clock
the following morning.
MORNING SESSION, SEPTEMRER 16.
It was 10 :05 o'clock when Chairman Howe called to order the
first of the two last sessions of the conference. In anticipation of
Col. William J. Bryan's reply to Mr. Cockran's address of the pre-
ceding evening the hall was again packed to the doors, and many
of the scenes of the previous evening were reenacted.
Moved by Gaines, of Tennessee, seconded by Davis, of Arkan-
sas, that a committee of five on finance and publication be ap-
pointed by the chair. Carried.
495
W. E. STANLEY.
Governor of Kansas. .
Chairman Howe introduced Governor Stanley, of Kansas, who
said:
More than three years ago in this city a great political party
met in convention, and in less than an hour changed their policy
and entrusted their banner and chances of success into the hands
of a new and untried champion. The campaign that followed
was one of the most memorable aye, the most memorable in
the history of American politics. We did not all agree with the
wonderful man who led over 7,000,000 voters with him in that
fight ; but we did all admire his matchless eloquence and brilliant
leadership.
It is not necessary for me to introduce him to any American
audience. I take pleasure, however, in presenting to this audi-
ence Col. W. J. Bryan, who will now address you.
WILLIAM JENNINGS BRYAN.
Col. Bryan was as enthusiastically received as he had been
when he entered the hall on the preceding evening. As soon as
the applause, which was long and vigorous, had subsided he began
his address, saying:
I appreciate the very kind words spoken by Governor Stanley
in presenting me to this audience. I am glad I live in a country
where people can differ from one another, differ honestly, express
their convictions boldly, and yet respect one another and acknowl-
edge one another's rights. I am not vain enough, however, to
think that any good will which has been expressed by the people
toward me is due to personal merit. If I have had political
friends it is because people believe with me in certain ideas or
rather because I believe with them in certain ideas. It is the
idea that makes the man. The man is only important as he helps
the idea.
I come this morning to discuss in your presence a great ques-
tion a .question of growing importance to the American people.
The trust principle is not a new principle, but tbe trust principle
is manifesting itself in so many ways and the trusts have grown
so rapidly that people now feel alarmed about trusts who did not
feel alarmed three years ago. The trust question has grown in
496
importance, because within two years more trusts have been
organized, when we come to consider the capitalization and the
magnitude of the interests involved, than were organized in all
the previous history of the country, and the people now come
face to face with this question : Is the trust a blessing or a curse ?
If a curse, what remedy can be applied to the curse?
I want to start with the declaration that a monopoly in pri-
vate hands is indefensible from any standpoint, and intolerable.
I make no exceptions to the rule. I do not divide monopolies in
private hands into good monopolies and bad monopolies. There
is no good monopoly in private hands. There can be no good
monopoly in private hands until the Almighty sends us angels to
preside over the monopoly. There may be a despot who is bet-
ter than another despot, but there is no good despotism. One
trust may be less harmful than another. One trust magnate may
be more benevolent than another, but there is no good monopoly
in private hands, and I do not believe it is safe for society to per-
mit any man or group of men to monopolize any article of mer-
chandise or any branch of industry.
What is the defense made of the monopoly? The defense of
the monopoly is always placed on the ground that if you will
allow a few people to control the market and fix the price they
will be good to the people who purchase of them. The entire
defense of the trusts rests upon a money argument. If the trust
will sell to a man an article for a dollar less than the article will
cost under other conditions, then in the opinion of some that
proves a trust to be a good. thing. In the first place I deny that
under a monopoly the price will be reduced. In the second place,
if under a monopoly the price is reduced the objections to a
monopoly from other standpoints far outweigh any financial
advantage that the trust could bring. But I protest in the be-
ginning against settling every question upon the dollar argu-
ment. I protest against the attempt to drag every question down
to the low level of dollars and cents.
In 1859 Abraham Lincoln wrote a letter to the Republicans
of Boston who were celebrating Jefferson's birthday, and in the
course of the letter he said : "The Republican party believes in
the man and the dollar, but in case of conflict it believes in the
man before the dollar." In the early years of his administration
he sent a message to Congress, and in that message he warned his
countryman against the approach of monarchy. And what was
it that alarmed him? He said it was the attempt to put capital
upon an equal footing with, if not above, labor in the structure
of government, and in that attempt to put capital even upon an
497
equal footing with labor in the structure of government he saw
the approach of monarchy. Lincoln was right. Whenever you
put capital upon an equal footing with labor, or above labor in
the structure of government you are on the road toward a gov-
ernment that rests not upon reason but upon force.
Nothing is more important than that we shall in the begin-
ning rightly understand the relation between money and man.
Man is the creature of God and money is the creature of man.
Money is made to be the servant of man, and I protest against all
theories that enthrone money and debase mankind.
What is the purpose of the trust or the monopoly? For when
I use the word trust I use it in the sense that the trust means
monopoly. What is the purpose of monopoly? You can find
out from the speeches made by those who are connected with the
trusts. I have here a speech made by Charles E. Flint at Boston
on the 25th day of last May, and the morning papers of the 26th
in describing the meeting said he defended trust principles be-
fore an exceedingly sympathetic audience, and then added : "For
his audience was composed almost exclusively of Boston bank-
ers/' "We thus secure," he says, "the advantages of larger aggre-
gations of capital and ability; if I am asked what they are the
answer is only difficult because the list is so long."
But I want now to read to you a few of the advantages to be
derived by the trusts from the trust system. "Raw material
bought in large quantities is secured at lower prices." That is
the first advantage. One man to buy wool for all the woolen
manufacturers. That means that every man who sells wool must
sell it at the price fixed by this one purchaser in the United
States. The first thing is to lower the price of raw material.
The great majority of the people are engaged in the production of
raw material and in the purchase of finished products. Com-
paratively few can stand at the head of syndicates and monopolies
and secure the profits from them. Therefore, the first advantage
of a monopoly is to lower the price of the raw material furnished
by the people. Note the next advantage : "Those plants which
are best equipped and most advantageously situated are run con-
tinuously and in preference to those less favored."
The next thing, after they have bought all the factories, is to
close some of them and to turn out of employment the men who
are engaged in them. If you will go about over the country you
will see where people have subscribed money to establish enter-
prises, and where these enterprises, having come under the con-
trol of the trusts, have been closed and stand now as silent monu-
ments of the trust system.
498
Behold the next advantage: "In case of local strikes and
fires, the work goes on elsewhere, thus preventing serious loss
.Uo not the laboring men understand what that means ? "In case
p local strikes or fires the work goes on elsewhere, thus prevent-
ing serious loss." What does it mean? It means that if the peo-
ple employed in one factory are not satisfied with the terms fixed
by the employer and strike, the trust can close that factory and
let the employees starve while work goes on in other factories
without loss to the manufacturers.
It means that when the trust has frozen out the striking em-
ployees in one factory and compelled them to return to work at
any price to secure bread for their wives and children it can pro-
voke a strike somewhere else and freeze the workmen out there.
When a branch of industry is entirely in the hands of one great
monopoly, so that every skilled man in that industry has to go
to the one man for employment, then that one man will fix wages
as he pleases and the laboring men will share the suffering of the
man who sells the raw materials.
"There is no multiplication of the means of distribution and
a better force of salesmen takes the place of a. large number."
That is the next advantage named. I want to warn you that
when the monopoly has absolute control, brains will be at a dis-
count, and relatives will be found to fill these positions. When
there is competition every employer has to get a good man to
meet competition, but when there is no competition anvbody
can sit in the office and receive letters and answer them because
everybody has to write to the same house for anvthing he wants.
There is no auestion about it. A trust, a monopolv, can lessen
the cost of distribution. But when it does so societv has no
assurance that it will sret any of the benefits from that reduction
of cost. But you will take away the necessity for skill and brains.
You will take away the stimulus that has .given to us the quick,
the ever alert commercial traveler. These commercial evangel-
ists, who go from one part of the countrv to the other proclaiming
the merits of their respective goods, will not be needed, because
when anybody wants merchandise all he has to do is to write to
the one man who has the article for sale, and say, "What will von
let me have it for to-day?"
And here is another advantage: "Terms and conditions of
sale become more uniform and credit ran be more safely srranted.
The trust can not only fix the price of what it sells, but it can fix
the terms upon which it sells. You can pav cash. or. if there
a discount, it is just so much discount, and you have to trust 1
the manager's generosity as to what is fair when he i
499
side and you on the other. I have read some of the advantages
which a great trust magnate thinks will come to the trust.
What is the first thing to be expected of a trust? That it will
cut down expenses. What is the second? That it will raise
prices. We have not had in this country a taste of a complete
trust, a complete monopoly, and "we cannot tell what will be the
results of a complete monopoly by looking at the results that
have followed from an attempt to secure a monopoly. A corpo-
ration may lower prices to rid itself of competitors ; but when it
has rid itself of competitors, what is going to be the result? My
friends, all you have to know is human nature. God made men
selfish. I do not mean to say that He made a mistake when He
did, because selfishness is merely the outgrowth of an instinct of
self-preservation. It is the abnormal development of a man's
desire to protect himself; but everybody who knows human na-
ture knows how easy it is to develop that side of a man's being.
Occasionally I find a man who says he is not selfish, but when I
do, I find a man \vho can prove it only by his own affidavit.
We get ideas from every source. An idea is the most impor-
tant thing that a man can get into his head. An idea will control
a man's life. An idea will revolutionize a community, a state,
a nation, the world. And we never know when we are going to
get an idea. Sometimes we get them when we not want to get
them, and sometimes we get them from sources which would not
be expected to furnish ideas. We get them from our fellow men.
We get them from inanimate nature. We get them from the ani-
mals about us. I got a valuable idea once from some hogs. I
was riding through Iowa and saw some hogs rooting in a field.
The first thought that came to me was that those hogs were
destroying a great deal in value, and then my mind ran back to
the time when I lived upon a farm and when we had hogs.
Then I thought of the way in which we used to protect prop-
erty from the hogs by putting rings in the noses of the hogs ; and
then the question came to me, why did we do it? !N"ot to keep
the hogs from getting fat, for we were more interested in their
getting fat than they were; the sooner they got fat the sooner we
killed them; the longer they were in getting 1 fat the longer they
lived. But why did we put the rings in their noses? So that
while they were getting fat they would not destroy more than
they were worth. And then the thought came to me that one of
the great purposes of government was to put rings in the noses of
hogs. I don't mean to say anything offensive, but we are all
hoggish. In hours of temptation we are likely to trespass upon
the rights of others.
500
I believe in self-government. I believe in the doctrines that
underlie this government; I believe that people are .capable of
governing themselves. Why? Because in their sober moments
they have helped to put rings in their own noses, to protect others
from themselves and themselves from others in hours of tempta-
tion. And so I believe we must recognize human nature. We
must recognize selfishness and we must so make our laws that
people shall not be permitted to trespass upon the rights of others
in their efforts to secure advantages for themselves.
I believe society is interested in the independence of every
citizen. I wish we might have a condition where every adult
who died might die leaving to his widow and children enough
property for the education of his children and the support of his
widow. Society is interested in this because if a man dies and
leaves no provisions for his wife and children the burden falls upon
society. But while I wish to see every person secure for himself
a competency, I don't want him to destroy more than he is worth
while he is doing that. And I believe the principle of monopoly
finds its inspiration in the desire of men to secure by monopoly
what they cannot secure in the open field of competition. In
other words, if I were going to try to find the root of the mo-
nopoly evil I would do as I have often had occasion to do go
back to the bible for an explanation and I would find it in the
declaration that the love of money is the root of all evil.
I will not ask you all to agree with me ; we have not met here
as a body of men who agree. We have met here as a body of men
who are seeking light and each ought to be willing to hear what
every other person has to .say, and each of us should desire the
triumph of that which is true more than the triumph of that
which he may think be true.
Let me repeat that the primary cause of monopoly is the love
of money and the desire to secure the fruits of monopoly, but I
believe that falling prices, caused by the rising dollar, have con-
tributed to this desire and intensified it, because people, seeing
the fall in prices and measuring the loss of investments, have
looked about for some means to protect themselves from this loss,
and they have joined in combinations to hold up prices to protect
their investments from a loss which would not have occurred but
for the rise in the value of dollars and the fall in the level of
prices.
Another thing that, in my judgment, has aided monopoly is
a high tariff. Nobody can dispute that a tariff law, an import
duty, enables a trust 'to charge for its product the price of a
similar foreign product plus the tariff.
501
Now some have suggested that to put everything on the free
list that trusts make would destroy the trusts. I do not agree-
with this statement, as it is made so broadly. I believe that the
high tariff has been the means of extortion and that it has aided
trusts to collect more than they otherwise could collect. But I
do not believe you could destroy all trusts by putting all trust
made articles on the free list. Why? Because, if an article can
be produced in this country as cheaply as it can be produced
abroad the trust could exist without the aid of any tariff, although
it could not extort so much as it could with the tariff. While
some relief may come from modifications of the tariff, we cannot
destroy monopoly until we lay the axe at the root of the tree and
make monopoly impossible by law.
It has been suggested that discrimination by railroads has
aided the trusts. No question about it. If one man can secure
from a railroad better rates than another man, he will be able to
run the other man out of business. And there is no question that
discrimination and favoritism secured by one corporation against .
a rival have been largely instrumental in enabling the favored
corporation to secure practically a complete monopoly. Now
that can be remedied by laws that will prevent this discrimination,
but when we prevent the discrimination, when we place every
producer upon the same footing and absolutely prevent favorit-
ism, monopoly may still exist. The remedy must go farther. It
must be complete enough to prevent the organization of a mo-
nopoly.
Now what can be done to prevent the organization of a mo-
nopoly? I think we differ more in remedy than we do in our
opinion of the trust. I venture the opinion that few people will
defend monopoly as a principle, or a trust organization as a good
thing, but I imagine our great difference will be as to remedy,
and I want, for a moment, to discuss the remedy.
We have a dual form of government. We have a state gov-
ernment and a federal government, and while this dual form of
government has its advantages, and to my mind advantages which
can hardly be overestimated, yet it also has its disadvantages.
When you prosecute a trust in the United States court it hides
behind state sovereignty, and when you prosecute it in the state
court it rushes to cover under federal jurisdiction and we have
had some difficulty in determining a remedy.
I believe we ought to have remedies in both state and nation,
and that they should be concurrent remedies. In the first place,
every state has, or should have, the right to create any private
corporation which in the judgment of the people of the state is
502
conducive to the welfare of the people of that state. I believe we
can safely intrust to the people of a state the settlement of a que s !
SmS* f n T nS ^ K th6 ^ Create a Corporation and t
PnZTr U ? ^ f th r best interests thg y ca destrov that
corporation and we can safely trust them both to create and anni-
hilate if conditions make annihilations necessary. In the second
place the state has, or should have, the right to prohibit any for-
eign corporation from doing business in the state, and it has or
should have the right to impose such restrictions and limitations
as the people of the state may think necessary upon foreign cor-
porations doing business in the state. In other words, the people
ol the state not only should have a right to create the corporations
they want, but they should be permitted to protect themselves
against any outside corporation.
But I do not think this is sufficient. I believe, in addition
to a state remedy, there must be a federal remedy, and I believe
Congress has, or should have, the power to place restrictions and
limitations, even to the point of prohibition, upon any corpora-
tion organized in any state that wants to do business outside of
the state. I say that Congress has, or should have, power to place
upon the corporation such limitations a,nd restrictions, even to
the point of prohibition, as may to Congress seem necessary for
the protection of the public.
Now I believe that these concurrent remedies will prove
effective. To repeat, the people of every state shall first decide
whether they want to create a corporation; they shall also decide
whether they want any outside corporation to do business in the
state, and if so, upon what conditions; and then Congress shall
exercise the right to place upon every corporation doing business
outside of the state in which it is organized such limitations and
restrictions as may be necessary for the protection of the public.
I do not believe that the people of one state can rely upon
the people of another state in the management of corporations.
And I will give you a reason. I have here a letter that was sent
out by a Delaware corporation with an office in New York. It
is a most remarkable document, the most remarkable document
on this subject that has ever fallen under my observation. We
have talked about the state of New Jersey having a law favorable
to trusts. I have a letter here which shows that in Delaware
they adopted a law for the purpose of making Delaware more
friendly to the trusts than New Jersey. Let me read the letter.
It is a little long, 'but it will repay reading.
"The state of Delaware has just adopted the most favorable
of existing general corporation laws, one marking a forward step
503
in the evolution of corporations. It does not encourage reckless
incorporation nor permit the existence of wild-cat companies, but
it furnishes at the least expense ample rights to stockholders, and
reduces restrictions upon corporate action to the minimum. The
enactment is not the result, as in the case of most states, of hesi-
tating, halting, enacting, amending and repealing, but is a logical
and systematic measure framed by a committee of able lawyers
appointed by the legislature to examine the various statutes of
the various states and prepare a bill which should embody the
good and eliminate the bad points of existing law. The law is
based broadly upon that of the state of New Jersey, and embraces
all the beneficial provisions and safeguards found in the laws of
that state. It has, however, in many respects advanced far be-
yond New Jersey, and makes Delaware a much more attractive
home for business corporations. In the following salient pro-
visions the Delaware and New Jersey law are substantially iden-
tical, namely: Any three persons may organize a corporation;
second, it may engage in any lawful business excepting banking ;
third, its existence may be perpetual or limited; fourth, it may
purchase and deal in real or personal property wherever situated
and to any desired amount; fifth, it may be a mortgagee or mort-
gagor; sixth, it may conduct business anywhere in the world;
seventh, stock may be issued for property purchased (and in Del-
aware for services rendered) and in the absence of fraud the judg-
ment of the directors as to the value of such property or services
is conclusive; eighth, it may easily wind up its affairs and dis-
solve itself; ninth, its authorized capital stock need not be more
than $2,000 and only $1,000 of this need be subscribed for; tenth,
the amount of capital stock which it may issue is unlimited ; elev-
enth, it may file its certificate of incorporation and even com-
mence business before any sum whatever is paid in; twelfth, it
may have different classes of stock, with different privileges or
restrictions; thirteenth, the charter may be easily amended; four-
teenth, only one director need be a resident of Delaware; fif-
teenth, the capital stock may be easilv diminished or increased;
sixteenth, the corporation may be readily merged or consolidated
into other corporations ; seventeenth, it may own and vote upon
the stock of other corporations; eighteenth, the incorporators
may or may not limit the authority of the directors as to the lia-
bilities.
"The Delaware law possesses the following decided advan-
tages: First, the original fee to be paid for incorporation is
small about three-fourths of that in New Jersey, for instance;
second, the annual tax is very small, one-half that in New Jersey.
504
.ueiaware is a small state and dnpa nnf nan/i i
TV,' a i T- need a very large revenue
Ihird stockholders and directors may hold their meetings wher-
ever they please, and need never meet in the state of Delaware
(New Jersey stockholders must meet in that state) You ee
it is a decided advantage over the New Jersey law in that respect.
fourth, the original stock and transfer books (which in a New
Jersey corporation must be kept in the state), may be kept in
>r out of Delaware in the discretion of the company Fifth the
examination of the books by intermeddlers is much more difficult
under the Delaware law than under the laws of any other state
'Sixth, the liability of the stockholders is absolutely limited
when the stock has once been issued for cash, property or services.
Seventh, stock may be issued in compensation for services ren-
dered, and in the absence of fraud in the transaction, the judg-
ment of the directors as to the value of such services is con-
clusive. (In New Jersey' authority is given to issue stock for
property, but not for service). Eighth, for 'certain important
classes of corporations, as, for instance, railroads, railway, tele-
graph, cable, electric light, steam heating, power, gas piping
lines, and sleeping car companies, the advantage is still more
marked."
I wish we had some way of knowing what the additional ad-
vantages are after having read the ordinary advantages.
"Ninth, the annual report of a Delaware corporation is re-
quired to give no secret or confidential information.
"Tenth, the certificate need not show nor need public record
be in any way made of the amount of stock subscribed by any
incorporator." ,
And then the letter adds: "This company is authorized to
act as the agent and trustee of corporations organized under the
Delaware law. It will maintain the principal office of the com-
pany in Delaware and keep an aerent in charge within the state.
It is formed for the purpose of facilitating the incorporation of
companies in Delaware, and of aiding them to comply, at a mini-
mum expense, with the requirements of the Delaware law. We
are ready to aid and give full information to in corpora tor= or
their counsel. We do not interfere between attorney and client.
We do not conduct a law business. Copies of the Delaware Inw,
blank forms of information concerning Delaware corporations
furnished on application.
"All communications to us are confidential."
A voice from the gallery Colonel, Delaware and New Jersey
are both Democratic states, are they not?
Mr. Bryan They were not in 1896.
505
Another voice from the gallery Has the gentleman any more
questions to put?
Mr. Bryan I am very glad to have questions asked, because
we are seeking the truth.
I have read you this letter in order to show you that where a
state can gain an advantage from the incorporation of these
great aggregations of wealth, it is not safe to place the people
of other states at the tender mercies of the people of such a state
as may desire to collect its running expenses from the taxation
of corporations organized to prey upon people outside.
I read the letter to show how impossible it is for the people
in one state to depend for protection upon the people in another
state; and while, as I say, I believe the people of every state
should have the power to create corporations and to restrainj to
limit, and, if necessary, to annihilate, yet I believe that no com-
plete remedy will be found for the trust until the federal govern-
ment, with a power sufficiently comprehensive to reach into
every nook and corner of the country, lays its hands upon these
trusts and declares that they shall no longer exist.
I am here to hear, to receive information, and to adopt any
method that anybody can propose that looks to the annihilation
of the trusts.
One method has occurred to me, and to me it seems a complete
method. It may not commend itself to you. If you have some-
thing better I shall accept it in the place of this which I am about
to suggest. But the method that occurs to me is this : That Con-
gress should pass a law providing that no corporation organized
in any state should do business outside of the state in which it is
organized until it receives from some power created by Congress
a license authorizing it to do business outside of its own state.
Now, if the corporation must come to this body created by Con-
gress to secure permission to do business outside of the state,
then the license can be granted upon conditions which will, in
the first place, prevent the watering of stock ; in the second place,
prevent monopoly in any branch of business, and, third, provide
for publicity as to all of the transactions and business of the cor-
poration.
A voice Colonel, would such a law be constitutional?
Mr. Bryan I was going to come to that. I am glad you
mentioned it. What I mean to say is that Congress ought to pass
such a law. If it is unconstitutional and so declared by the Su-
preme Court, I am in favor of an amendment to the Constitution
that will give to Congress power to destroy every trust in the
country. The first condition which I suggest is that no water
606
should be allowed m the stock. I do not agree with those who say
LI is a matter entirely immaterial whether a corporation has water
m its stock or not. It may be true that in the long run, if you
are able to run as long as the corporation can, the stock will fall
to its natural level, but during all that time the harm goes on;
during all that time the trust demands the right to collect divi^
(lends upon capital represented by no money whatever I do
not believe that any state should permit the organization of a
corporation with a single drop of water in the stock of that cor-
poration. The farmer cannot innate the value of his land by
watering the value of that land. The merchant in the store can-
not inflate the value of the goods upon his shelves. Why should
the corporation be permitted to put out stock that represents no
real value?
Why, there are instances where there are $4 of water for $1
of money.
A voice Seven.
Mr. Bryan Yes, a man suggests seven. Do I hear a higher
bid? I have known it to be twelve but I am a conservative man,
and I must maintain my reputation. No man can defend stock
that does not represent money invested, and only in the case of a
monopoly can you secure dividends upon stock that does not
represent money invested.
We had a law in Nebraska that was intended to regulate rail-
road rates. One railroad in our state was capitalized and bonded
for more than five times what it would cost to duplicate the road,
and yet the judge held that in fixing rates and in determining
what was fair compensation for the railroad, we had to consider
the watered stock as well as the actual value of that road, and
when the case went to the Supreme Court, the Supreme Court
rendered a decision which, while I cannot quote its exact lan-
guage, was in substance this: That in determining what was a
reasonable rate we had to take into consideration a number of
things besides the present value of that road, measured by the
cost of reproduction. If the watering of the stock is permitted,
then the cry of the innocent purchaser is raised, and you will
be told that you must protect the man who bought the sto-k.
No man ought to stand in the position of an innocent purchaser
who buys stock in a corporation, if that stock does not represent
actual money invested, because he can find out what the stock
stands for if he will only investigate, but, as a matter of fact, the
holders of watered stock are able to collect dividends. Now, if
this license is granted, then the first condition can be that any
corporation desiring to do business outside of the state in which
507
it is organized shall bring to that board or body proof that that
stock is bona fide and that there is no water in "it. In my judg-
ment, when you take from monopoly the power to issue stock
not represented by money, you will go more than half the way
toward destroying monopoly in the United States.
The law should provide for publicity. As has been well said
by men who have spoken here, corporations cannot claim that
they have a right, or that it is necessary, to cover their transac-
tions with secrecy, and when you provide for publicity so that the
public can know just what there is in the corporation, just what
it is doing, and just what it is making, you will take another long
step toward the destruction of monopoly.
But I am not willing to stop there. I do not want to go one
01 two steps, I want to go all the way and make a monopoly abso-
lutely impossible. And, therefore, as a third condition, I sug-
gest that this license shall not be granted until the corporation
shows that it has not had a monopoly, and is not attempting a
monopoly of any branch of industry or of any article of mer-
chandise and then provide that if the law is violated the license
can be revoked. I do not believe in the government giving priv-
ileges to be exercised by a corporation without reserving the right
to withdraw them when those privileges become hurtful to the
people.
Now, I may be mistaken, but as I have studied the subject
it has seemed to me that this method of dealing with the trusts
would prove an effective method, but if you once establish the
system and require the license, then Congress can, from year to
year, add such new conditions as may be necessary for the pro-
tection of the public from the greed and avarice of great aggre-
gations of wealth. I do not go so far as some do and say that
there shall be no private corporations, but I say this, that a cor-
poration is created by law, that it is created for the public good
and that it should never be permitted to do a thing that is injuri-
ous to the public, and that if any corporation enjoys any privi-
leges to-day which are hurtful to the public those privileges ought
to be withdrawn from it. In other words, I am willing that we
should first see whether we can preserve the benefits of the cor-
poration and take from it its possibilities for harm.
A delegate -Would you apply that to rich individuals also,
supnose Eockefeller did it on his own account?
Mr. Bryan We have not reached a point yet where an in-
dividual has been able to do harm, and, in my judgment, if we
would abolish those laws that grant special privileges and make
some men the favorites of the government, no man, by his own
508
brain and muscle, could ever earn enough money to be harmful
to the people.
A delegate What will you say to the banks reporting five
hundred millions of money in the vaults and four billions of
loans?
Mr. Bryan Well, I would say it would not be safe to have all
the loans collected at once.
Following out the suggestion the gentleman has made, I
want to add to what I have said to this extent : My contention is
that we have been placing the dollar above the man; that we have
been picking out favorites and bestowing upon them special priv-
ileges, and every advantage we have given them has been given
them to the detriment of other people. My contention is that
there is a vicious principle running through the various policies
which we have been pursuing; that in our taxation we have been
imposing upon the great struggling masses the burden of govern-
ment, while we have been voting the privileges to a few people
who will not pay their share of the expenses of the government.
Every unjust tax law is an indirect form of larceny. If, for
instance, a man who ought to pay $10 only pays $5, and one who
ought to pay only $5 pays $10, the law that compels this contribu-
tion from these two men virtually takes $5 from one man's pocket
and puts that $5 into the other man's pocket, and I have claimed
that when we collected our taxes we were making the poor people
pay not only their own share, but the share of the men whom
they have no chance to meet at the summer resorts. I have been
gratified to note the progress that you have been making in Illi-
nois towards more equitable distribution of the burdens of gov-
ernment. I heard it stated that there was a time only a few
years ago when the agricultural implements owned by the farm-
ers living within the city limits of Chicago were assessed for more
than all the money in Chicago returned for taxation by private
citizens. I do not know whether it was true or not, but I saw it
stated as a fact. There are some people who have visible prop-
erty, others who have invisible property, and the visible property
is always taxed. The invisible property has too often escaped,
and as a result the people owning visible property have not only
paid their own taxes, but the taxes that should have been paid
by the owners of invisible property. I have advocated an income
tax because I believe it the most just tax. I do not mention it
to argue the question here, because I want to avoid the discussion
of any questions that might be considered partisan. f the gov-
ernment will quit picking out favorites and follow the doctrin
of equal rights to all and special privileges to no man
509
no fear that any man by his own "brain or his own muscle will be
able to secure a fortune so great as to be a menace to the welfare
of his fellow men. If we secure a government whose foundations
are laid in justice and laws exemplifying the doctrine of equality
before the law, if we can secure such a government and such laws,
and wealth is then accumulated to a point where it becomes dan-
gerous, we can meet that question when it arises, and I am will-
ing to trust the wisdom of society to meet every question that
arises, and remedy every wrong.
Sigmund Zeisler (Attorney, Chicago) What will you do,
colonel, with the multi-millionaires that already exist? Sup-
pose they should hold and acquire all the industries, all the fac-
tories, and particularly industries?
Colonel Bryan Do you mean before our laws go into opera-
tion?
Mr. Zeisler The multi-millionaires that already exist.
Colonel Bryan In the first place, private individuals have
not been able to secure monopolies, and are not likely to do so.
As to the multi-millionaires now in existence, I would wait and
see whether they would die off soon enough to relieve the coun-
try of danger. Life is short. If, however, their accumulations
should become a menace, I would then consider 'what measures
would be necessary for the protection of society. And this brings
me to what I regard as a very important branch of this subject.
I am glad the question was asked : it calls attention to the differ-
ence between an individual and a corporation. Every trust rests
upon a corporation at least that rule is so nearly universal that
I think we can accept it as a basis for legislation. Every trust
rests upon a corporation, and every corporation is a creature
of law. The corporation is a man-made man.
When God made man as the climax of creation he looked
upon his work and said that it was good, and yet when God fin-
ished his work the tallest man was not much taller than the
shortest, and the strongest man was not much stronger than the
weakest. That was God's plan. We looked upon his work and
said that it was not quite as good as it might be, and so we made
a fictitious person called a corporation that is in some instances
a hundred times a thousand times a million times stronger
than the God-made man. Then we started this man-made giant
out among the God-made men. When God made man he placed
a limit to his existence, so that if he was a bad man he could
not do harm long, but when we made our man-made man we
raised the limit as to age. In some states a corporation is given
perpetual life.
510
When God made man he breathed into him a soul and warned
him that in the next world he would be held accountable for the
deeds done in the flesh, but when we made our man-made man
we did not give him a soul, and if he can avoid punishment in
this world he need not worry about the hereafter.
_ My contention is that the government that created must re-
tain control, and that the man-made man must be admonished :
"Kemember now thy Creator in the days of thy youth" and
throughout thy entire life.
Let me call your attention again to this distinction. We are
not dealing with the natural man; we are not dealing with
natural rights. We are dealing with the man-made man and
artificial privileges.
What government gives, the government can take away.
What the government creates, it can control;, and I insist that
both the state government and the federal government must pro-
tect the God-made man from the man-made man.
I have faith that these questions will be settled and settled
right, but I want to protest against this doctrine that the trust
is a natural outgrowth of natural laws. It is not true. This
trust is the natural outgrowth of unnatural conditions created by
man-made laws. There are some who would defend everything
good or bad, on the ground that it is destiny and that you can-
not inquire into it. The fact that it is, proves that it is right;
the fact that it is, proves that it has come to stay, and the argu-
ment most frequently made in defense of a vicious system is not
that it is right and ought to stay, but that it has come to stay
whether you like it or not. I say that that is the argument that
is usually advanced in behalf of an error it is here, it has come
to stay what are you going to do about it?
I believe that, in a civilized society, the question is not what
is, but what ought to be and that every proposition must be
arraigned at the bar of reason. If you can prove that a thing is
good,, let it stay, but if you cannot prove that it is good you
cannot hide behind the assertion that it is here and that you
cannot get rid of it. I believe that the American people can
get rid of anything that they do not want and that they ought
to get rid of everything that is not good. I believe that it is the
duty of every citizen to give to his countrymen the benefit of his
conscience and his judgment, and cast his influence, be it small
or great, upon the right side of every question that arises In
the determination of questions we should find out what wil
make our people great and good and strong rather than what wil
make them rich. "A good name is rather to be chosen than great
511
riches." Shall we decide the ethics of larceny by discussing how
much the man is going to steal or the chances of his getting
caught? No, my friends, we must decide questions upon a higher
ground, and if you were to prove to me that a monopoly would
reduce the price of the articles that we have to purchase, I would
still be opposed to it for a reason, which to my mind overshadows
all pecuniary arguments. The reason is this : Put the industrial
system of this nation in the hands of a few men, and let them
determine the price of raw material, the price of the finished
product, and the wages paid to labor, and you will have an indus-
trial aristocracy beside which a landed aristocracy would be an
innocent thing.
I may be in error, but, in my judgment, a government of the
people, by the people, and for the people, will be impossible when
a few men control all the sources of production and dole out
daily bread to all the rest on such terms as the few may prescribe.
I believe that this nation is the hope of the world. I believe that
the. Declaration of Independence was the grandest document
ever penned by human hands. The truths of that declaration are
condensed into four great propositions: That all men are cre-
ated equal; that they are endowed with inalienable rights; that
governments are instituted among men to preserve those rights,
and that governments derive their just powers from the consent
of the governed. Such a government is impossible under an in-
dustrial aristocracy. Place the food and clothing, all that we
eat and wear and use, in the hands of a few people, and instead
of it being a government of the people, it will be a government
of the syndicates, by the syndicates, and for the syndicates.
Establish such a government, and the people will soon be pow-
erless to secure a legislative remedy for any abuse. Establish
such a system, and on the night before election the employees
will be notified not to come back on the day after election unless
the trusts' candidate is successful. Establish such a government,
and instead of giving the right of suffrage to the people, you
will virtually give the right of suffrage to the heads of monopo-
lies, with each man empowered to vote as many times as he has
employees. I am not willing to place the laboring men of this
country absolutely at the mercy of the heads of monopolies. I
am not willing to place the men who produce the raw material
absolutely in the hands of the monopolies because when you con-
trol the price that a man is to receive for what he produces, you
control the price that he is to receive for his labor in the produc-
tion of that thing.
The farmer has no wages, except as wages are measured by
512
the price of his product; and when you place it in the power of the
trust to fix the price of what the farmer sells, you place it in the
power of the trust to lower the wages that the farmer receives
for his work; and when you place it in the power of the trust to
raise the price of what he buys, you do the farmer a double
injury, because he burns the candle at both ends and suffers when
he sells to the trust, and again when he buys of the trust.
Some people have tried to separate the laboring man who
works in the factory from the laboring man who works on the
farm. I want to warn the laboring men in the factories that
they cannot separate themselves from those who toil on the farm
without inviting their own destruction. I beg the laboring men
in the factories not to join with the monopolies to crush the" farm-
er, for as soon as the farmer is crushed the laboring man will
be crushed, and in a test of endurance the farmer will stand it
longer than the laboring man.
I come from an agricultural state, one of the great agricul-
tural states of this nation, and I want to say to you that while
our people are, I believe, a unit against the trusts, we can stand
the trusts longer than the laboring man can; we can stand all
the vicious policies of government longer than the laboring man
can. The farmer was the first man on the scene when civiliza-
tion began, and he will be the last one to disappear. The farmer
wants to own his home ; he ought to own it. I think that this
nation is safer the larger the proportion of home owners. I want
every man with a family to own his home, the farmer wants to
own his home, but if you will not allow him to own his home he
can rent. He will have to be employed to work the farm.
Take his farm from him by mortgage if you like, but the man
who forecloses the mortgage and buys the property will not work
the farm. He will need the farmer to work for him, and he will
have to give the farmer enough to live on or the farmer cannot
work. When prices fall so low that the farmer cannot buy coal
he can burn corn. But when prices fall so low that the cod
miner cannot buy corn, he cannot eat coal. You can drive the
farmer down so that he cannot buy factory made goods, but hi=?
wife can do like the wife of old make the clothing for the familv
off of the farm, but when you close your factories it will take nil
of the accumulated wealth of the cities to feed the people brought
to the point of starvation by vicious, greedy, avaricious legisla-
tion.
But, my friends, why should we try to see who can hold out
the longest in suffering? Why try to see who can endure the
most hardships and yet live? Why not try to see who can con-
sis
tribute most to the greatness and to the glory and to the pros-
perity of this nation? Why not vie with each other to see who
can contribute most to make this government what the fathers
intended it to be? For one hundred years this nation has been
the light of the world. For one hundred years the struggling
people of all nations have looked to this nation for hope and
inspiration. Let us settle these great questions ; let us teach the
world the blessing of a government that comes from the people,
let us show them how happy and how prosperous people can be.
God made all men, and he did not make some to crawl on hands
and knees and others to ride upon their backs. Let us show what
can be done when we put into actual practice the great principles
of human equality and of equal rights. Then this nation will
fulfill its holy mission and lead the other nations step by step in
the progress of the human race toward a higher civilization.
Twice after he had finally pushed his way through the crowd
which rushed forward to congratulate him, did Mr. Bryan have to
rise and bow his acknowledgments of the applause which ensued
when he had finished speaking. It was some minutes before the
chair could restore quiet and introduce James H. Eaymond, of
Chicago, who speaking on "Monopolies Under Patents and the
Industrial Effects Thereof," said : .
JAMES H. EAYMOND.
Chicago Patent Law Association.
General and unlimited propositions with reference to our
present existence and to proper governmental relations, no mat-
ter how glittering, are quite unsafe to follow.
To cite Garfield, it must be remembered that the dead level
of the sea, from which all heights and depths are measured, still
remains.
The subject assigned to me is: "Monopolies under Patents
and the Industrial Effects Thereof/'
The broad statement that "all monopolies are odious" has
been oft repeated, but, since the days of Magna Charta, has been
little less than obnoxious to all well informed .and right thinking
men.
A corollary to this proposition, which is a little aside from my
subject, yet worthy of note, is this: Modern history has abun-
dantly demonstrated and the established law of this and of other
514
, ' that ^l*' re g ulatio *s and established customs
ti I, 1 ? a gene / al T nSe > ln restraint of trade and are resS
tions upon free and unlimited competition, are not illegal and
Shed cu S ?o eS m ^ ? 1J SUCh kwS > re ^ latio - and estab
flrlV +t ^ f he r tem Prarily or permanently, are con-
o 7n I' g lTf al W f^ e ?* S det ^ and are dea ^ hown
so to be, should be prohibited.
Certain theorists to the contrary notwithstanding, from the
days of tribal relations to the present day, all society or associa-
tion of human beings, all laws and all governments are, in the
very nature of things, and for all time will be, based upon the
dilierence between meum and tuum or upon the fundamental idea
oi personal possession and exclusive property rights.
I can have no argument with, and it is difficult to exercise
even a mental sympathy for, those iconoclasts, who, traversing
these historic truths and denying all doctrines >of exclusive rights
and privileges, are attempting to pull down the pillars which
sustain the framework of all civilized society. In all right basic
theories of sociology, the foundation of the structure is human
nature as we find it to have been, to be and to continue. The
pillars upon this foundation are three: -First, the individual
consent to be associated with others for common purposes; sec-
ond, the reservation of individual rights and liberties, which
shall not interfere with the personal rights and liberties of the
associates or traverse the necessary police powers of government;
and, third and foremost, as to industrial or commercial consid-
erations, the right to individual property and exclusive privi-
leges.
All right economic conclusions have a common dual premise,
clearly sounding in two questions, namely : First, What are the
basic conditions of our present existence as they have been
throughout historic times and are likely to be? And, second
(those conditions being truthfully stated), "What do the laws of
thought require as conclusions concerning any plan for the fu-
ture? The stern facts of our present existence and our experi-
ences are the lamps which must, with honest thought, rather
than with vagaries and theories and fads which have no relation
thereto, guide our individual and our cosmic future.
My next proposition, which certainly is self-evident, is this,
namely, that progress in science and in the useful arts is desira-
ble.
For the purpose of promoting progress in science and in the
useful arts, the framers of our federal Constitution, with char-
acters which came from the cradle of suffering and were molded
by pious purposes, fully familiar with the then effete institutions
of the Old World, where monarchy or imperialism, in one form
or another, then prevailed, and at a time when the most civilized
nation on earth, our mother country, old England, was operat-
ing under an unwritten constitution, instead of the code, with
which it is now struggling at such a time inspired men com-
piled and created an instrument greater, broader, deeper, higher
and more lasting in its effects than Magna Charta, because it
dealt less with temporary conditions and more with the utter-
most of the principles of individual sovereignty and personal lib-
erty at such a time and under such conditions these inspired
men in the United States Constitution, as a paragraph in Section ,
8 of Article I, gave to our Congress the following legislative
power :
"To promote the progress of science and the useful arts, by
securing, for a limited time, to authors and inventors the exclu-
sive right to their respective writings and discoveries."
That written Constitution remains to-day as the safeguard
of our liberties and as the basis of all our political and social
institutions.
Many amendments have been made to it, but none have, even
indirectly, affected the provision I have quoted. It has been
embodied and emphasized in many acts of Congress, which have
been uniformly in furtherance of its purpose and provisions; but
its purposes have been thwarted and its provisions have been dis-
regarded by foolish resolutions of mass-meetings and by some
decisions of our federal courts containing "judge-made law."
A proper and a profitable answer to any question depends
upon the proper putting of the question. Let me ask some ques-
tions, and leave them with you to answer:
Was this constitutional provision a wise one?
Has the first century of our existence demonstrated that
operations under it have contributed to our progress in science,
1 in arts and in comforts?
Has our patent system aided us in our competition with other
groups of humanity under other governments?
Has it markedly contributed to all of the other governmental
institutions of which we boast; and
Can we separate it from any line of our progress since the
time when George Washington, Thomas Jefferson, and the attor-
ney-general signed the first letters patent for an invention,
which pertained to "Matrices in Printing," on the 31st day of
January, 1791?
516
S to ^ Proper answers to
Temporary irruptions have, from time to time, appeared upon
our body politic some of which have affected our patent system
New ones are there now. They itch and are distressing ami'
for the most part, are promoted by doctrinaires and theories, by^
seekers for office or by others who have no visible means of sup-
port. _ We may, however, congratulate ourselves that, as a rule
these irruptions cure themselves without the a;d of the adminis-
tration of violent drugs, and they purify the blood.
In connection with my subject, T specially refer to the gran-
ger movement," which began in 1870-71 with an onslaught upon
the railroads and which provoked, and was immediately followed
by the "Grangers," with an onslaught upon our patent system'
Blackmailers put up at hotels at county-seats throughout the
middle and the then western states. They sent their "walking-
delegates" throughout the county to find farmers who had driven
a pipe into the ground to reach water. The agent then sent
formal notices, couched in legal cant, to the farmers that they
had infringed the "Driven Well Patent" .granted to Mr. Green
(who really was an inventor and was entitled to a reward), and
the notice was that the farmer must appear at the hotel and pay
so much per pipe or he would be sued in a United States court
twenty, and, in some cases, one hundred and fifty miles from his
habitat.
The walking-delegates of those days in those matters were
called "patent sharks." That race has become extinct, and we
do not now even hear that name any more.
The frown of public sentiment stopped the nefarious prac-
tices, of which I have cited an example, and, during the decades
ending with 1890, they practically ceased to exist, because the
irruptions were cured by their own virus and our patent system
has remained during the present decade, with constitutional
foundations, as a permanent institution of our social fabric and
as a primary factor in OUT industrial progress.
Is not this part of our history a demonstration of the conclu-
sion that all monopolies, which are contrary to the public good
and are really obnoxious, are necessarily so exercised as that they,
without unnecessary agitation and public disturbances, are
buried by their own weight or are killed by their own virus,
leaving behind them purified business conditions?
Certainly no monopolies in the world have such sure founda-
tions as the ones of which I am speaking, and history shows
that, if they be abused in their exercise and thereby become ob-
noxious, they individually die a natural death, leaving the insti-
tution which created them for the public good, quite intact.
Let us now pause to state two facts and to ask two questions
concerning them, which further questions also need not be now
answered in words :
First In 1873 the balance between our exports and our im-
ports was a balance against us of one hundred and twenty million
dollars, and on June 30, 1899, the balance was five hundred and
thirty million dollars in our favor.
Has not the encouragement of our patent system been a prime
factor in bringing about this marvelous change?
Second Our inventors have been taxed by fees for the sup-
port of the patent office in an excess over the expenditures
allowed by Congress for that office, with this result, that there
now remains in the federal treasury a balance of these fees, as of
December 31, 1898, of $4,972,976.34, and the Congress continues
to treat that department most niggardly, and unintelligent and
uninformed people are carping at its work.
The question, which I leave unanswered, as to this plain state-
ment of facts, may be stated in a homely manner thus :
Has not Congress and some of our courts and some of the
associations of our people, in a very midnight of darkness of in-
formation and thought, made staggering blows, blindly and
insanely attempting to kill the goose which has laid most of our
golden eggs?
The first patent law under the constitutional provision cited
was enacted bv Congress in 1790. Up to 1836. tinctured some-
what by the old theory of a royal prerogative and grant, the prac-
tice was for an inventor to petition and for the officers of the
government to pay attention simply to the form of the grant.
So patents were then issued.
Although, to some esthetic minds and to some wild theorists
and to some associations, it is obnoxious to say that the hope of
reward or gain (either in money matters or in the manner of
living) is the main incentive to human endeavor, it plainly re-
mains that our history from 1790 to 1836 show= that perfunctory
performances under the constitutional provision which I have
cited, did not meet its purposes. In 1836 the patent laws were
5is;
revised, the patent office was organized, a corps of skilled exam-
iners as to what, in the world, was really new and useful was in-
stalled, and provisions of law were added by Congress, which
were intended to give to real inventors real monopolies.
The nations of the earth are very slowly following the example
set by us in 1836. England, though tardy, was the first to fol-
low our example m organizing a corps of examiners as to what
was new and useful in her realm. She still lacks the wisdom to
give to her inventors some prima facie exclusive property rights.
Germany, with great severity as to details, is now traveling on
our lines as to inventions, and is about", in this regard, where we
were in 1870, at the time of the second revision of our patent
laws.
What is the monopoly which an inventor obtains under our
laws? This question I shall answer briefly.
The constitutional provision gives him an exclusive right for
a limited period. Our court of last resort, the supreme court
of the United States, has said in an unbroken line of unanimous
decisions, as to which there has been no modification, that, under
the Constitution and under the acts of Congress, letters patent
for inventions confer upon the recipient of the grant three
monopolies, namely, one to make, another to use, and still an-
other to sell. The recipient of the grant, that is, the person or
persons to whom the patent may issue, has, under the plain
meaning of our laws, the right, for seventeen years, to own, retain,
and control his invention, even if he put it in a corner closet
behind a Yale lock; or he may "farm out" the same upon such
conditions and terms, as to the proper use of his invention in
manufacturing, as to the character of the output produced, in
whole or in part, by his invention, as to the location where his
invention may be used, and as to the prices which shall be charged
for that which involves his invention, just as to him may seem
meet and profitable. I am not unmindful of recent decisions in
federal courts of inferior jurisdiction, which seem to militate,
upon their face, against the broad propositions just made. It
remains, however, in my opinion, that he who, in this country,
has made an invention which has been properly patented, may.
for seventeen years, either retain it to himself or "farm it out"
upon such terms and conditions as to making, as to using, and
as to selling as he may elect, so long aS ( his election shall not be
contrary to some great and general public purpose.
Such is the nature of the grant, such is the constitutional pro-
vision upon which it is based, and I feel safe in saying that, for
the purpose of promoting progress in science, in arts, and in our
519
civilization, this form of monopoly will remain until after the
provisions of our national Constitution preserving the right of
trial by jury, preventing the deprivation of property except "by
due process of law," and prohibiting enactments by State legis-
latures impairing the obligations of contracts, shall have been
worn worse than threadbare.
My further words will be few, and they will relate to the in-
dustrial effects of our patent system.
We have received beautiful theories from the savants of other
countries, but the practical inventions have been made in this
country, and with this result, as to which I challenge contradic-
tion, that in ninety per cent of the artificial and useful products
of the world, the Yankee to-day produces, as compared with all
other human beings, a better article, at a less cost,of production,
and he still pays the highest wages. This result, nay, this fact,
may possibly in some part be due to tariff laws or to monetary
regulations, but I do not believe it, and I do believe that it is the
sole result of the encouragement of our patent laws.
It should also now be specifically remarked that, as conceded
by all competent writers and economists, the principal reason
why greater wages are paid in the United States than anywhere
in the world is the fact that, by virtue of the encouragement of
our patent system, minor improvements, relating frequently to
the smallest details of processes, methods, and machines, have
enabled us to reduce the cost of production and to improve the
character of the article produced beyond that which producers
in any other nation have yet been able success-f ully to accomplish.
And I pause to say that, in view of this plain and prominent fact,
any disposition to discourage the patenting of what are some-
times ironically called trifling improvements, and a disposition
to annul patents therefor, if the improvement be, in the broadest
sense of the. terms, new and useful, should be affirmatively and
earnestly opposed as being more threatening than any condition
of war or any results of war can be.
I venture the statement that more than seventy per cent of
the blades in the pocket-knives in this great audience were made
and tempered in this country, shipped abroad, stamped, encased
in handles and boxes, and reshipped to this country. I forbear
to comment upon this fact.
Looking backward through the years of authentic history,
we find "the quarry slave scourged, at night, to his dungeon."
"We find the Oriental, bound, as it were by the queue of his hair to
the pole of unintelligent labor, and, in modern times, we find
women, both in the domains of England and in continental
520
THOMAS UPDEGKAFF
T. S. SMITH
JOHN M. STAHL
J. C. I1ANLEY
AARON JONES
JOHN HILL. .IK.
Europe, used as mere beasts of burden, not only about the mines
but also where the pig-iron is carried to the furnace
In our colonial days our grandmothers walked miles per day
m winding a thread about a spindle with which they weaved cloth
to clothe their children, while to-day our machines, the product
o Yankee inventions, register in a few minutes a thousand miles
oi our grandmothers' tired walks.
Illustrations could be multiplied by ten thousand times ten
thousand. We do not for a waking minute of our lives either
dress or eat or work or play without using some product of an
American invention.
What, then, has brought these distinctive conditions to pass
in our country? The plain answer is this :
The workman in our country, be he the carrier of a hod which
does no't balance on his shoulder, or a bricklayer whose trowel
is not handy, or the steamfitter who in his daily toil recognizes
the relation between area and pressure be he laborer, artisan,
mechanic, or engineer, unless he be a recent importation or a
natural loafer or one who is under the thumb of some irrespon-
sible walking-delegate, either with or without his dinner pail,
goes to his work through an atmosphere which makes him think.
The burden of the thought of the American laborer is as to
how, possibly, his tools or his machine may be improved, how
manual labor may be lessened, how the cost of production may
be cheapened, how the product may be bettered in short, how
the dignity of labor may be increased by the continuous addition
of the elements of intelligence, thought, experiment, and im-
provement, with resulting -benefits, first, to himself and to his
family, and, secondly, to the now very rapidly increasing, shift-
ing, and uncertain cash capital held by the bankers and by the
employers.
That the encouragement of our patent laws and the monop-
olies thereunder have dignified and enriched daily toil ten thou-
sand fold is way beyond any intelligent or honest disputation.
In conclusion I ask another question, and cannot forbear to
give its necessary answer.
What has brought it to pass that the workman, the artisan,
the mechanic, or the engineer in our country begins his daily
work with such thoughts and with such ambitions?
The plain answer is, the encouragement and the hope of re-
ward by way of a monopoly for a limited period or of a full and
speedy compensation for parting with the monopoly, m whole
or in part, which the patent laws of the United States, m no
equivocal terms, promise to its people.
521
I must add that any material interferences in the carrying
out of these promises, whether by Congress, by the courts, or by
the communes, will degrade labor, will widen the breach between
capital and labor, will tend to destroy our mechanical and indus-
trial supremacy, will tend largely, whatever the conditions of
peace or war may be, to reverse the balance of trade between
our nation and other nations, and will work havoc in all of our
boasted institutions.
G. W. NORTHRUP, JR.
Member Illinois Bar.
G. W. Northrup, speaking on "Practical Remedies for Indus-
trial Trusts," said :
It is well worth considering whether the popular belief in
the futility of federal legislation, as applied to industrial trusts,
and the declarations to that effect so generally made by promi-
nent men, are well founded. At least it is important to inquire
upon what, if anything, in the past history of legislation and
judicial decision on this subject, such sweeping opinions are
based. It would seem as though such conclusions would not
have found general acceptance until repeated efforts had been
made by the federal government to legislate on the subject, and
until all such legislation had proved ineffective on account of
some inherent defect in the powers of Congress. But such is far
from being the case.
The so-called Sherman anti-trust act of July 2, 1890, consti-
tutes, practically, the only federal legislation on the subject of
trusts, monopolies and combinations in restraint of trade. The
act makes illegal and prohibits, under penalty of a fine not ex-
ceeding five thousand dollars, or imprisonment not exceeding one
year, or both, "every contract, combination in the form of trust
.or otherwise, or conspiracy, in restraint of trade or commerce
among the several states or with foreign nations," and every
attempt "to monopolize any part of the trade or commerce among
the several states or with foreign nations." This language is
calculated to create the impression, in the mind of a "layman,"
that every trust, combination and monopoly which, in the course
of it's business dealings, engages in commerce in more than one
state, is within the prohibitions of the act. But further con-
sideration demonstrates clearly that this is not the fact. The
phrases "among the several states" and "with foreign nations"
are copied from the commerce clause of the Constitution, which
declares "the Congress shall have power to regulate commerce
with foreign nations and among the several states." Long before
the passage of the Sherman act, long before the modern trust had
made its appearance, this commerce clause had been the subject
of repeated judicial consideration, and the phrase "commerce
among the several states," had become fixed and crystallized as
equivalent to "commerce between the several states" those acts,
dealings and transactions directly involved in effectuating the
transfer of persons, property or value across one or more state
lines; in short, "interstate commerce," as distinguished from
"that commerce which is completely internal, which is carried on
between man and man in a state or between different parts
of the same state."* It is manifest, then, that the only con-
spiracies or combinations within the purview, of the Sherman
act, are conspiracies and combinations to restrain or monopolize
either interstate commerce per se, and as thus defined, or foreign
commerce, or both.
Notwithstanding these obvious considerations, the practical
failure of the Sherman act as a repressive measure, ha* not
been generally ascribed to its own inherent limitations. On the
contrary, this failure has been charged up with equal vehemence
to the indifference or hostility of the executive department on the
one hand, and on the other,' to adverse "judicial legislation 1 ' by
the federal courts. If the former charge be well 1 founded, the
remedy is obvious. We are satisfied, however, that the judicial
decisions which have been rendered involving the scope and ap-
plication of the Act of 1890, are not justly open to criticism.
the contrary, we assert with confidence, that an examination of
these decisions is calculated to inspire a renewed respect for the
federal judiciary, and to afford substantial encouragement for
the future. It 'is specially significant that the Supreme Cmr
itself as late as 1897, denounced in sweeping and emphatic lan-
guage, the modern trusts, as "combinations of capital whose
purpose in combining is to control the production or manufacture
of any particular article in the market, and by such control d
tate the price at which the article shall be sold, the effect heir
to drive out of business nil the small dealers in the commodity nnH
to render the public subject to the decision of tho eombvnation
as to what price shall be paid for the article." Said the Court.
"In this light it is not material that the price of an article mav
be lowered. It is in the power of the combination to raise it
and the result in any event is unfortunate for the coi
*Gibbons vs. Ogden, 9 Wheat. (U. S.) 1.
523
depriving it of the services of a large number of small but inde-
pendent dealers who were familiar with the business and who
had spent their lives in it, and who supported themselves and
their families from the small profits realized therein. Whether
they be able to find other avenues to earn their livelihood is not
so material, because it is not for the real prosperity of any coun-
try that such changes should occur which result in transferring
an independent business man, the head of his establishment,
small though it might be, into a mere servant or agent of a cor-
poration for selling the commodities which he once manufactured
or dealt in, having no voice in shaping the business policy of the
company and bound to obey orders issued by others. Nor is it
for the substantial interests of the country that any one com-
modity should be within the sole power and subject to the sole
will of one powerful combination of capital."*
In the face of these trenchant declarations, the Court can
hardly be charged with extreme partiality to trusts. Moreover,
whenever a contract or combination, which could be fairly said
to lie within the scope of the Sherman act, has come before the
Supreme Court, the latter, disregarding the plausible construc-
tions and ingenious objections of eminent counsel, has not hesi-
tated to enforce the provisions of the act in their entirety. In
this connection, the Court has declared in forcible terms, the
power of Congress to legislate in its own discretion, on the subject
of interstate commerce, and the duty of the courts to enforce this
legislation, in accordance with the will of the legislative body as
expressed in the terms of its enactments.
Most important of all, perhaps, is the express decision in the
"Joint Traffic" case, that the Sherman act violates no constitu-
tional guaranties, not even those of the fifth amendment, which de-
clares that no person shall be deprived of life, liberty, or property,
without due process of law, and that private property shall not
be taken for public use without just compensation. "The latter
limitation," said the Court, by Mr. Justice Peckham, "is, we think,
plainly irrelevant. . . . The question which arises here is,
whether the contract is a proper or lawful one, and we have not
advanced a step toward its solution by saying that the citizen is
protected by the fifth or any other amendment, in his right to
make proper contracts to enable him to carry out his lawful pur-
poses. . . . Notwithstanding the general liberty of con-
tract which is possessed by the citizen under the Constitution, we
find that there are many kinds of contracts which, while not in
themselves immoral or mala in se, may yet be prohibited by the
*United States vs. Trans-Missouri, etc. Assn., 166 U, S. 290.
524
legislation of the states, or, in certain cases, by Congress. The
question comes back whether the statute under review is a legiti-
mate exercise of the power of Congress over interstate commerce
and a valid regulation thereof. The question is for us one of
power only, and not of policy. We think the power exists in
Congress, and that the statute is therefore valid."*
So far, everything seems most favorable, but the concrete
fact remains that the Supreme Court, while steadily refusing to
fritter away the statute by forced constructions, has also with
equal steadfastness declined to enlarge its prohibitions beyond
the plain limitations expressed in the wording of the act itself.
The Court has twice decided that associations formed to regulate
freight rates for interstate traffic, are clearly within these pro-
hibitions. But it was held in the E. C. Knight Company casef
that the Sherman act did not apply to contracts by which the
American Sugar Refining Company had secured all the corporate
stock of four Pennsylvania sugar refining companies, which, to-
gether with the American Company, controlled all the sugar re-
fineries of the United States, except one, and manufactured 98
per cent of the refined sugar produced in the country, although
it was charged by the government that by means of these con-
tracts, the defendants had secured a complete monopoly of the
manufacture and sale of refined sugar throughout the United
States, and that in so doing they had combined and conspired to
restrain trade and commerce in refined sugar among the several
states and with foreign nations. The essential point decided in the
case was, that the particular contracts under examination did not
constitute a direct restraint, or monopoly of interstate commerce,
but merely contracts by which the defendants aimed to secure a
monopoly of the manufacture of refined sugar in Pennsylvania,
and that the effect of this monopoly in manufacture on interstate
commerce was indirect and incidental, and therefore not within
the purview of the Sherman act.
This decision, and others which have followed it, are prac-
tically the sole authorities relied upon in support of the proposi-
tion that the federal government has no power or authority to
restrain or suppress industrial trusts. It is, however, perfectly
clear from the case as a whole, that the Supreme Court did nr-i
say anything to that effect, but on the contrary, carefully con-
fined itself to the particular question presented, which was lim-
ited and defined at the outset of the opinion, as follows:
- "The fundamental question is, whether, conceding that the
*United States vs. Joint Traffic Assn., 171 U. S. 571.
fUnited States vs. E. C. Knight & Co., 156 U. S. 1.
525
existence of a monopoly in manufacture is established by the evi-
dence, that monopoly can be directly suppressed under the act
of Congress, in the mode attempted by this bill."
And so in a later decision, the Court said:
"In the Knight Company case it was said that this statute
(the Sherman act) applied to monopolies in restraint of inter-
state or international trade or commerce, and not to monopolies
in the manufacture even of a necessary of life."* '
But it may be conceded that an industrial trust, as a mere
monopoly in manufacture, and without violating the particular
provisions of the Sherman act, can secure practically as com-
plete a monopoly in -its product throughout the United States,
as it would have secured had it combined with its monopoly in
manufacture and local sales a further monopoly of interstate
commerce, per se. It may be conceded further, that it is not
within the constitutional powers of Congress to fine, imprison
or enjoin the existence of monopolies in mere manufacture as
monopolies, because manufacture being necessarily a local mat-
ter, a monopoly in manufacture is, under our dual system, to be
prohibited and penalized as such monopoly, by the authorities
of the state of its habitat only. Conceding all this, it by no means
follows that no effective remedies for evils of this class can be
afforded by federal legislation. .
Although the federal authorities may have no control over
industrial trusts as monopolies of manufacture, yet as soon as
these manufactures start in a movement destined to carry them
across the boundary line of airy state, they become the subjects
of interstate commerce,, and come within the jurisdiction of
Congress, to remain within its jurisdiction until they have actu-
ally passed the state line, and become intermingled with the gen-
eral mass of goods in the state of their destination. Further, not
only the actual transportation of such manufactures across state
lines, but all transactions and agencies directly connected with
accomplishing that end, are within the plenary power and con-
trol of Congress, by virtue of its constitutional power to regulate
interstate commerce.
Power to regulate interstate commerce involves, in its very
essence, among other powers, the power to determine and pre-
scribe what agencies shall be permitted to engage in interstate
commerce. Doubtless under the constitution, this determination
cannot be exercised in a purely arbitrary manner, or be the result
of mere whim. But where a given determination can fairly be
said to rest on an intelligible basis, having some conceivable rela-
*United States vs. Trans-Missouri Freight Assn., 166 U. S. 326.
526
tion to the promotion of national interests, the discretion of Con-
gress in making that determination, in the exercise of the powers
granted by the commerce clause of the constitution, must, under
all the decisions, be treated by the courts as an absolute discre-
tion.
Starting with the propositions announced by the Supreme
Court in the decisions referred to, i. e., that these modern com-
binations of capital are injurious to the real prosperity and sub-
stantial interests of the nation; that, if not in themselves im-
moral or mala in se, they are proper subjects of adverse and hos-
tile legislation on the part of Congress in the spheres in which
it can constitutionally legislate; that as subjects of such legisla-
tion, they are, owing to their injurious character, not within the
protection of the Constitution; that where Congress speaks on a
subject over which it has constitutional power to legislate, pub-
lic policy in such a case, is what the statute ena6ts. Starting with
these propositions, it is perfectly competent for Congress to en-
act legislation declaring the injurious character of industrial
trusts, their dangerous effects upon the country at large, and for
that reason, imposing restraint or prohibition upon their enjoy-
ment of those fields of commercial action which are within the
jurisdiction of the general government.'
If it be constitutional for Congress to punish a monopoly of
interstate commerce by fine and imprisonment, under the powers
granted by this commerce clause, it is assuredly constitutional for
Congress, under the same provisions, to prohibit a monopoly in
manufacture from employing or engaging in interstate commerce
to further and effectuate its injurious aims.
Indeed, the conceded fact that the individual states are de-
prived of power to interfere with interstate commerce on the
part of monopolies in other states, even for the purpose of pro-
tecting their own citizens from destructive competition, is a
sufficient demonstration that this power is possessed by Congress.
Having absolutely no jurisdiction over interstate commerce, a
state is unable to prevent the industrial trusts domiciled in other
states from shipping their products into its own territory, nor
has it any power to enact laws which have the effect of rendering
unsalable, in its own territory, manufactures and products of
other states which are harmless in themselves. It is clear, there-
fore, that the individual states are helpless to protect their own
manufacturers and dealers from the destructive competition of
industrial trusts in other states; that this kind of protection can
only be afforded by the regulation of interstate commerce prr se.
But no powers of sovereignty are lost or destroyed by our dual sys-
527
tern of government, and powers which are clearly not possessed
by the states, must necessarily inhere in the federal authorities.
In addition to this broad jurisdiction over interstate com-
merce per se, Congress is expressly vested with the exclusive man-
agement and control of one of the most important instruments of
commerce the post-office. It is well settled that this power
embraces the regulation of the entire postal system of the coun-
try, and the power to designate what shall be carried, and what
shall be excluded, from the mails.* In recognition of these prin-
ciples, the Supreme Court has uniformly upheld acts of Con-
gress making it a criminal offense to deposit in the mails not only
obscene matter, and letters or communications connected with
the formation or execution of schemes to defraud, but also lot-
tery "literature" of all kinds. In passing on the constitutionality
of the Lottery Act, the Supreme Court said :
"When the power to establish post-offices and post-roads was
surrendered to the Congress, it was as a complete power, and the
grant carried with it the right to exercise all the powers which
made that power effective. It is not necessary that Congress
should have the power to deal with crime or immorality within
the states in order to maintain that it possesses the power to for-
bid the use of the mails in aid of the perpetration of crime or
immorality.
"The argument that there is a distinction between mala pro-
liibita and mala in se, and that Congress might forbid the use
of the mails in promotion of such acts as are universally regarded
as mala in se, including all such crimes as murder, arson, bur-
glary, etc., and the offense of circulating obscene books and pa-
pers, but cannot do so in respect of other matters which it might
regard as criminal or immoral, but which it has no power itself
to prohibit, involves a concession which is fatal to the contention
of petitioners, since it would be for Congress to determine what
are within and what without the rule ; but we think there is no
room for such a distinction here, and that it must be left to Con-
gress in the exercise of a sound discretion to determine in what
manner it will exercise the power it undoubtedly possesses. "f
The application of the principles here announced, to the sub-
ject under discussion, is obvious, and needs no argument.
As we have already seen, the Federal Supreme Court has de-
clared that these monopolies are necessarily injurious to the best
interests of the country, and inimical to its prosperity. Substan-
tially every court in the Union has made repeated and even more
emphatic declarations to the same effect. The status of indus-
*Exparte Jackson, 96 U. S. 727. f/n re Rapier, 143 U. S. 134.
528
trial trusts as mala prohilita is now further established by the
criminal statutes of more than a score of states.
In view of the foregoing considerations, it is confidently as-
serted that Congress is clothed with power to deprive trusts and
monopolies of all kinds and descriptions, not only of the right to
engage in interstate commerce, but also of the right to use the
United States mails in the promotion and effectuation of their
monopolistic aims.
The practical effect of measures of this character is obvious.
The destructive' results accomplished by analogous legislation
upon the lottery evil, is a matter of recent history. The ability
freely to import raw materials and supplies from other states
into the states where their manufacturing plants are located, the
ability freely to transport and distribute their product through-
out the Union, is vital to a perpetuation of their monopolistic
powers, and as a necessary consequence, vital to the very existence
of industrial trusts as business enterprises.
Free use of the mails is essential to the successful prosecution
of commercial enterprises, in direct proportion to the magnitude
and territorial extent of their operations. Deprived of the use
of this instrument of commerce, industrial trusts would practi-
cally be compelled to cease their operations.
Prohibitory legislation of this kind cannot, in the long run,
be successfully evaded. So far as the element of postal exclu-
sion is concerned, the existing postal laws and regulations furnish
ample precedents for the practical enforcement of prohibitive
measures of that character. Exclusion from interstate commerce
can be accomplished by statutes imposing heavy penalties upon
the transportation by industrial trusts of any property or values
from one state to another; by the imposition of like penalties
upon any common carrier or other agency which may take any
part in such transportation; by the forfeiture ef all property or
goods in transit; by injunctive relief and by other methods.
It is true, such measures would not affect the right of indus-
trial trusts to dispose of their product in the state of its manu-
facture, but property sold to dealers acting in combmai
or under arrangement with, or in the interests of the trusts,
would still remain within the prohibitions of such J
tion, and be barred from transportation to other states s
long as it remained in such hands or control,
wise, property sold by any exclusive arrangement to a single
dealer, or to two or more dealers acting in combination wit
each other, would continue within these prohibitions,
dealer, when vested with such exclusive rights to the
529
product of an industrial trust, would constitute a monopoly in
itself. Indeed, such an arrangement could hardly be effectuated-
without practically creating a new monopolistic combination,
composed of the trust and the dealer having such exclusive rights.
Two or more exclusive dealers, acting in combination with each
other, would likewise constitute a monopoly, irrespective of any
connection with the trust from whom they obtained their prod-
uct. In short, until any trust or combination should have abso-
lutely and bona fide parted with all the interest and control of
its product to independent dealers in its own state, that product
would remain within the prohibitions of such legislation. But
when manufactures or other property have become thus dis-
tributed among a number of independent dealers acting inde-
pendently, the monopoly in that product is ipso facto destroyed,
and it comes into the market subject to the laws of competition
which govern the product of the ordinary small independent pro-
ducer.
Legislation of this character is consonant with the spirit of
our institutions. Under our system of government, the several
states are left to deal with their own domestic, social and business
problems. Every state has ample power in the exercise of its own
sovereign authority, to punish and exterminate trusts and monop-
olies in its own borders. The practical difficulty with the present
situation consists in the fact that, owing to their inability to
interfere with interstate commerce, the several states are unable
to prevent the practical invasion of their own territory by trusts
domiciled in other states^ It is idle for a state to punish and
extirpate its own domestic monopolies, so long as its manufactur-
ers, dealers and consumers remain practically subject to the de-
structive competition of foreign monopolies. Legislation like
that suggested, leaves the states free to deal with the trusts in
their own borders as they see fit. If any state prefers trusts and
monopolies, it is at liberty to encourage their growth within its
own limits. On the other hand, states hostile to these modern
developments, are left free-handed to deal with them in their
own territory as they see fit, without finding their efforts ren-
dered nugatory by the aggressive action of monopolies in other
jurisdictions.
DAVID KIKLEY.
Prof. David Kinley, of the Universit}'' of Illinois, presented to
the convention a report on the information gathered by the Civic
Federation concerning trusts. Trie report was in part as follows :
Questions were sent to wholesale dealers, commercial trav-
630
elers, railroads, combinations, labor organizations, contractors
and manufacturers, and economists, financiers, public men, etc.
According to these replies the following articles cannot bu
bought outside of trusts:
Anthracite coal, bagging, brass goods, cigarettes, copper,
(rolled), coffee, glass, iron and steel, (certain iron and steel prod-
ucts, such as chains, nails and shovels, pipe, etc.), glucose, kero-
sene oil, liquors, (domestic distilled except some Kentucky whis-
ky), matches (certain makes), raisins, roofing (felt and slate),
powder and ammunition, stoves, sardines, starch, snuff, solder,
scythe snaths, tin plate, tinware, tobacco (certain brands, as
Battle Axe, Horse Shoe, Duke's Mixture, and Durham), white
lead, white pine, lumber, woodenware, and yeast cakes.
In answer to the question what effect combinations have on
the distributor, 110 say it is injurious because it decreases their
business and profits and tends to eliminate the.m.
Forty-nine wholesale dealers think they have been benefited
"by the formation of combinations.
In answer to the question what effect combinations have on
the consumer, 105 think consumers are injured, while only '34
think they are benefited, and 41 think there is no difference.
The items of information about prices aggregate 500; 452
were to the effect that prices rose after combinations were made ;
24 that they fell, 15 that there was no change, and 15 that they
were fluctuating; 210 do not specifically assign a cause, 189 assign
trusts as the cause of the change (increase, in most of these cases) ; .
and 40 assign other causes, usually "increased demand," "rise of
raw materials," or the tariff.
Of the 452 answers that prices rose, 294 were from wholesale
dealers, .105 from manufacturers and contractors, and 53 from
commercial travelers.
Circular "H," sent to lawyers, economists, public men, etc.,
nominally contained eleven questions. The first question asked,
"Should a combination of producing agencies be expected, to in-
crease or decrease- the cost of production; if either, ought it
therefore to be beneficial to society or the reverse?"
Four hundred and thirty-two of 'the writers think that com-
binations "should" decrease the cost of production, and 17 that
they "should" increase it. Two hundred and eighty-nine think
that the decrease "ought" to be beneficial to society, and 74 that
it "ought" to be a detriment. The rest do not answer.
To what extent will the consumer gain by the decrease in cost
of production? Forty of the 444 answers to the question say r
will depend on competition; 110 think the consumer will
531
ally get most or all of the gain; and 101 think his gain will
depend on the trusts; while 75 think the consumer will gain
nothing and the rest are doubtful.
. Is there any danger to the individual investor and the finan-
cial system of the country from large aggregations of capital?
Two hundred and ninety-three think that there is danger for the
individual investor, because of his inability to judge of tho safety
of the investment, or because of the widespread evil that would
result if a crash should come. Sixty-three say there is no element
of danger to the individual investor. In the opinion of 266, large
capitalization is dangerous to our financial system, .and is not
so in the opinion of 79.
What effect have combinations on wages and conditions of
labor?
One hundred and eighty writers say that combinations in-
crease wages, and 148 that they reduce wages; 51 that they de-
crease the number employed, 3 say that they increase the length
of the working day, and 3 that they decrease it, 25 that they have
no effect, and 67 are doubtful.
As to the effect of combinations on middlemen, 313 are of the
opinion that these will be wholly or partially eliminated; 114
think that this will be to the advantage of society.
The tendency to combination is regarded with "apprehen-
sion" by 270 on the ground that it may create monopolies con-
trary to the public weal, while 149 think there is no danger, and
34 are doubtful.
Three hundred think that our foreign trade would be bene-
fited by combination, 59 that it would be injured, 64 are doubt-
ful, and 2 think that the benefit will be to the foreigner. The
nature of the benefit is variously described; most mean thereby
simply an increase of trade.
Are labor organizations trusts?
Of the 459 who expressed themselves on the subject, 243
think that labor organizations are to be classified with other
forms of combinations, while 165 take the opposite view, and 53
are doubtful.
Is railway consolidation desirable?
Two hundred and twenty-eight think it desirable, and 41
think it desirable under government control or ownership; 70
think it desirable if restricted by law, 11 desirable except in the
case of parallel lines, making 350 who answered in favor of con-
solidation with or without restrictions. Sixty-seven think rail-
way consolidation undesirable, 16 are indifferent, and the rest are
either indefinite in their statements or do not answer at all.
532
Considerable information was received about prices, from
wholesale dealers, contractors and manufacturers and commer-
cial travelers.
What shall be done with combinations?
In answer to the question asking for suggestions on this topic
a large number of opinions were brought out, and are tabulated
as follows:
Clergymen,
Col. Economists
Busi- Pres'ts Statisti-
ncss and Law- cians, Oth-
Answers Indefinite... Me g n. Profs, yers. etc-. K Total.
Federal Commission to Supervise . . 32 48 i>0
Government Ownership or Control of
Natural Monopolies.. 5 3 5 g 5 2(5
"Legislation," not Otherwise Specified 11 8 15 2 25 Gl
"Legislation," Cong, and States 2 3 5 "l 11
"Let alone" ... 10 5 , 2-1 1 20 (50
No answer .__ 12 13 13 2 5 45
Prevent Over-Capitalization -. 14 9 1(5 9 9 57
Publicity of Accounts.. 77 8 1C 11 49
Stricter Limitation of Corporate
Powers 3 7 10
Tariff Revision ... 20 1 13 2 I'.i -45
Taxation 6 2 3 5 17
98 57 119 55 102 431
Miscellaneous-.. 29 23 29 20 22 123
127 80 148 75 124 554
JOHN W. SPENCER.
In presenting my ideas upon the remedy for the evil effects
of organized wealth, I take it for granted that all owners of wealth
will be reasonable enough to concede that the remedy is only to
be applied to the evil effect of wealth that is concentrated and
organized for purposes that are not for the benefit of the major
portion of the people.
As a delegate at large from the state of Indiana, I come from
the First Congressional District, which has within it the county
of Posey, my birthplace, where they produce more cereals, good
people, soldiers, and wealth from the soil, than any agricultural
county in the United States of like area and population, notwith-
standing the sneering snobs and would-be humorists, whose
thoughts emanate from a brain apparently nourished by bad al-
cohol and raw meat. The city of Evansville, which is the second
city in our state, is the commercial center of that district, and
533
produces so much hardwood lumber that it is known as the larg-
est market for that product on this continent. That district pro-
duces more lumber, bituminous coal, wheat and corn than any
six counties of the same area in the United States. Hence, I do
not hesitate to say that I come from a people who produce more
than their share of this country's wealth, when compared with
the amount they are able to retain, and consume their full share
of the country's products of organized wealth; therefore, they
as a class are more affected, and consequently more interested
in the results of the organization and centralization of wealth
than those who are east of the Alleghanies, who gather the wealth
of the nation, a portion of which is produced by the people of
my state. ,
I think it is everywhere a conceded proposition that wealth
is centralized and industrial trusts are organized for the sole pur-
pose of making money for those who invest therein ; if this is con-
ceded, then the prime motive prompting such organizations is
human avarice and greed; or, put it another way, it is an effort
to profit the few at the expense of the many, in total disregard
of the rights of the many. 1 know that some of the later day
magazine writers characterize such statements as a "crusade
against prosperity," but they fail to state the prosperity they
refer to is the prosperity of but the few holders of trust certifi-
cates, and not the prosperity of the great mass of people who con-
sume the products of the industrial trusts and produce the wealth
to declare the dividends on first, second, common, preferred, fluid,
solid, and all other classes of stock issued by the trust; I know
it is said that by concentration of business interests they cheapen
their product to the consumer and enhance the price of labor that
produces them, but is that true? We are constantly referred to
the Standard Oil trust, and the Sugar trust, as examples. Now,
while the crude oil has decreased in price since the organization
of this infant industry, the price of the refined oil, such as is
consumed by the people, has been very successfully maintained.
We find that from 1894 until 1897, crude oil declined 6 per
cent, while refined oil advanced 14 per cent; notwithstanding
the fact that since the organization of the Standard Oil trust
there has been developed and put into use as against its product,
that greatest of all of nature's product, so great that it has been
called, and perhaps correctly so, the law of gravitation, electricity,
to say nothing of the development of natural gas, and the fact
that demand for light has so whetted the inventive genius, that
artificial gas from bituminous coal is now produced at a cost of
about 16 cents per 1,000 cubic feet, and the people have learned
534
to make a "pillar of fire by night" from the two-thirds forma-
tive substance of the earth, water; and so with the Havemeyer
associates and sugar they seem to think that some of us do not
know that they are the refiners of sugar, and that the prices paid
for refined sugar has never been so cheap as they were in 1885,
and the Sugar trust was first organized in November, 1887, since
which time the price of sugar has been steadily maintained, while
the price of raw sugar has materially and steadily decreased; so
on analyzing all of them, we find that their every effort has been
to strike down and kill all competition, so as to gratify their ap-
parent insatiable avarice, so that they really reap unearned profits
and injure the public; that the so-called "economic evolution of
our industries" injures the public, will be readily seen from a few
extracts taken from the testimony of Mr. Havemeyer, given be-
fore the Senate investigating committee in 1894.
, "The Sugar trust makes it a rule to make -political contribu-
tions to the Republican party in Republican states, and to the
Democratic party in Democratic states."
"We get a good deal of protection from our contribution."
"Our company has made considerable money out of the Mc-
Kinley bill." (Byron W. Holt in June Review of Reviews.}
Such statements as these drive one to the irresistible conclu-
sion that the sugar trust is an injury to the public. That they
reduce the number of positions for active and energetic citizens
to fill, is no longer in dispute, since reports from all commercial
travelers' associations testify to that fact; that they control the
output of articles which they produce and handle is a conceded
fact, that they control the price of raw material, assisted by
"protection for protection's sake" legislation, is no longer dis-
puted; that they fix and resmMe the prices paid bv wholesaler,
jobber, retailer, and finally by the consumer is an agreed proposi-
tion.
It strikes me that a few master minds have successfully man-
aged politics and business from a financial standpoint, until now
the industrial trusts propose to make the people pay tribute to
them for all the necessities of life, from the soothing syrup age
to the shroud.
The manufacturing interests have told and repeated to us.
that they wanted protection to give them a home market: thev
got it and the market, and now thev are committing the old com-
mon law crimes of forestalling and reffratintr. until they control
that home market from the raw material to the consumed article.
Up to the day of the application of the protective tariff by
535
the industrial trusts, we had a fair competitive system of produc-
tion and distribution. If it is possible, let us take up again the
interstate commercial policy, that materially assisted us in devel-
oping the greatest union of states that is known to the history
of man.
My method of regulating and restraining the substance eating
and never earning trusts would be to first have the Congress of
the United States, as soon as possible, put upon the free list every
article that is made, sold or controlled by a trust, and every one
of the component parts of all articles manufactured by them.
The answer to that would be or is, their magnitude is such that
they break over any or all nations' barriers, and become interna-
tional; but "sufficient for the day is the evil thereof," by the elim-
ination of the protective tariff, we would not necessarily destroy
or disintegrate them, but it would in a great measure relieve the
people from paying the enhanced prices to them for such neces-
sities of life as coal, salt, petroleum and its products, sugar,
matches and the like; and then let the American Congress pass
licensing or taxing act, in the exercise of the police power of the
government, under the implied general welfare clause of the Con-
stitution, as interpreted by Justice Marshall, the definer and de-
fender of the Constitution, notwithstanding the opinion of Attor-
ney-General Griggs to the contrary.
Are the people to be informed that it does not lie within the
power of the general government to protect the government itself
from the avarice and greed of some of the members of society?
If such is the only power of the government, what is there to pro-
hibit a combination of capital or wealth from buying up all the
world's output of coal, or salt or any other necessity, and they
saying to the other members of society, you cannot have a pound
of either, unless you pay our price?
Ah! Greater than Griggs have been in error. The people will
stand by the declarations of John Marshall in preference to
Griggsology. Place upon all corporations a graduated tax, the
rate of taxation increasing with the capitalization. You tell me
it cannot be done under the Constitution. I tell you that at one
time in the interest of organized wealth, the national banks, this
government placed a tax upon their competitors, the issue of the
state banks, that drove them from the fields of finance. Why
can not that same power be exercised in the interest of the peo-
ple and against aggregated wealth? Here is a way that I believe
is safe and sure. One of the great political parties that is now
in complete control of all branches of the national government,
536
will next year in its declaration of principles, declare its opposi-
tion to trusts, we are told by leaders of that party. We say, "act
your opposition before you declare; you have the opportunity,
give the people some performance and not so much in promise
for by 'their fruits ye shall know them.' "
HENRY H. SWAIN.
Montana State Normal School.
There is no thought of entering in this paper into a compre-
hensive survey of the trust problem. Nor is there any attempt
to seek some one simple cause for the growth of trusts. The rise
of trusts has resulted from a combination of various influences,
and no one cause alone is sufficient to account for all these phe-
nomena. We have heard how an unwisely adjusted tariff has
fostered the growth of some trusts, how others nave profited un-
duly by the operation of patent laws, others have thriven because
of unfair discriminations in railroad rates. No one of these
causes tells the whole story, but all are important, and if the
trust question is to receive any truly scientific treatment, all
these, as well as many other phases, must be fully taken into
account.
The case is very similar when we come to the relation between
trusts and the currency. There is no disposition to claim that
our currency system is the sole cause of the rise of trusts, nor that
currency reform would, all by itself, settle the matter. It is
maintained, however, that the relation between the trusts and the
currency is so intimate that no consideration of the trust problem
which overlooks this view of the matter can be other than partial
and inadequate.
If we should ask any plain, intelligent business man what is
the one matter of vital importance nnder our profit system of
doing business, he would certainly reply that it was mainly a
question of prices. It is utterly impossible for any enterprise to
keep on if the prices obtainable on the market fall for any reason
whatever below the cost of production. If the fall of prices
comes about from causes wholly outside the business itself, the
. resiilt is quite as disastrous as if it came from internal causes.
During the last quarter-century or so, while we have boon
trying the experiment of gold monometallism, the usual course
of general prices has, as a result of that experiment, with occa-
sional temporary fluctuations, tended steadily downward. There
was once a time when certain persons professed to be unconvinced
537
of this fact. I think that time is past. I have in recent months
read efforts to show that this fall was not without its partial com-
pensations, but I think the fact of the fall is itself no longer seri-
ously disputed.
Now what is the bearing of this upon the trust question? It
touches it at two points. In the first place, the fall of prices
resulting from an unstable currency has tended to magnify every
disadvantage against which a weaker competitor was struggling.
Does one enterprise sustain itself with difficulty because of unfair
discrimination in railroad rates then the possibility of success
is still further diminished by the burden of falling prices. Is one
competitor heavily ha'ndicapped because of a rival's possession of
exclusive patents then the additional weight of constantly fall-
ing prices breaks down the competitor altogether.
In a superficial view of the case it might seem that such a con-
dition would affect all competitors alike, and so not prejudice the
race at all. But while the effect upon all is similar in kind, the
weight upon each is not necessarily in equal proportion^ Under
normal conditions a small advantage in draft of river vessels is
only of slight importance, but in a stage of low water the impor-
tance of this advantage is greatly enhanced and a very slight dif-
ference of draft may make all the difference between complete
success and hopeless failure. So, under stable prices, many com-
petitors may remain in the field even in spite of unfair discrimina-
tion. But when prices continue downward for a long period,
there is less hope for all competitors, and the enjoyment of some
exceptional favoritism may prove the absolute sine qua non of
survival.
An appreciating currency accelerates the development of trust
combinations in the second place, because it greatly increases the
stimulus to strive for a complete mastery of the market. Under
these circumstances even the possession of unfair advantages may
not suffice unless these advantages are such as to create a prac-
tical monopoly. Now, if an industry can be so monopolized that,
while general prices are falling, the products of this industry can
be made actually to increase in price, or even to fall less rapidly
than the average of general prices, it may be possible not only to
escape from the mire of general business depression, but even
to attain exceptional prosperity. All depends, however, on secur-
ing practical control of the market. Hence all energies which,
under normal conditions, might be given to improving the prod-
uct and cheapening the process are now bent to combine the
strongest competitors and crush out all others by whatever means
may appear necessary.
688
Thus all causes tending to the growth of monopoly combina-
tions have been stimulated by an appreciating currency. Now
let us note what occurs when this unstable currency takes a turn
in. the opposite direction. In the last few years gold-mining has
increased so rapidly that the production of gold in 1898 exceeds
in value the production of both gold and silver for any year prior
to 1891. This increase in gold production which, under an
established system of general bimetallism, would scarcely have
disturbed the general price level at all, now occasions a decided
rise of general prices, giving a bonus at the expense of the public
to producers generally. In so far as industry is controlled by a
trust combination, this combination of course also gathers its
bonus from. this source. While therefore the long-continued
appreciation of the currency has been of material benefit to the
trust combination in its efforts to crush competitors, the com-
binations which have survived and have freed themselves from
effective competition, now find an unstable currency beginning
to depreciate just in season to enable them to reap an extra profit
at a time when they are prepared to monopolize it.
Hence, while a currency which will keep prices always at an
absolutely unvarying level, is something not yet discovered, still
it. can be seen that any plan for dealing with the trust problem
must be at best but partial and inadequate if it does not con-
template as one of its features such changes in our currency sys-
tem as will tend as much as possible toward stability of prices.
Still worse would it be if, by the retirement of our national paper
currency and the substitution therefor of currency of private issue,
the power should be given to any private combination not only to
control the prices of its own specific products, but even to man-
ipulate the general price level in behalf of special class interest
T. B. WALKEK.
Minneapolis Board of Trade.
J. W. Gaines, of Tennessee, was called to the chair, and intro-
duced T. B. Walker, of Minnesota, who spoke on "Trusts fr.nn
a Business Man's Standpoint" :
To intelligently consider the question of the modern trusts
it is necessary first to examine and analyze the principles and
practices on which the trust is based. Not a prolonged
sion of the meanings of words, but to know what the object, am
539
and intent is in forming these combinations and to trace the
practical results reacKed by them.
The general foundation principles of the trust and that which
if taken away would entirely obliterate all the trust methods, is
the intention to combine together, under one central control so
much or so large proportion of any industry that the production
of that particular commodity can be so limited that prices can be
fixed arbitrarily and maintained at any price within certain limits
which the trust may determine to fix.
If this result could not be reached in the expectations of the
formers and investors in the trust, there would be none organ-
ized. This is the essential object in forming the combination.
The question of the intention is evident from the fact that peo-
ple will invest their money in these trusts under an excessive
capitalization, where it is known undoubtedly and unquestionably
that without the advantage of fixing and maintaining high prices
dividends could not possibly be earned or paid on such an enor-
mous amount of capital stock.
For instance, the tin-plate trust was organized from plants
which with their good will under legitimate valuation would
probably not exceed ten million dollars, or twelve million dollars
at the outside, was organized for fifty million dollars. Twenty
million dollars of preferred stock, drawing a good rate of interest,
and twenty million dollars of common stock were paid for the
plants. Ten million dollars of common stock was distributed to
the promoters and others who were influential in forming the
combination. Before the company was formed, tin-plate was
worth $2.75 per box. It is now worth $4.25. Earnings of fif-
teen to twenty per cent are estimated as being made on this fifty
million dollars of capital stock.
As another instance, it has been proposed to me several times
to organize a lumber and timber trust. A trust that is formed
and can handle and control the supply of raw material has a bet-
ter chance for permanency than one where the supply of raw
material can be produced by competing producers to an unlimited
extent. It was urged upon me that the pine timber of Minne-
sota and northwestern Wisconsin might be put into a deal where
the lumber prices would be controlled to such an extent that the
trust could afford to pay the timber owners a large price for their
timber, mills and lumber stock, and very readily add enough to
the lumber price to cover the excessive purchase price and to
make dividends on the enormous amount of stock that would be
issued. It was the general proposition to pay us a large sum of .
MO
money, if wanted, and a large block of stock/and it was intimated
that a portion of the promoters' portion would also be paid over
The only object whatever in proposing to form this trust was
to put so much of the timber together that the prices could be
controlled and maintained at a high price. If it had been shown
to these promoters and investors that prices could not have been
controlled by means of the control of the supply and the limita-
tion of the output, it would not have been considered for a
moment at even much lower figures than they were willing to pay.
In order to provide against competition the trust, when organized,
makes it a practice to pay to those from whom the plants were
purchased, as large an amount of stock as they can be induced to
take as payments, in order that their interests may induce them
not to build competing plants. They also give employment to
as many of them in the new deal as they can conveniently man-
age, in large part for the same purpose^ namely^, to prevent com-
petition.
Another method of destroying competitipn, which is prac-
ticed- by some of the large trusts, for instance, the Diamond
Match Company, the National Biscuit Company, and the Sugar
Company, is to give to the wholesale dealers a certain discount to
each one that will buy exclusively of the trust and in no instance
to any extent from any competitor.
The Sugar Company, for example, pays one-eighth of one
cent, and all of the wholesale grocers in Chicago are in the deal,
with one exception. This places the competitors where they
cannot sell goods to these firms even though they would dis-
count a much larger amount than that offered by the trust, as the
agreement prohibits any such purchases. As this, then, drives
the competition to seek trade among the retail dealers, the trust
follows up and offers to sell to the retailers at a competitive price.
Perhaps the friends of the trust will say that this is competi-
tion for the benefit of trade. On the contrary it- is the throttling
of trade to prevent or destroy competition. The competitors are
not able to sell goods at even less prices for a better quality, for
these trusts control so large a proportion of the output that the
wholesale dealers are not able, or feel that they are not able, to
maintain their trade without accepting these demands,
trust is, then, in a position to control the market without recourse
on the part of the public.
Competition cannot, then, be looked for excepting there
should come into the field a powerful organization of experienced
competitors with modern methods and machinery and sufficien
capital to meet the trust in the contest for trade.
541
taken by the trust to prevent such results and the prospect of a
final collapse of trusts and all other business interests with them,
are likely to make the public a heavy bill of expense before relief
is reached.
We are told that a trust is a corporation. That corporations
and large aggregations of capital have been the essential means
through which our industrial progress and great advance in
wealth and prosperity has been made. Those who understand the
business world are readily agreed on these general facts. The
organizations of capital under the laws of the different states has
enabled small capitalists to perform the work that could be per-
formed only with large capital, but it is begging the question
when we are urged not to oppose corporations and aggregations
of capital because such organizations have been of great value in
the past. An invading army might be a combination and we
could say that combinations are beneficial and hence we should
not defend ourselves against the invasion. Trust methods were
applied in other ways until the laws of the states trying to pre-
vent these combinations drove them in defiance of public senti-
ment to seek protection under laws intended only for the organ-
izations of 'legitimate business corporations.
The ordinary corporation in the industrial world is to bring
new capital, new plants and new competition. It is for the inter-
est of the commonwealth and the general prosperity.
The trust, however organized, is essentially a combination for
throttling, and in many cases the destruction of plants that other-
wise would be competing one with the other and furnishing goods
at a relative price proportioned to the amounts received by others
for their work or the use of their capital.
An eloquent appeal made by Mr. Cockran in favor of corpo-
rations in general and the vast advantage received from the use
of capital and the necessity for peace and good will between capi-
tal and labor in our industrial affairs, while very fine, and to
which all could agree, is not only unfair as an argument in favor
of the trust, but when rightly applied will justify the most ex-
treme measures to wipe out and prevent the organization and
operation of trusts in this country. Mr. Cockran also appealed
strongly for the protection and maintenance of competition and
excellence. !NTow what excellence there is in the combination to
defeat competition and what competition there is in the excel-
lence of the trust methods and practices seems very ludicrous to
consider. There has not been one single excuse or argument
presented in favor of the trust. It is a method so opposed to
fairness and equal individual rights that the most stringent laws
642
and rigid enforcements are justifiable and necessary to protect
the plain, unquestioned rights of the community at large. The
fact that many who are hostile to all combinations of capital and
to the use of large aggregations of capital, are arrayed against the
trust is used to show that the opposition to these combinations is
essentially from this class of people.
This is not true. There is a very strong undercurrent and in
many cases unexpressed hostility to this form of business over-
reaching, and many who have even taken part in these combina-
tions where they have thought that they could not avoid it with-
out heavy loss,, are strongly opposed to such combinations.
Mr. Cockran recommends as a method of regulation and to
provide against the encroachments of the trust upon the public
interests and to expose their unfair methods, that full and specific
annual reports should be required from them and these subject
to public inspection and publication. This he dwells upon
largely as a specific remedy for the evils which he by inference
admits are the result of the trust combinations.
_This is a very plausible theory, an excuse and a make-shift
which 'would be practically worthless as a remedy against the
evils of these combinations. Most of the large corporations do
make annual reports which the public is not sufficiently inter-
ested in to consider more than as to the summary of the year's
receipts and expenditures.
To trace with any degree of certainty the unfair methods of
the trust it would be necessary to examine in detail all the ac-
counts and all items of expenditures. To authorize the examin-
ers to demand explanations and to investigate under oath the
officers of the company to find out the actual considerations for
moneys expended, for rebates made, and the object and motive of
many proceedings and work of employees. This would require a
perfect army of auditors and an inquisitorial intermeddling with
the business management that could be justified only by a
knowledge of the wrong motives, intent and practice of the com-
binations, that would justify direct legislation to prevent the
formation or continuance of such combinations; and the rigid
enforcement of such acts.
All the publications that could be squeezed out of the trust
without the application of laws that would be less justifiable than
in prohibiting of trust organizations would result in no material
public advantage.
Others have recommended heavy reductions of duty or free
importation of all goods and manufactured product?, the domes-
tic production of which is controlled more or less by the trust.
543
This would be somewhat like burning a city to drive out the
criminals. All business interests would collapse with the trust.
In the early part of this century it was the custom of the
medical fraternity to apply the lancet to every patient to take
away a sufficient amount of blood to reduce the vitality of the
patient below the danger point of the disease. Our tariff is the
key to our prosperity. We have never had prosperous times
under low tariff or free trade and we have never established and
maintained for any considerable time a sufficient protection that
did not result in prosperity/ The old system of blood-letting
and withdrawing the vital force of the body would be a discreet
act compared to the destruction of our tariff to wipe out the trust.
Trust legislation should be so specific and direct that legiti-
mate business and fairly established vested rights shall not be
infringed upon or destroyed by it. Legitimate business interests
are being sufficiently disturbed by the trust now without having it
stand responsible for the bad methods of the trust.
J. DANA ADAMS.
After having listened to the many valuable papers presented
to this conference by men so eminently qualified to enlighten
and instruct, it is with much hesitation that I venture to tres-
pass upon the limited time of this assembly by offering a few
suggestions upon those fundamental principles which underlie
this whole question of trusts and combinations, and which per-
haps from their very nature have been overlooked or not fully
brought out in the presentation of the subject already made.
The first of these is that human labor is the true measure of
value in measuring the cost of production and distribution of
commodities.
And the second is the great economic law that cost of
production ultimately fixes the market or exchangeable value of
commodities.
Taking labor as the measure of value, and for convenience
a day of average labor as the unit of value, material prosperity is
enhanced and progress in civilization is promoted by a decline
in value of the products of labor measured in this unit.
In other words, the cheapening of the cost value, which is
simply the labor value of commodities, is an unmixed blessing
to humanity.
Therefore, any agency which lessens the amount of human
labor which enters into the production and distribution to the
544
consumer of a commodity, must be regarded as desirable and of
benefit to mankind.
For if it is well to cause two blades of grass to grow where
only one grew before, how much more is it to produce two bush-
els of wheat with the same expenditure of human labor as it re-
quired to produce one bushel before, or two pairs of shoes with
the same amount of labor as it required to produce one pair
before ?
Now if, under the unrestricted operation of the economic law
referred to, a commodity cannot long be furnished at a market
value below its cost value, or its market value cannot long
be maintained much above its cost value, then the question of
primary importance in ascertaining the economic value of any
agency is not whether it will directly reduce the market value
of the commodity to the consumer, but whether it will reduce
the cost value or the actual amount of labor necessary to produce
and distribute it to the consumer, leaving to the effect of this
law the ultimate reduction in its market value.
If the principles thus briefly outlined be accepted as correct,
every agency claiming a right to exist under the universal law
of the survival of the fittest must be able to demonstrate its
ability to accomplish greater results with the same amount of
labor, or the same result with a less amount of labor. And the
fact that in accomplishing certain results it is able to dispense
with a part of the labor formerly employed in producing them,
will count in its favor, instead of constituting an argument
against it.
C. D. WILLAED.
Los Angeles Board of Trade.
The foremost topic in the political and economical discussion
of to-day is the rapid development of the principle of combination
in all industrial lines. These combinations the public calls
the general name of trusts, although they are, for the most part,
not trusts at all, if we hold that word to its original meaning as
a commercial term. The question has not as yet developed in
a definite issue, but the lines along which the issue i
may already be dimly distinguished through the haze of conflict-
ing argument and -assertion. On its face, the problem seems to
be one of mammoth proportions, affecting the fundamental prin-
ciples upon whicli the business edifice has rested since trade
began; and yet this may all be an illusion. Men have been (
545
ceived before by economic mirages. It certainly concerns all
classes of people the workman, who is himeslf in a trust, or
union, and who perhaps works for a trust ; the housekeeper who
uses trust-made articles; the investor who will handle trust se-
curities ; the statesman who must make and administer laws that
deal with trusts, and the manufacturer who is forced either to
join a trust in his line of production, or to fight for his commercial
life. That it should be the great issue of the day is not strange;
on the contrary, we may well wonder that we have waited so long
to look it squarely in the face.
As a rule, the consideration of 'a question of the immediate
present is rendered difficult by the fact that its very nearness
throws it out of perspective and leads us into error. This diffi-
culty is in a measure removed in the case of the trust, for the prin-
ciple of combination is not new, nor is its application in the trust
form. It has been before the American people as a minor issue
for over thirty years. The developments of the past ten months,
astounding as they seem, nevertheless involve no essentially
new problem for consideration by economists and law-makers.
All that is 'happening in 1899 was predicted ten years ago; the
only cause for wonder lies in its delay in coming to nass.
There are four stages in this evolution down to the latest form
of combination, which, as I have said, is falsely called a trust.
The first of these is the pool, which originated among the rail-
roads, and which, in spite of adverse legislation, is still widely
practiced, although in a modified form. It was a limited form of
trust, for it covered not the whole business of t':e r. t ... i. ... ca-
tered, but only certain specified lines of work.
The constitution provides that Congress shall have ^ '
regulate the traffic between states, and under this prerogative the
Cullom-Eeagan bill, now known as the interstate commerce act,
was framed and passed in the year 1887. It forbids pooling in
every form, under severe penalties. The constitutionality of the
. law has been tested and it stands. Pooling as an open deliberate
practice has ceased, but identically the same result is achieved
by a different process. There is no law that can compel a railway
to go out after business if it prefers to sit still and allow another
road to take it. The A Route and the B Eoute parallel each other
from X to Y, and there are ten million tons of freight to be car-
ried annually between those two points; the roads are not parties
to a pool; that would be unlawful; but at certain intervals the
managers get together and compare notes on the amount of busi-
ness done in certain lines, and if one is getting more than his
ghare ; he will, during the period that follows, refrain from solicit-
546
ing for those commodities, or by any one of a dozen methods
manage to throAV the business to his competitor, thus accomplish-
ing exactly the same result as the pool, but without violating the
law. The legislation which was intended to abolish the primary
trust has merely driven it into a new and utterly impregnable
position. This we shall find to be the inevitable tendency with
reference to all anti-trust legislation.
Next comes the real trust, which is the second stage of the
development. It varies somewhat as to details, but in the main
is as follows: there are a dozen large factories producing the
same article, working in competition with each other, and cover-
ing all, or .a large part, of that particular field. They are tired of
fighting, and are ready to go into an equitable arrangement. A
schedule is drawn up, showing the value of each plant, to each is
assigned a just proportion of the final organization, and trust cer-
tificates are issued to each in proportion to his share as determined
by the schedule. The management of the several factories is
placed absolutely in the hands of the directors of the central or-
ganization. History does not record the name of the genius that
devised this plan, but the first man to put it into practical and
extensive operation was John D. Eockefeller, of the Standard
Oil Company. That famous trust was organized on a permanent
basis in 1882, and the agreement includes the total stock of four-
teen companies, the partnership or individual rights of forty-
seven men and women, and the majority stock of twenty-six com-
panies. It was incorporated in all the states where the trust was
to do business. Having under its control all the principal nine
lines, and mining and refining the great majority of the entire oil
product, it was in a position to command special rates from rail-
ways, which it received by devices that successfully evaded the
interstate commerce law. It could and did dictate to retailers,
forbidding them to purchase from other producers, under fear of
having their local market demoralized by competition direct from
the Standard refineries. One rival after another was singled out
for treatment, until all were ruined or driven into the combine.
The brazen iniquity of this performance roused Congress lo
action, and the Sherman law was passed in 1890, which declared
that all interstate combines of corporations engaged in the same
or similar lines of industry, having for their object the sunpres-l:n
of natural competition, were unlawful and shr.uld be |>u"i<he<J ' y
a fine and by the imprisonment of their chief officers. Tin's put a
stop to the formation of genuine trusts, and drove those already
in existence into a different form of organization. As far as ef-
M7
fecting the purpose it had in view, viz., the re-establishment of
competition, the Sherman law was utterly worthless.
The third stage of this development was reached by a natural
- and easy route in the effort to evade the Sherman law. The
trust organization was abolished. In its place arose a genuine cor-
poration, having for its purpose the operation of a number of
factories, mines or whatever might be chosen, a corporation which
buys the various subordinate enterprises outright, and owns and
runs them. The transfer is supposed to be absolute and irre-
vocable, and the man who parts with his factory, or the stock com-
pany that disincorporates and gives up its plant, receives in re-
turn a lump of preferred stock in the new company.
The very latest phase of the trust organization, which is the
plan under which the present trusts are largely forming, differs
from the one last described only in that the purchase of the plant
is a bona fide cash transaction. It would seem at first glance
that this difference is not material, and possibly the distinction
is not important from a legal point of view; but it serves to com-
plicate the political or legislative side of the question, as it intro-
duces an innocent third party in the shape of the ultimate holder
of the trust securities. The whole transaction is thus one of
straight business, with nothing in the nature of a quibble or a
makeshift about it. In cases where the factory owner had ac-
cepted stock in the new organization, there was always the ques-
tion as to whether the transaction was genuine or not. In the
event of the liquidation of the corporation, or a wind-up of its af-
fairs, the preferred stock was to operate as a first mortgage lien
on the tangible assets, taking precedence over any outstanding
common stock. In other words though the factory was theoreti-
cally sold, there was a string tied to it, by which it could be hauled
back if the scheme failed to accomplish all that was expected of
it. But the latest form of the trust presents no such rough edge
on which the law may fasten its clamp. The elements that enter
into the transaction are simple, and are so fundamental in their
character that to affect them in any way the law must tear up the
whole business fabric and precipitate the country into financial
convulsions.
It is quite impossible to obtain accurate figures of the trust
development of the year 1899, which exceeds in gross capitaliza-
tion all that which had preceded. The figures given in news-
paper articles are contradictory and evidently full of error. A
large part of the alleged capital of the new concerns is admitted
to be fictitious, or water, as it is commonly called. The capital-
ization totals are therefore of no particular value as showing the
548
real extent of the movement. But the question whether the trusts
now in operation embrace one-third, one-half or nine-tenths of
all industrial enterprises is, after all, not material. The important
facts are: First. That certain trusts do cover certain articles
in their entirety. Second. That new trusts are constantly form-
ing, and the field rapidly widening. Third. That they have dem-
onstrated by long periods of success the entire feasibility of the
plan. Fourth. That a scheme of organization has been devised
that is practically invulnerable from destructive attack either
through national or state law.
It is questionable whether any form of law will ever be de-
vised which shall put an end to these combinations. Laws may be
passed which will correct certain of their attendant evils, as, for
example, over-capitalization, which is not an essential of the trust
nor is it peculiar to it. But how is it possible to frame a law
which shall prevent men from widening the scope of their busi-
ness, along natural and logical lines, until it includes all the
factories or mines or stores that are concerned in any one product ?
Unless the government adopts socialistic measures, and itself en-
ters the field of manufacture or mining or exchange, how can it
create competition, when those who are directly concerned in the
matter decline to have it? If all the shoe men of the country
choose to get together, and unite as one corporation, by what
kind of a legal process is the government to gain a footing among
them, and compel the existence of Competition?
The trust is of necessity an interstate affair, and hence is to
some extent under the control of the Fed era! government. While
we can conceive of no constitutional legislation which shall effect
its abolition, it is probably feasible to frame a law governing inter-
state corporations which shall require them to take out a charter
under Federal authority, and this charter, which is in the nature
of a franchise for a semi-public utility, may lay down certain re-
quirements. For example, the amount of stock to be issued should
be exactly in accord with the value of the company's real assets.
The tax to be paid might be graduated on the company's income,
increasing as the profits passed a certain percentage. The ten-
dency of such a law would be to forestall the effort to earn un-
reasonable dividends, and to abolish the obtaining of money under-
false pretenses that now prevails in the sale of watered stock.
- But would such a law drive the Standard Oil monopoly
from existence, and distribute its business among a number of
individual firms and corporations? No ; nor would any other law
of a general character, such as all our laws must be, accomplish
that result. There is a plain, definite reason why this is so, and it
549
lies in the fact that the trust, much as it is berated and deplored,
has its foundations deep down in the common sense and experi-
ence of the race. In the last analysis the trust is logical, and com-
petition foolish. Here is the world to be supplied with a certain
article, and here are we, the producers of it. Which is best, th-it
we should each blunder on by himself with inadequate facilities,
alternately flooding and starving the market, and using a large
part of the finished .product as ammunition with which to fight
each other, or that we should come to an intelligent, amicable
understanding, combine our efforts, stop the waste, cease fight-
ing, and, as we say, gqt right down to business? As in the case of
nations, so with individuals, peace is a thousand times better than
war. The world never permanently goes back. When it has
learned a good lesson, it abides by it. We understand the folly and
waste of international conflict, and, as far as the mistakes and
passions of men will admit, we will abolish war. Similarly, the
business world has learned the great advantage to be gained by
combination; and while certain limitations on human nature
rqake it impossible to carry it to the ultimate lengths, it will grow
and extend and strengthen until it becomes, in spite of all we may
say, or do, or enact, the controlling force of production and trade.
We are now face to face with the one essential and vital issue
of the trust; and it is a problem so stupendous that we pause for
a moment almost in terror before we cross the threshold of in-
quiry. What is to be the effect of this change in the world's busi-
ness methods upon the people? It cannot be doubted that the
change is of a most radical character, amounting to a veritable
revolution in the world's economics. Thus far in the history of
the race the natural laws of supply and demand and of the com-
petition of producers and of distributers one with another, have
prevailed, subject only to such limitations as governments have
seen fit to apply.
The world has passed through a number of minor industrial
revolutions the general substitution of free labor for slave, the
abolition of government monopolies, the discovery of steam, and
of labor-saving machinery, the development of quick transporta-
tion, etc., and we are not ignorant of what it means to readjust
man and all his affairs to a change of economic conditions. But
here is a revolution so profound and far reaching in its character
as to make all that have gone before it seem insignificant by
comparison. Understand, I do not refer to the mere formation
of individual trusts, but to the inevitable substitution of the
principle of combination for that of competition. The next gen-
eral movement in the trust field will be the swallowing of some
550
combinations by others, until all are practically in a harmonious
whole. It may take a quarter of a century to accomplish this; it
may be done in five years. But it is coming who can doubt 'it?
And this period of adjustment will be one of discontent, distress'
failures, panic, and disaster.
But this is the darkest hour that is just before the dawn.
The worst will have passed, and that which is to follow will, I am
convinced, be a vast improvement on any condition of affairs that
the world has hitherto beheld. The general rule which applies
to all labor-saving devices must hold good 'here. The scale is
larger, but the principle is the same. Gradually work will be
found for hands that are ready to accept it, in new lines of devel-
opment which the several trusts, or the one great central trust,
as the case may be, will throw open. Indeed, there is hope that
the long period of disaster may be shortened by the fact that the
trusts themselves will find it greatly to their advantage to provide
work for the discontented and dangerous element. The producer,
moreover, must have a market for his manufactured commodity,
and that can come only with prosperity among the working-
classes.
The industrious and intelligent people of this globe have cer-
tain problems which in the divine scheme of things they must
either solve or suffer a certain loss of happiness. We are coming
to understand the problems that concern the production of
wealth and by wealth we mean the things that contribute to
human comfort but we have not learned even the primary les-
sons of its distribution, one of which is that every man should
have an opportunity to work_and to earn what is necessary for liis
family's support. Until we have mastered this most elemental
principle, upon which the whole fabric of a self-respecting and
generally contented community must rest, it is folly for us to at-
tempt the solution of more difficult questions, such as the scheme
for an equal division of wealth must involve. Neither have wo
succeeded in solving the problem of the panic and the waves of
elation and depression, which at intervals sweep across our ocean
of commerce and throw frightful wreckage to the shore. With
the aid of science we have met and withstood the ravages of dis-
ease, we have harnessed the forces of nature to our command, we
have explored the heavens and we have carried into the common-
est household knowledge which a few centuries ago was restricted
to the monks and the clerks. We have accomplished miracles;
but the poor starve almost at our doors. We have piled up great
masses of wealth, but at intervals of less than a score of years, we
are all affected by a madness, that causes us to throw this wealth
551
about and destroy it. Terrible as these things are, we have at
least become hardened to them. We dare not think of the suf-
ferings of others, lest it fairly poison our own cup. We have be-
come fatalistic ; these evils are inherent in human nature, we say,
and can never be eradicated. That same sentiment has, in the
world's history, prevailed with regard to the tyranny of kings,
and slavery, and duelling and punishment by torture; but these
have all passed. Because we have operated our business affairs
under the competitive system from the beginning, that system is
not necessarily God-given, for all eternity. Centuries of experi-
ence have demonstrated that the panic, over-production, bad dis-
tribution and uncertainty of employment are inevitable accom-
paniments of competition. A plan has suddenly developed which,
without overturning our laws or our social order, without war,
and with nothing worse than a protracted period of industrial de-
pression which we have learned by hard and bitter experience to
endure with patience will do away with competition and give us
co-operation in its stead not that ideal co-operation which the
socialist paints with colors so brilliant that they dazzle us unto
disbelief, but a tangible, reasonable, practical condition of com-
mercial peace. If the trust is the instrument through which
the change of the world's affairs to a common sense basis is to be
accomplished, then God speed the trust, let us say.
EDWARD P. EIPLEY.
President Atchison, Topeka & Santa Fe Railway System.
The. Atchison, Topeka & Santa Fe Eailway System is com-
posed qf something over one hundred corporations controlling
all the way from one mile to one thousand miles each at the time
of lease or consolidation, and the total now controlled is, roughly,
7,500 miles.
The result to the publte of the consolidation as to rates has
been to lower them the force of public opinion and legislation
demand more of a large corporation in all directions than is ex-
pected of the smaller companies, and the larger roads are held
to a more strict account in all directions. The same is true as
to convenience of service. The system now being operated as
an entity was formerly disjointed and disconnected, besides being
in some cases irresponsible.
The result to employees' wages has been to advance them. It
is a well known fact that wages on the smaller roads are in almost
all cases lower than on the larger systems. The result of con-
552
solidation on the number of employees is not considerable in any
direction. Naturally the consolidation does away with a few
officials and some accountants, but as a rule does not affect the
number of men required for the physical operation of the prop-
erties, and the reduction in the official and accounting staff is
trifling.
The conditions of service on the consolidated lines are in no
respect inferior, and in some respects superior, to those on the
smaller roads. As before stated, the larger roads pay higher
wages, and the employees are, as a rule, less subjects of favoritism
and are more justly treated.
It is difficult to say what have been the results to investors
of the various consolidations and absorptions that have taken
place, -but it may be stated as a general proposition that the
owners of the smaller properties have made more money than
those of the road by which the smaller properties were absorbed,
and more than they could have made had they remained inde-
pendent. The small road is often worth more as an adjunct or
feeder of the large road than as an independent proposition. In
the latter case it is worth only the sum on which it can earn a
fair rate of interest, while to the larger road it is worth what it
can earn plus the profit on what business it can bring to the
larger road.
The intrinsic values of the properties absorbed have not been
changed by the absorption. It is difficult to say whether the
process of consolidation has resulted in the diffusion or concen-
tration of capital. Since .the securities of the absorbing com-
pany are so widely distributed, it is fair to presume that there
has been no radical change in that respect.
With few exceptions each absorption or consolidation has
both relieved and intensified competition. That is, it has re-
lieved us of competition at one point, only to bring us into com-
petition at another; and as there is no part of the United States
where railway competition does not exist either in its direct or
indirect form, it is fair to say that competition has been restricted
but slightly, if at all, by the consolidations that have taken place.
Unquestionably the result of strong trade combinations has
been that the railroads have been compelled to discriminate In
their favor. The railroads being mistakenly prohibited from
organizing to prevent such attacks, are individually to some ex-
tent at the mercy of large combinations controlling immense
volumes of tonnage, and the interstate commerce law and other
equally unwise legislation on the part of national and state bodies
has fostered the very evil it was intended to prevent.
553
to be construed as an admission that the railroads have been or
are violating the letter of the law ; there are legal ways of "pro-
tecting" the large shipper, and it may be laid down as an axiom
that until the railroads are legally permitted to combine to resist
such attacks, the shipper having the largest amount of trans-
portation to buy will buy it cheapest; this is rendered the more
probable because the mercantile interest as a rule maintains that
such is the correct principle and that the "wholesale and retail"
idea should govern in transportation as in the sale of commodi-
ties, and that interest is not in the least in sympathy with the
principles of the law. On the other hand, the railroads are gen-
erally in sympathy with the objects of the law, but are deprived
by its terms of the only means by which they can enforce its main
principles.
It should be stated in justice, however, that some of the
strongest "combinations," or so-called "trusts," have consistently
refused to accept cut rates, or become parties to, or beneficiaries
of, any infraction of the interstate law.
For the same reason that a legalized combination among rail-
roads would tend to do away with discrimination in favor of
large combinations of capital or trusts, the competition of roads
is even still more potent in the same direction. It is quite safe
to say that were all the roads of the country under one manage-
ment, there would be no discrimination whatever, and it is prob-
ably equally safe to say that rates would be lower and the service
better. But this is not to be construed as a suggestion in favor
of government ownership, than which few greater calamities
could overtake us. This is evidenced by the conduct of the post-
office department, which, after paying the railroads for trans-
portation about 28 per cent of its gross receipts, shows a deficit
of sixteen millions a year, though without any competition;
while the express companies, paying the roads for transportation
about 50 per cent of their gross receipts and subject to severe
competition, make satisfactory returns to their stockholders.
There have been in all ages and in all countries those who
saw in the introduction of labor-saving devices the destruction or
degradation of the workingman. Yet his condition has con-
stantly improved.
And some of us have been taught to believe that the great
economic principle is, free and unrestricted competition. The
weaver displaced by the power loom, the retailer displaced by the
department store, the traveling salesman displaced by the trust,
are all alike the relics of a regime that has passed away for good
in spite of sentiment and in spite of legislation a regime which
554
was wasteful, in that it forced the consumer to pay more than a
fair profit or forced him to pay profits to middlemen.
The economic tendency to larger combinations is irresistible,
and to my mind not dangerous, but whether dangerous or not,
there is no stopping it.
Labor has by combination been able to greatly improve its
condition, and labor organizations are neither more nor less than
a trust. Why deny to capital the rights accorded to labor?
The average individual laborer has found that, as an indi-
vidual it is difficult for him to obtain recognition, or what lie con-
ceives to be his share of the results of his work; hence he com-
bines with his fellow-laborers that they may jointly command
a respect and exercise a force, that to the individual is impossible.
For precisely the same reason the individual merchant or the
individual corporation finds itself forced to seek the co-operation
of its fellows.
The labor organization succeeds when wisely handled and not
unreasonable in its demands; when that limit is exceeded it fails.
So also the trust succeeds only when it reduces costs and is con-
tent with fair returns; to exceed this limit is to invite the com-
petition it most dreads.
STUYVESANT FISH.
President of the Illinois Central Railroad Company.
The Illinois Central Eailroad Company is not a consolidation
of any other companies whatever, but is precisely the corporate
entity created by the act of the state of Illinois to incorporate"
that company, approved February 10, 1851. The railroad con-
templated by and built under that charter is 705.5 miles in length,
and lies in Illinois. The Illinois Central is, however, operating.
as lessee or agent, other railroads in connection with its own.
aggregating all told 3,769.74 miles, located in eleven different
states.
The early history of all the leased lines is not as clear as
might be, but from 'the records and from a personal knowledge
which dates back to 1871, I can say that the number of railroad
companies absorbed by or consolidated into the various linos now
operated by the Illinois Central have been at least a* many as
fifty-five. Eeference is here made only to distinct corporations,
and no account is- taken of mere changes of name, nor yet of
mergers, consolidations, and the like. On the other band,
should not be assumed that the Illinois Central Railroad Company
555
has dealt directly with each of these companies. It has, in some
cases, leased railroads which had previously been formed by the
consolidation of smaller ones.
Having had occasion to go quite thoroughly into the matters
germane to the field of inquiry of the conference on trusts, in an
unpublished report made to the board of directors of the Illinois
Central Railroad Company May 18, 1897, some figures there given
I shall here employ.
It was not until after the Civil War that the consolidation of
railroads into large systems began to make itself felt. Poor's
Manual for 1869-70, after making, at page xxix, under the head-
ing "Construction, Organization and Management of Rail-
roads," some interesting remarks as to their control by the gov-
ernment, goes on to say, at page xxx, "The company having con-
trol of the longest line with us is the Chicago & Northwestern,
which has a mileage of 1,257 miles. The Pennsylvania Railroad
Company operates 538 miles, the Reading 807, the Erie 774, the
New York Central 692." The Illinois Central was then operat-
ing 895 miles, as shown on page 319 of the same book, although
it is not mentioned on the page quoted from.
The effect of the amalgamations of railroads which have since
taken place is well shown in a report, entitled "Changes in the
Rates of Charge for Railway and Other Transportation Services,
Prepared under the Direction of John Hyde, Statistician, by H.
T. Newcomb, Chief of the Section of Freight Rates in the Divi-
sion of Statistics." All the figures there given are in gold, or its
equivalent, and they cover, with regard to substantially all the
railroads in the United States, the long period from 1867 to 1896 :
In 1886 the average revenue per ton was $ 2 06"
In 1896 " " " " " .. 1 56
Decrease.- $ 50 or 24.27
In 1886 the average rate per ton per mile was <1.160
In 1896 " " " " " " " .
Decrease-- C. 415 or 35.78
Information as to later dates down to June 30, 1898, can be
obtained from the reports of the Interstate Commerce Commis-
sion on "Statistics of Railwa}^." In using the latter it must be
remembered that as the net earnings of the railroads are given
without deducting taxes, there is in them a gross and constant
over-statement. The steady fall in the rate per ton per mile
from 1.925 cents in 1867 to". 753 cents in 1898, shows the effect
of consolidation on freight rates.
That the rate per passenger per mile has not fallen, if at all,
in like proportion, is due to the better accommodations, higher
speed, and greater comfort now afforded. No one would to-day
consent to travel as all had to travel formerly, without sleeping
cars, parlor cars or dining cars, without through connections and
subject to repeated delays and constant changes, including the
rechecking of baggage and the purchase of a ticket at the end
of each short railroad.
In 1886 the average fare per passenger was .. 'fil.39
In 1896 " " '/34.30
Decrease - - . C7.09 or 17.13?
In 1886 the average rate per passenger per mile was '."2.208
In 1896 " " " " .. f 1.979
Decrease.-. . '.229 or 10.37?
As to the convenience and efficiency of the service resulting
from consolidations, a comparison of time tables, and especially
of freight schedules, in force before and after consolidations
would be instructive, or, better, the testimony of shippers and
consignees at distant points as to the time which is now, and was
then, actually consumed in delivering freight. Their testimony
as to adjustment of claims against one consolidated corporation
and those against a number of small, independent ones would
be instructive.
The time of merchandise freight trains has been reduced :
Chicago to New Orleans, from 80 hours to 55, saving 25 hours.
Chicago to St. Louis, from 30 hours to 16, saving 14 hours.
St. Louis to New Orleans, from 59 hours to 38J, saving 20 1 ., hours.
Chicago to Sioux City, from 43 hours to 33* , saving 9 1 .,' hours.
The average time in which freight trains are actually moved
has been decreased in a much greater ratio, owing to better track,
improved engines, passing tracks and other facilities, and a much
better organization and esprit du corps.
As an illustration, showing the present possibilities, a train
consisting of twenty-five Illinois Central standard refrigerator
cars, containing 11,250 bunches of bananas, was moved from
New Orleans to Chicago on February 20, 1894912 miles in
35 hours and 45 minutes, or an average speed, including stop?,
of 25.45 miles per hour. This was done without any unusual
preparation or interfering with the regular service. Our banana
trains are run from New Orleans to Chicago on established sched-
ules of 47 hours- and 30 minutes. Our manifest freight trains
daily make, with great regularity, schedules nearly as fast as
those set for the banana trains.
557
In 1886 the number of tons of freight carried one mile
per mile of railroad operated was 344,564
In 1896 it was - 657,890
Increase --313,326 or 90.93
Showing that, notwithstanding the increase in mileage, the
intensity of service in the carriage of freight has also increased.
In 1877, before the Illinois Central had control of the railroad
from Cairo to New Orleans, the fastest passenger trains con-
sumed 47 hours and 45 minutes in going from Chicago to New
Orleans (912 miles), and 47 hours in returning northward.
The time consumed has been reduced:
Chicago to New Orleans, from 35 hours 50 minutes to 26 hours, thus
avoiding a second night in the cars.
Chicago to Sioux City, from 22 hours to 15 hours 30 minutes.
Chicago to St. Louis, from 10 hours 50 minutes to 8 hours.
In 1886 the number of passengers carried one mile per
mile of railroad operated was 54.840
In 1896 it was .. ..72,381
Increase .-17,541 r 31.99*
Showing that, although so many miles of railroad have been
added, the intensity of the service in the carriage of passengers
has increased.
As a result of consolidation employees are privileged to work
for standard wages under standard rules, with the assurance of
continued employment and a chance to rise to the highest places
in the service. Every one of the superior officers of the Illinois
Central Eailroad, excepting those in the legal department, has
risen from the ranks in the service of that or some other railroad
company.
The earnings, which have sustained a uniform rate of divi-
dend since the close of 1890, have also enabled the company to,
thus far, go on paying the standard scale of wages in all branches,
without even a temporary reduction. It is to be hoped that with
a return of prosperous times the men will be mindful of how far
the enhanced purchasing power of the money given them has
operated to increase their pay during all these hard times.
In 1877 reductions of from 10 to 25 per cent were made in
a scale of compensation lower than the one now in force. The
employees of the Illinois Central Eailroad Company never have
received higher pay than at present.
In 1886 the company employed 8,516 persons, and paid them
$4,937,955, being an average of $580 to each.
558
In 1896 it employed 19,647, and paid them $11,099,590, being
an average of $595 to each.
The comparatively small increase in the yearly pay was due
to lessened hours of work, and to the absence in recent years of
any large payments to train crews for overtime.
On small, independent roads wages were often fixed by favor.
and very generally limited to the utterly inadequate means of
bankrupt concerns. Standard wages represent the maximum
scale which has thus far been secured by thoroughly well organ-
ized combinations of labor from first one and then another of
the railroad companies, which, through the personal vanity of
their managers and the natural rivalry of the corporations, are,
and have ever been, utterly unorganized for mutual protection.
I do not wish to be understood as opposing combinations of
labor. On the contrary, I believe certain of them work for the
general good, as do also certain combinations pf capital. More-
over, the best paid men generally do the best work. But I am
stating facts, and not writing an essay on what should be.
Except in the accounting offices and in the purely clerical
branches of the service, I fail to see how consolidation can reduce
the number of men employed. On the contrary, it generally leads
to increased traffic and increased employment.
The number of miles operated and the number of men em-
ployed by the Illinois Central Railroad Company, and in and
since 1892 by that company and the Yaxoo & Mississippi Valley
Railroad Company, taken together, have been as follows:
Miles Men Employed
Years. Operated. June 30th.
1885 '2,066 8,485
1886 2,066 8.576
1887 2,355 9,915
1888 2.355 11,316
1889 2,875 10.669
1890 2,875 13.823
1891 2.875 15.789
1892 3,695 20,311
1893 ---- 3,695 18.828
1894 .-- 3,695 16,095
1895 3,695 17,080
1896... 3,934 20,581
1P97 3,937 23,569
1898 --- 4,615 25.212
1899". ... 4,626 28,SS3
Increase in miles operated since 1885
Increase in number of men employed- -
Number of men employed per mile operated
In 1885
In 1899 ..
Increase slightly more than 2 men per mile, or over i
659
Conditions of service on large railroads are controlled by
standard rules, which clearly define each man's duties and powers
and his relation to those around, above and below him. On small,
independent railroads, the conditions were necessarily dependent
almost solely on the temper, health and momentary engagements,
in short, on the heredity and environment, of a local officer of
limited experience. In this connection some valuable informa-
tion might be gained by asking a great number of men now in
the employ of several of the large railroad companies two ques-
tions, viz :
First Have you ever worked on a small, independent rail-
road in your present capacity?
Second If so, which service do you prefer?
Had I the time to do so, it would be an easy matter to take
from the files of such a paper as the Financial Chronicle both the
dividends and interest paid, and the prices of stocks and bonds.
I cannot recall, in the last ten years, a single consolidation which
has resulted in a higher rate of dividend or of interest being paid,
and it is notorious that all the reorganizations made in recent
years have been based on a very material reduction in interest.
Competition, adverse legislation, increased taxes, enhanced
wages, and the better service required by the public, long since
made it impossible for railroads in the West to sustain the 10 per
cent rate of distribution which prevailed thirty years ago.
More than twelve years ago the rate on the Illinois Central
had fallen to 7 per cent on the then capital of $29,000,000, the
amount distributed in 1886 being $2,030,000.
The increase in the capital in 1887 to $40,000,000, the bad
effects of legislation at that time, especially in Iowa, and of the
interstate commerce law, forced a reduction, in 1888, to 6 per
cent, which rate was maintained until 1890, when, on the increase
of the capital to $45,000,000, a further reduction in the rate to 5
per cent was made necessary by a very material increase in the
pay of employees, especially in the train service, and by the deter-
mination reached by the board of directors to bring the prop-
erty, as rapidly as possible, up to higher standards of mainten-
ance and of service.
During the long depression in railroad and general business,
which has been almost continuous since the failure of Messrs.
Baring Bros & Co. in November, 1890, the share capital of the
company has again been increased from $45,000,000 to $52,500,-
000. Through this period of 6^ years, dividends at the uniform
rate of 5 per cent per annum have been earned and regularly
paid. Investigation will show that no other large railroad com-
560
pany has, throughout this period, uniformly maintained its rate
of dividend.
Not only is there no water in the stock of the Illinois Central,
but the aggregate capitalization of the company, including all
of the bonds and all of the stock, does not represent, by many
millions of dollars, the money which has actually been put into
the property.
Attention is invited to the following tables, which compare
the capitalization of the railways of Great Britain with those of
the United States in 1890 (which was the first year for which the
Interstate Commerce Commission published statistical reports)
and in 1898:
RAILWAYS IN THE UNITED KINGDOM.
STATED IN DOLLARS, 1 BEING TAKEN AS WORTH 5.
YEAR ENDED
DEC. 31ST, 1890
YEAR ENDED
DEC. 313T, 189S
INCREASE IN NINE YEARS
AMOUNT
PEK CENT.
Miles operated
20,073
21,659
1,586
7.90
Capital paid up
Capital paid up per
Mile operated-. -
Gross Receipts
Gross Receipts per
Mile
$4,487,360,130
223,550
399,743,510
19,915
5,672,342,310
261,895
481,262,505
22,220
$1,184,982,180
38,345
81,518,995
2,305
26.41
17.15
20.39
11 .57
RAILWAYS IN THE UNITED STATES.
YEAR ENDED
JUNE BOTH, 1890
YEAR ENDED
JUNE 30TH, 1893
INCREASE IN MINE YEARS
AMOUNT
PERCENT.
Miles operated
156 ; 404
184,648
28,244
18.06
Capitalization - -
Capitalization per
Mile - -
$9,437,343,420
60,340
1,051,877,632
6,725
10,818,554,031
60,343
1,247,325.621
6,755
$1,381,210.611
3
195,447,989
30
14.64
0.00
18.58
0.45
Gross Receipts ..
Gross Receipts per
Mile
*Less than one-half of one-hundredth of one per cent.
5G1
The jigures for the United Kingdom of Great Britain and
Ireland are taken from the returns to the British Board of Trade,
and those for the United States from the reports of the Inter-
state Commerce Commission on "Statistics of Kailways in the
United States."
It will be seen therefrom that, while the number of miles
of railroad in the United States has increased 18.06 per cent,
their capitalization, including both bonds and stock, has in-
creased only 14.64 per cent; and that the increase in the capi-
talization per mile of railroad is $3, a sum too small to be ex-
pressed in percentages; less than one-half of one-hundredth of
one per cent.
Also, that the gross receipts of the railroads in the United
States have increased in almost exactly the same ratio as the
miles operated, viz., 18.58 per cent, while their gross receipts
per mile have increased $30, or less than one-half (45-100) of one
per -cent. This in a country which has developed enormously in
the meanwhile, and whose population is estimated by the Inter-
state Commerce Commission to be increasing at the rate of 1,250,-
000 per annum.
On the other hand, in the same time, in the United Kingdom :
The number of miles operated increased 7.9 per cent.
The capital increased 26.41 per cent.
The capital per mile operated increased 17.15 per cent.
Gross receipts increased in amount 2039 per cent.
Gross receipts per mile operated, 11.57 per cent.
While it is true that, as a whole, the English railways are
better built than ours, there are many points in which ours excel
them, and there are also thousands of miles of railroad in the
United States which are well and permanently constructed.
The capitalization, including bonds and stocks, of the rail-
roads in the United States, is $60,343 per mile. That of the rail-
ways in Great Britain 53,379 per mile, which, at $5 to the pound,
equals $261,895.
The increase in the capitalization of the railroads of the
United States, per mile, in nine years, has been, as above stated,
three dollars.
The increase in the capitalization of the British railways per
mile, during the same nine years, has been 7,669, or, at $5 to
.the pound, $38,345.
The figures are given as reported, without accepting respon-
sibility for their accuracy. Those for the railroads in the United
States include the many millions of dollars of bonds and stocks
of railroad companies which are owned by other railroad com-
562
panics and, to that extent, they greatly overstate the capital of
the railroads in the United States actually held by the public A
candid consideration of these figures shows that the ancient myth
about railways in the United States being -over-capitalized has
no basis in fact.
The only gauge of the value of railroad property is its returns
in dividends^ or the market price of its securities.
In January, 1877, of the $29,000,000 of Illinois Central cap-
ital stock outstanding, about $15,700,000 (or 54.14 per cent) was
held in Great Britain, $7,700,000 (or 26.55 per cent) in Holland
and only $5,600,000 (or 19.31 per cent) in America.
At present 705 officers and employees, other than directors of
the corporation, are registered on the books of the company as
holding 2,554 shares.
The number of stockholders in each of the eleven states in
which the company is now operating railways varies from seven
in Indiana to 767 in Illinois. The total number of stockholders
in those states is 1,126, and they hold 33,995 shares.
There are resident in the United States 3,868 stockholders,
owning 346,207 shares, or over 57 per cent of the total capital
stock of $60,000,000; in Great Britain 2,543, owning 198,616
shares; elsewhere 115, owning 55.125 shares.
All told, the books show 5 holdings of 5,000 shares or over;
85 of 1,000 shares or over; 93 of 500 shares or over; 694 of less
than 500 but more than 100 shares; 455 of exactly 100 shares
each, and 5,194 of less than 100 shares. The number of stock-
holders registered on the books is 6,526. Barely one-seventh of
them own over 100 shares apiece.
By way of contrast, it should be remembered that in 1873 the
capital consisted of 254,79'4 shares, or $25,479,000, of which 130,-
438 shares, or 51.19 per cent, was owned in Great Britain; 79,863
shares, or 31.34 per cent; in Holland; 9,978 shares, or 3.92 per
cent, elsewhere out of the United States, leaving as owned in
the United States only 34,515 shares, or 13.55 per cent.
The number of stockholders in the United States then was
338, and they owned less than one-seventh of the capital and
scarcely more than the number of shares which are now owned
by residents of the eleven states served by the railroad. There
was, at that time, practically no ownership of shares in any of
those states.
The number of individual proprietors is, however, much
larger than that of the registered stockholders, and the average
interest of each much smaller than as shown a.bove, owing to
trusts in the settlement of estates, partnerships, joint ownerships,
and the custom, so common, especially in England, of passing
certificates registered in the names of hankers from hand to hand
in settlement of transactions at the Stock Exchange.
Whether the inclusion of other railroads in the Illinois Cen-
tral system has lessened purely local competition, is somewhat
questionable. While I incline to think it has, the far more de-
structive general. competition of rival markets .and of rival rail-
roads has gone on without let or hindrance. In the Western
states there is no check on the huilding of new railroads, such
as there is in New York, Massachusetts and elsewhere. Hence
any Western company can at any time build into a territory
already well served by existing railroads. There is nothing in
the leasing or the acquiring of rival lines which amounts to a
guarantee against future and new competition of the most de-
structive kind. Our leasing of other railroads has not intensified
competitive conditions.
Of late I should say that the formation cf so-called trusts and
combinations has had no effect whatever upon rates. The present
managers of industrial trusts are too broad-minded, and know
the law too well, to hope to build themselves up in that way. The
very fact of their enjoying a practical monopoly in their own
line precludes the possibility of their profiting thereby.
So far as I know or have heard for a long time, there has been
no discrimination in favor of such combinations. It is true that
I was asked for something of the kind within a year, and promptly
refused to grant it. If such discrimination exists, it is due to
some radical difference in the circumstances, such as the large
merchant owning his cars or giving prompt dispatch to those
of the carrier, which the small merchant does not and cannot
do, or to his shipping by the trainload as against a carload. This
difference between wholesale and retail trade is recognized the
world over and is unavoidable. It seems to be inherent in nature.
Napoleon is credited with having said, "G-od fights on the side
of the heavy battalions," and, what is more to the purpose, the
planets revolve in their orbits in obedience to the attraction of
the greater mass of the sun. Struggle against it as we may, this
condition will continue to prevail in spite of 'TBulls against the
Comet." The thing is simply beyond human control. The feder-
al government recognizes it in the sale of stamps, and, to the
newspapers, in greatly lessened charges for postage.
Except in increasing the difference between the largest whole-
sale shipments and the smallest retail shipments of the same com-
modity, I think railroad consolidation exercises no influence for
or against the trust idea. There was a time when the trusts, or
564
certain of them, were believed to control certain railroads. Given
unlimited consolidation of railroads as their capital must ex-
ceed that of the industrial trusts there seems little to he feared.
On the contrarjr, as the rate making power becomes centered
in fewer hands, the men wielding it necessarily become more con-
servative and realize that the vastness of the interests committed
to their care requires them to stand for law and equal justice to
all. Kailroad property is in its nature so scattered as to require
the constant protection of the law, day and night, to such an ex-
tent as to make its managers and OAvners more dependent on just
government than are any others. This fact is now very generally
appreciated.
In thus considering certain questions which have come within
the administration of the Illinois Central Eailroad Company 1
express my personal views solely, and my statements are not in-
tended, and must not be taken, as binding the corporation which
I serve. All the powers of that corporation are, by law, vested in
its board of directors, and they have not been consulted in respect
to these statements, much less have they authorized me to make
them.
A recess was taken at 1 o'clock until 3 o'clock.
AFTERNOON SESSION, SEPTEMBER 16.
MEETING OF COMMITTEE ON RESOLUTIONS.
When it became known that it was the desire of William Jen-
nings Bryan to present resolutions to the committee, and had
requested that no report be made until he was given a hearing,
quite a change was wrought in the situation. Many who had
opposed reporting resolutions promptly advocated their introduc-
tion, and it looked at one time, Friday afternoon, as though the
New York and Nebraska delegations would be able to agree on the
substance of resolutions. Saturday morning Chairman Luce as-
sembled the committee, at the conclusion of Mr. Bryan's address
but, by this time, the idea spread that resolutions could not be
passed without party politics getting into the question and mar-
ring the good effects of the conference. Furthermore it was felt
565
that the adoption of resolutions would not enhance the influence
of the conference upon the public mind.
The members at noon, and after long debate, reaffirmed its
decision of the preceding day, recommending that no resolution
expressing the views of the convention on the trust question be
adopted. This conclusion was reached with a view of keeping
politics out of the conference, and in the interests of harmony.
After Chairman Luce had rapped for order Attorney-General
Gaither, of Maryland, presented an order giving all delegates the
privilege of submitting resolutions to the committee without be-
ing read or debated in the convention, with the understanding
that all such documents were to be printed in the official pro-
ceedings. J. C. Hanley spoke in support -of the suggestion.
Delegate Dowe, of New York, expressed the opinion that no reso-
lution should be passed at the conference. S. H. Greeley, of Chi-
cago, followed and asserted it would be impossible to frame a reso-
lution that would meet the approval of the entire body. He
thought the committee should abide by its original decision. Ed-
ward Rosewater, of Nebraska, said that if a resolution were to be
passed it should be intelligent and tangible. He did not want
the conference to make itself ridiculous by trying to express its
views in generalities. E. C. Crowe, of Missouri, objected to the
Gaither order. He thought it would serve no good purpose and
certainly would not accurately reflect the sentiments of the gath-
ering, for the reason that many delegates would not avail them-
selves of the opportunity to have resolutions published in the prq-
ceedings. Edward Keasbey, chairman of the sub-committee of
five, said he had talked with Mr. Bryan on the subject, and that
Mr. Bryan, after reflection, had withdrawn the resolution he had
prepared, and had advised that the conference take no action
along that line.
It was noticeable all through the contest over resolutions that
neither political nor trust lines were drawn. This is evident by
a glance over the following names of some of the delegates who
took pronounced positions.
FOR RESOLUTIONS. AGAINST RESOLUTIONS.
Bryan, Neb. Blair, N. H.
S? kra ' 5- Y> Slllith ' Tex.
Shaw, N. Y. Dill, N. J.
Kosewater, Neb. Weil, Pa.
Gaines, Tenn. Dovve, N. Y.
Jones, Ind. Lockwood, Pa.
Atkinson, W. Va. Clarke. Iowa.
Pmgree, Mich. Luce, Mich.
Thurber, N. Y. Collins. 111.
Potter, Pa. Jones, Wis.
Keasbey, N. J. Search, Pa.
Brown, Ark.
Crow, Mo.
, Foster, Ohio.
Chairman Howe called the conference to order at 3 o'clock
and appointed the following committee on finance and publica-
tion:
A. C. Bartlett, 111. EX-OFFICIO:
K. D. Sutherland, Neb. ^
Thomas M. Osborne, N. Y. rank 1m H Head 111.
William Dudley Foulke, Ind. Ral P h M - Lasle >'' I1L
T. B. Walker, Minn.
George E. Clark, of Iowa, submitted the following:
Eesolved, That all addresses prepared for delivery at this
meeting and crowded out for lack of opportunity may be filed
with the secretary, and thereby become a part of the official rec-
ords of the proceedings, and as such entitled to publication, sub-
ject only to the same revision as addresses actually delivered.
The resolution was adopted by unanimous vote.
The chair then announced that the final session would be do-
voted to an open debate consisting of five-minute talks, lie
called upon Gen. T. S. Smith, of Texas, who explained the work-
ings of the anti-trust law in his state.
T. S. SMITH.
Attorney-General of Texas.
Before I came to this conference I arrived at the conclusion
that in order to remedy the wrong and protect the right of the
people and the corporations, it was necessary to have not only
state legislation, but also national legislation along these lines.
I take the position. that no corporation can do business in an-
567
other state without the consent of that state." The Federal gov-
ernment cannot give a corporation the right to do business in a
sovereign state without the consent of that state. It is only by
comity between states that a corporation chartered in one state
can do business in another.
The courts have decided that in forming corporations, they
can only be formed by the association of individuals, and that
one corporation cannot be formed by another corporation. So far
as the Texas anti-trust law is concerned, we do not expect to con-
fiscate anybody's property. We say to you : "You may come to
Texas and transact any business, but it must be a legal business
and open to competition, and that restriction bears alike upon
individuals, partnership and corporations."
JAMES B. DILL.
North American Trust Company.
James B. Dill, of New York, an authority on the New Jersey
law and one of its f ramers, said in part :
In the major part of the sentiment expressed here, I, as a
corporation lawyer, agree with the speakers. I agree with what
has been said by the labor organizations, that that corporation
which fails to devote its earnings, first to the increase of wages, will
eventually go to pieces. I cannot agree with Mr. Cockran that
it makes not much difference how much you capitalize a cor-
poration, provided you make it public. A corporation that issues
a certificate of stock which says on the face of it that it represents
$100, \vhen these men know it does not represent $100, misrepre-
sents the facts and should not and will not succeed. It makes a
difference to the man who gets stock on that certificate, believing
he is getting $100 worth. One of the greatest evils of the day is
overcapitalization.
I agree with the proposition laid down by the honorable at-
torney-general of the state of Texas, and I say to you that New
Jersey has been as much misunderstood in Texas, as Texas has
been misunderstood in New Jersey. The secretary of state of
New Jersey is obliged to take and place on file any charter which
is properly presented, and it has been the abuse of the New Jersey
law, and not the use of it, which has brought New Jersey into dis-
repute.
In speaking of honest combinations for business, I want to
point out two dangers which are likely to arise : the first is over-
sea
capitalization, and in the second place concealment. If, instead
of providing for the punishment of trusts, after being organized,
you will provide for the punishment of the man that promotes
them, you will kill the eggs in the nest before they are hatched.
I would simply provide for the English statute in this country
that any article advertising the stock of a corporation, or any
prospectus issued in regard to the stock of a corporation, wherein
a sum of money is mentioned as the subscribed capital, shall truly
state the amount of money actually paid and subscribed as capital
of the corporation. I would pass the English law, which is that
'every holder of stock, and every person through whose hands it
may have passed, shall be deemed to hold that stock, subject to
the payment in full in cash, unless the stock is issued, together
with a contract showing all the conditions of the issue of that
stock, which shall be filed in every state where the company does
business. Then everybody would find out in regard to it. -
The effect of these meetings here, whatever resolutions are
passed to-day, I believe will check these dishonest combinations,
because it will show that men are still living who go about ready
to prick the bubbles of sham and fraud wherever they are found.
LAURENCE GRONLUND.
Socialist, Editorial Staff New York Journal. (Since deceased.)
We mean legitimate, sound trusts, not fraudulent con-
cerns, such, for instance, where smooth scoundrels sell to gullible
people millions worth of worthless common stock, which they
know will never produce a dividend. There are plenty of means
and of laws to take care of this class. The legitimate trusts are
eiiiRrfL associations of capital and to these, department stores
belong or unions of labor. We shall deal with both, though
it is the former alone that creates difficulties for us.
Let us at the start understand that it is impossible to crush
out either kind of trusts. The politicians who propose that
remedy are either supremely ignorant or downright demagogues.
In order to find out how to deal with trusts of capital, we i
understand their origin.
They are not the outcome of "prohibitive" or other tarifl
neither are they the products of railroad discriminations, thougl
they often are considerably assisted thereby. They are economic
necessities, due to our complex civilization. Our commercial am
industrial affairs have shown during the last hundred years an
ever accelerating tendency to larger schemes, more ela
569
ganization, more intricate machinery. Our vast iron and steel
industry comes down from the village blacksmith, our huge
shoe factories from the village cobbler, our textile industry from
the village hand-loom. At one time everyone worked for him-
self. Then came small, then large firms, followed by joint-stock
companies and corporations. Finally, during the last genera-
tion, trusts, more and more extensive and intricate organiza-
tions, having for purpose to limit or abolish competition, since
it was found to have become highly injurious and unprofitable.
Thus it cannot be too much emphasized that trusts are not
due to any casual cause, not to wrong-headedness, not to vicious
business principles, often even not to voluntary choice. A brewer
in England declared, "We are compelled to take over the other
breweries; we don't want to, but we are obliged to." It is an
irresistible tendency, of late appalling in its rapidity, to be
ascribed to increase of population, scientific discoveries and me-
chanical inventions.
Of course, it cannot be stopped. To try to crush the trusts
would be like the attempt by a dam to stop the mighty Mississippi.
The trusts will go on ; the various industries in each line will come
under a central management. They will in our coimtry de-
velop in all directions, till finally some time during the Twen-
tieth Century all considerable industries will be under the con-
trol of trusts, extending from the Atlantic to the Pacific. There
is absolutely no help for it.
Still we say, the trust is not at all a monster; it is a phenome-
non at which to look fearlessly, and to utilize for the public wel-
fare. For this purpose we must fully understand wherein the
dangers of the trust consist. It is generally supposed that the
only interest the public has is how the trust affects wages and
prices. We think this is a great error. We do not believe that
trusts as yet have seriously lowered wages or raised prices. They
surely need not do it. And we know that in many cases- they
have lowered prices and raised wages.
But there are two very serious dangers that threaten in the
future. Let us assume that the time has come when every con-
siderable industry has come under one head, one manager, whose
sway will extend from ocean to ocean. What powers will such
a chief not have,. what power especially for mischief! Then the
trust, indeed, will be capable of seriously affecting the p^^blic
welfare; then indeed it may lower wages and raise prices, if
it has a mind to. Can a democracy like ours stand such a state
of things? Can it tolerate in its midst a handful of such auto-
crats, whose aim is simply private greed, and who do not need
570
to care a particle for social need? Already we are now living
Again in every trust, the owners virtually abdicate all their
powers in favor of the manager. Hence, when all our industries
have become trusts, capital will have had its character completely
changed. Formerly capitalists performed a highly important
function, that of directing production; capital had a social charac-
ter, and was subject to noteworthy social obligations, which some-
times were splendidly discharged. But in the future our capital-
holders will become industrially and economically useless, first
superfluous, then harmful; they actually will become rudi-
mentary organs in the social organism, and capital-holding will
become a 'pure personal privilege, subject to no social obliga-
tion whatever. Can a democracy like ours stand this; will a
democracy stand it? No. Such a state of affairs will be simply
the last step but one.
Even before trusts arose, when we only had large enterprises
that controlled matters of vital interest to the people, the pub-
lic was forced to step in, in order merely to secure the rights
of consumers. Public control has again and again been asserted.
Grandmother always has had her way. So with still greater force
it will be in the future. The organization of trusts is admirable ;
it knocks into the heads of all with sledge-hammer blows the
patent truth that system is better than planlessness. The ma-
chinery of the trust is all ready to the hands of democracy to
public control. No one would think of socializing an industry
that was divided into a hundred thousand businesses. But this is
a national monopoly. That is why the trust movement is an
irreversible step along the path to universal co-operation.
This, we say, is the first answer to the question, what to do
with the trusts: Look forward to the future public ownership
and management of their enterprises, but let this change pro-
ceed slowly. However, prepare for it, make it the ideal of the
coming century, and treat the trusts accordingly.
The second thing to do, meanwhile, is to protect labor against
the trusts. That they in the future may raise prices arbitrarily
is bad enough, but that they arbitrarily may reduce wages is
much worse. Oh, if the trusts would believe that it is to their
advantage to include their employes in the benefits which they
achieve, if they would conclude to revive the ancient guilds on a
higher plane, then the future might be quite bright but they
are too selfish for that!
How, then, protect labor? For our laboring people to help
our demagogues in attempting to crush the trust would be sui-
cidal. They would be the first and only ones to feel the blows
of such an enterprise. Undoubtedly our trades unions are trusts.
Our work people generally do not know what they owe to trades
unions, especially what they owe to the old English trades union-
ists, who kept up their unions in spite of parliamentary terrors.
That they now enjoy higher wages and shorter hours is due to
the unions. Though strikes often are disastrous to the partici-
pants, there never was one, either won or lost, that did not benefit
the working people as a class.
It is well that work people are fast coming to look upon the
workman as positively immoral who holds aloof from his fellows
and refuses to enter the union of his trade. With the arrival
of the trust, their ideal has become an organization, controlling
the entire labor-force of the country, nothing less than a National
Syndicate of Labor. They are right. Unless the labor trusts
develop equally with trusts of capital, our civilization will soon
come to a halt.
But the work people cannot achieve this ideal now with- their
own unaided efforts still less when the trusts have gained their
giant strength. The State must help them, and a demand is
soon to be made on our politicians which they cannot resist.
Such a demand has in fact been made by the well-known anti-
socialist writer, William H. Mallock, to-wit: That the trades
unions be made an "estate of the realm" by being granted "a
privileged status-law." Our legislators must persuade every
workman, induce him by every practicable motive, to join his
union;, even to the extent of granting to the unions the privilege
of, in last resort, determining all labor questions thus making
the union the representatives of the men on an equal footing
with the haughtiest employer. To those who will be horrified
at this suggestion, we recommend the words of Thorold Eogers :
"1 would limit the franchise, parliamentary and local, to those
and those only who enter into the guild of labor." .
These unions, of course, must be organized in a thorough demo-
cratic fashion, so that every workman will have a vote that counts
as much as that of everyone else. Moreover, the State, as the
representative of the whole community, will rectify the many
serious blunders that trades unions in the past have com-
mitted, and which sometimes have made them absolutely anti-
social institutions, such as the limitation of apprentices and for-
bidding able workmen to do the best they can.
This is the way to protect adult labor. But we must also
protect our growing-up youths against the trusts both of capital
572
and labor. We must have a new education for our boys a truly
democratic education. Every phase of civilization has had its
appropriate education. A good education under the ancient
regime was different from a good education during the Middle
Ages, and that again very different from a good education for the
Twentieth Century. Our boys must be trained into being all-
round men, fit to take their places in a perfect democracy. Next,
our people now are being forced especially by the trusts to
take their places according to their capacity, as portions of a
great machinery. That is, we are fast becoming a nation of
specialists. Specialization evidently is the law that will govern
our future. No man will amount to anything unless he becomes
a specialist in something useful, and just by becoming such a
specialist will he become a valuable member of a perfect democ-
racy.
We must have such an education. Indeed, it has already been
started under the name of "The New Education." It will" make
our boys into capable specialists and all-round men. For that
purpose the State must have control of ten years of the lives of
our boys, during which first the principles of the kindergarten
and then the principles' of manual training should govern. Thus
the boys will be trained to take their places in the ranks of the
producers, and both the trusts of capital and of labor must be
made to submit.
Lastly, we come to the third thing we can do about the trusts.
While public control of what is now strictly private business
should be merely the ideal for the next century, and not be at-
tempted until its close, there is some business that should imme-
diately be entered upon. That is the so-called public utilities, such
as municipal ownership and management of waterworks, of course,
of street transportation in every form, of gas works, and electric
power works. These may not yet be trusts only large enterprises.
But in Brooklyn we find surface and elevated roads already
a trust, and in Manhattan they will soon be that. It would be
highly desirable, and the best thing for itself, if the new democ-
racy would in its next national platform incorporate a plank de-
manding municipal control. Nothing would so much convince
our people of the blessings of public control, and prove to them
that government can do business as well, and even better, tl
private parties, as such an object lesson.
But here we have still a suggestion to make.
State should have more to say than now it has in municipal <
terprises. For them to succeed, they must be undertaken, not
with a view of giving labor employment, but with the object
573
furnishing the best and cheapest water, light, and transportation.
This the State can effect better than the city. Hence the cry
of "local self-government" is wrong. Capitalists might just as
properly demand that the legislature shall grant the stockhold-
ers of a railroad "self-government free from State interference."
The city is a creation of the sovereign State, and when a charter
is granted it should safeguard State interests to the same ex-
tent that is supposed to be done in granting a charter for a rail-
road. We say that the State should exercise oversight and have
final control, simply because it at least is one step further re-
moved from local pressure, and hence will dare and be able to
do things that the local authorities will not dare even attempt.
Then there are public utilities that come under the jurisdic-
tion of the Nation which will furnish splendid opportunities for
curbing the trusts. We should have a National express system,
to which the late convention with Germany ought to give a great
impulse, a National telegraph, National banks of deposit (postal
savings banks) and National banks of loans from the funds thus
accumulated, and finally National control of railroads. We do
at present advocate National ownership and management of these
latter ; this might as yet be too big a mouthful to digest, but Na-
tional control of railroad fares and freight-rates this is per-
fectly practicable, and has been several times recommended to
Congress. It would with one stroke abolish the unjust dis-
crimination, both between localities and between shippers, which
the interstate commission has been unable to effect. If trusts
should ever dare to raise prices, such a National control of freight
rates will immediately bring them to their senses. It is per-
fectly practicable, we contend. Through a committee of Con-
gress it is just as easy to establish schedules of fares and freight
rates on all our railroads, and' to enforce them, as through the
committee on ways and means to establish schedules of duties
on imports and to enforce them, as is now done.
This is a practical way, and, we think, a far-seeing way to
utilize the trusts for the public welfare, while to attempt to crush
the trusts, we repeat, is simply the notion of the demagogues.
In conclusion, we beg those who want more information in
this direction to read an English anonymous book entitled, "The
Social Horizon," and this writer's last publication, "The New
Economy." \
574
CLEM STUDEBAKEK.
Manufacturer, South Bend, Ind.
Within certain reasonable limits the combination of agencies
lor the production of a given article decreases the cost of produc-
tion Such combinations enable the use of the latest improved'
machinery, and the adoption of general facilities to expedite the
progress of work usually impossible if the manufacture is carried
on with limited capital, or with small productive capacity. Fur-
ther, it is well known that managerial assistance usually costs little
more for a business of great magnitude than for one the output of
which is small. On the other hand, however, whenever a busi-
ness becomes so large that its oversight is impossible by one
executive head, then it is often the case that economies are less
likely to be successfully practiced. Such I imagine would be
the case if it were undertaken to operate plants widely separated
throughout the country. As to whether the decrease of cost of
production ought to be beneficial to society, or the reverse, I
think this answers itself in the asking. Morally considered, so-
ciety ought to be benefited by every honest and proper improve-
ment of conditions in the material world.
To what extent a decrease of the cost of production will profit
the consumer will depend largely on the necessity which con-
strains the purchaser to share with him his saving. If the com-
bination in question were such as to utterly preclude competi-
tion, the benefit which would accrue to the consumer by a saving
effected by the producer would quite possibly be inappreciable.
Most producers under such circumstances would be quite likely
to arrogate to themselves credit for the saving effected, and would
consider that a division of the benefits under such circumstances
would come under the head of philanthropy or benevolences
rather than matter of fact business.
I would regard a general combination of all of the manufac-
turing plants for the production of any given article of manufac-
ture as likely to be to some extent disadvantageous to the wage
earner. The operation of some factories would perhaps be dis-
continued in favor of others more eligibly situated, and to the
degree that concentration of forces would increase productive-
ness, there would be a correspondingly diminished demand for
laborers. But this, of course, happens whenever improved ma-
chinery is introduced, or whenever there is a readjustment of
production occasioned by a change in conditions affecting such ,
production.
I do not imagine that combination among industrial enter-
575
prises will very seriously affect middlemen. In some cases com-
mercial traveling men could be dispensed with, but the day when
the public can be conveniently supplied without the intervention
of the merchant, is a long ways off.
No true monopoly is possible in this country except that en-
joyed by virtue of a patent granted by the United States. If
those who undertake to inaugurate trusts had a monopoly of the
trust business there would be cause for alarm. But any one can
go into the trust or combination business who is able to find
others who will join him. Herein is the safety of society. Com-
binations of capital build railroads and decrease the cost of travel
and transportation. Some part of that saving they keep as profit,
but whenever they undertake to keep so much of it from the pub-
lic as to give them unusually large returns on their capital, a rival
road springs up, and down goes the cost to the consumer. Trusts
have undertaken to enfold producers so as to limit competition,
but in vain. No sooner have they gathered into the fold all in
sight than up springs another. And this will continue to be the
case so long as there are profits made which allure outside capital,
and outside capital is left free to take a hand in. Sugar refining,
the manufacture of tobacco, etc., are cases in point. Whenever
these great companies give evidence of making large profits, some
powerful rival comes into the field, and competition proceeds to
regulate prices on a lower plane.
Combination within reasonable lines is likely to be of benefit.
This is already evident in the fact that our products in iron and
steel are coming into large demand throughout the world, even in
England herself.
The best service which our legislators can render the country,
when considering the subject of our productive agencies, is to
insure enterprise and home capital a fair field and no favor. It is
folly to talk of restraining legitimate combinations. There is
scarce a corner grocery in the land that is not witness to a com-
bination of money and brains, a combination for the mutual
benefit of the combined. The whole country is built up of com-
binations. They exist alike in society, in government and in
business, and it is as futile and senseless to talk about restrictions
in this particular as it would be to undertake to make Niagara
flow up stream into Lake Erie.
As manufacturers we feel no concern about combinations of
capital in our line of business. It is the brain power of a competi-
tor, rather than his capital in money, which makes him formid-
able in the struggle.
576
S. A. MARTIN.
President Wilson College.
The determining question in all of life's activities is, will it
pay? Will the outcome of the proposed enterprise compensate
for the capital, the time and labor and whatever else must be
invested, risked, or used in the work? Is there the prospect of a
satisfactory quid pro quo? By this the enterprises of the business
world are judged.
I am not here to criticise this rule of business. I do not ques-
tion its validity if properly applied. But I venture to suggest that
commercial and industrial methods cannot be wisely judged by
the results which' may appear only on the ledger. Still less can
they be judged by such reports as cover only a year, or even
twenty years.
Many of the forces which make for public weal or public woe
require generations to effect their purposes. Some influences of
sturdiest growth and richest fruitage ripen only after centuries
of silent growth. The development of national character, the
formation of those attributes which make a people great, is not
the work of years or decades, but of generations.
In estimating the effects of such a movement as this which
we are now discussing we do but belittle and obscure the subject
when we speak of it as though it could be stated in terms of dol-
lars and cents, or in any results of mere material prosperity. The
prevalence of an industrial system dominated by great aggrega-
tions of capital and great federations of labor might result in
such prosperity of business "as the world has never seen, and yet
prove an immeasurable curse. It certainly will do so, if it in
any considerable degree debauch the conscience or degrade our
manhood.
"Ill fares the state, to hastening ills a prey.
Where wealth accumulates and men decay. '
Now it is not fair to presume that such will be the tendency
of such a system ; but it is important to inquire with great care
what effect it will have on the average manhood of our people.
It is strongly urged that on the whole the influence of such
combinations, such fuller organization of our industries, will he
favorable to the development of a higher, stronger, purer type of
character that the average manhood will be elevated. Tn sup-
port of this we have been offered some considerations of impor-
tance, and we would gladly be convinced. But for myself I can-
not without most serious 'apprehension see the small proprietor
577
eliminated,, the freedom of his will abridged, his conscience hand-
icapped, and the sphere of his thought and actions circumscribed
to very narrow limits. I cannot see in all that has been offered,
nor does the range of my imagination find any compensation ade-
quate for the surrender of so large a portion of the exercises which
in all the ages we have depended on to make men manly.
We cannot forget that in all our history, the small proprietor,
the independent workman, toiling with his own tools in his own
shop, or driving his own team to till the farm he owns that these
men have been and are to-day the ultimate dependence of our
civilization. In every social revolution in historic times this class
has been the bulwark of the state, the conservator of justice, the
savior of social order. Can we with safety eliminate this class,
or even diminish its number or its power?
It is urged by some that trusts will not drive out the small
proprietor, that there will always be a field for competition, but
we doubt it. Even though our laws be strictly just, and our
courts maintain their ermine spotless, which I trust they will
do, though it must be in face of greater temptation than ever
before. Still, the natural advantage of great combinations of
wealth and influence is too great to be rivaled in an open field.
The earthen pot may sail with the brazen pot on an open sea and
with equal winds, but when the storm dashes them together, it
is easy to predict which will go to the bottom.
But my chief concern is not for his business, but his char-
acter. Can the small proprietor lose his independence in business
and not lose his integrity of character? It certainly is not impos-
sible, but it certainly is extremely difficult.
Few men, if any, feel the same sense of responsibility for acts
committed as an agent of a corporation as they feel for acts which
they alone direct. Clerks and officers will share in fraud and
rank injustice which they would not stand sponsor for before the
world, and little at a time men are seduced from their high sense
of honor and integrity because each small increment in the down-
ward course is laid in the balance against the loss of their position.
Each point seems too small to fight for, but as one after an-
other is given up, the conscience is corrupted and the manhood
of the man enslaved.
What I have said is but an illustration of the evils which I
fear from this intense and universal tendency to greater and still
greater aggregation, combination and insatiate eagerness for or-
ganization. Yet I do not stand here to oppose it. I do not think
it any more worth while to oppose the evolution of our business
life by argument than it would be to rail at the precession of the
578
equinoxes or quarrel with the seasons of the year The harm
if harm it be is -done; charters of the most lihera nature ha^e
exTt Tkno y f the SC re ' aGd We mUSt face Conditions whic-h
exist I know of no power on earth that can prevent men from
maTkJt OT -H 8 T ti J r ml T ng t0 get the best P rices tSt the
Ew n Tl , rd ! r ,T h , at they have to sell > whether that ^
labor or the product of labor.
The state can withdraw the protection of the tariff, and the
state will no douht do so. The state can readjust taxation, so
that great corporations shall have their fair share of the public
burdens, which I think they do not now. But trusts are here and
here to stay as the result of the inevitable laws of industrial
development.
_ For us the duty is to recognize the facts, face the conditions
of the age we live in; meet the evils of the present hour as they
rise, protect the individual from the greed of wealth and the
selfishness of labor, to educate the conscience, and devise new
channels for individual enterprise. Thus with the unfaltering
faith in the fair-minded honesty of the American people go on
to occupy the fields of opportunity which open so abundantly
before us in this age and country.
WILLIAM DUDLEY FOIILKE.
William Dudley Foulke took issue with some of the remarks
made by Col. Bryan, saying hi part :
It seems to me that the plan suggested by Mr. Bryan for the
annihilation of trusts will be found entirely inadequate for th.it
purpose. He proposes that no corporation organized in one stale
shall be allowed to do business in any other state until a license
shall be first secured, and that this license shall only be given
upon proof that the corporation is not a monopoly, and is not
attempting to become a monopoly.
Very few corporations will be prevented from doing business
by such a provision. Every company which now exists can point
to some competitor. Even the Sugar Trust, which once con-
trolled 98 per cent of the business in that line of industry had
2 per cent of competition. The other trusts have a far grcnti r
proportion. Mr. Bryan himself said that we had at present no
illustration of a complete monopoly. The corporations then can
easily make the proof that they have no monopoly, and it cer-
tainly will not be hard for their officers to swear that they are
579
not attempting to establish monopolies. It will be very difficult,
on the other hand, to show that these statements are untrue.
But even if a license should be refused, even if all the states
should prohibit foreign corporations from doing business within
their borders, this would not "annihilate" the trusts. They
might sell their goods to a middle-man, who, if he should become
the owner of property lawfully manufactured in his own state,
could not under our federal constitution be excluded from selling
it in other states. Even if you were to provide that a monopoly
should not recover the price of its goods, still you could not an-
nihilate the trusts. It would be important for buyers to preserve
their credit, and they would hardly dare to take advantage of such
a law. Or if it were found necessary, the trusts would sell for
cash. So long as they could sell lower than any one else, they
could still keep their present advantages.
The states have been passing laws for the abolition of trusts
for more than ten years. As early as 1894 twenty-two states had
enacted statutes for this purpose, yet all these laws as well as the
federal act were found to be totally ineffective. The Supreme
Court of the United States in the Knight case the case of the
Sugar Trust decided in regard to the Sherman anti-trust law
that it applied only to the agencies controlling transportation,
and not to manufacturing industries at all, even though the prod-
ucts of these industries were sold. in many states. The Court
said that commerce merety "served manufacture to fulfill its
functions," and indicated that the Constitution had given Con-
gress no power over manufacturing trusts, and that the Sherman
act had not prohibited them. To do this, therefore, an amend-
ment to the Constitution will be required.
Now an amendment to the Constitution has to be adopted by
two-thirds of both houses of Congress and ratified by three-
fourths of all the states. It would be very hard to secure such
an amendment. And if we are to have federal legislation and
federal courts controlling our manufacturing industries, indus-
tries which now affect nearly all the agencies by which we live
and move and have our being, it is evident that state lines will
become very shadowy in the presence of these great industrial
forces of a consolidated republic.
My friends, are we ready for that change ?
Judge Harlan pointed out in his dissenting opinion in the
Knight case the necessity for federal control if the trusts were
to be overthrown. "If one great combination," he asked, "should
control the sugar industry, another the flour mills, another the
elevator business, another the cotton business, and so on, what
580
power would be adequate to deal with such organizations except
the federal power?"
But it seems to me that even if all corporations could be
destroyed (which I think is impossible) we could not even then
abolish the trusts. If the Standard Oil Company were dissolved
the men who control it might with their vast capital organize a
partnership to carry on the same business in the same way, or
if that would involve too great a risk, or, if partnerships, too,
should be made illegal, what is there to prevent the stockholders
of the great companies from loaning the value of their stock to
some manager, agreeing to receive in lieu of interest a propor-
tionate part of the profits of the joint adventure? If you abolish
one form of combination another will take its place. When you
propose to annihilate trusts you are proposing to destroy the ten-
dency of men to unite and organize their business, and it is just
as impossible to destroy that as it is to annihilate the law of
gravitation.
Mr. Gaines : Does the speaker desire to amend the Constitu-
tion and give the federal government exclusive power? Or does
he want the states to have the power?
Mr. Foulke: I believe the power to annihilate the trusts
cannot be given at all. When it comes to regulation, let the
federal government exercise the powers it has and let the state
governments exercise the powers they have to-day. Although
we cannot annihilate the trusts, we may regulate and restrain
their injurious influence. You cannot stop the Mississippi by a
dam, but you may conduct it into safer and more convenient
channels.
Something may be done by tariff legislation, and I believe
that many even of those who are in favor of the protective system
would be willing to see our tariff laws modified so as to prevent
any industry which has thereby acquired a monopoly from using
that monopoly for the purpose of exacting exorbitant prices.
But the greater part of the trusts do not owe their existence
to the tariff. The Standard Oil Company did not acquire its
power through legislation of this kind. Trusts exist even in free
trade England, and if you change the tariff laws you will hardh
do more than scratch the surface of the great question involved
in these vast combinations.
The law may do something also to prevent unjust discrimina-
tions. I think that would be wise not only in respect to railroad
companies, but in respect to all corporations.
Mr. Bryan spoke of the evils of over-capitalization. I agree
that that ought to be prevented if possible, but even here we
581
shall find difficulties. A government expert might be required
to make the valuations, not only of the actual property of each
company, but also of its good will. Often the good will of a
business costs a great deal, and has a substantial value apart from
tangible property. For instance, the circulation of a newspaper
is perhaps the greater part of its capital. Mr. Bryan said that a
dry goods merchant could not inflate the value of his goods. Yet
there are many dry goods merchants who would not sell their
business for a good deal more than their stock is worth. If you
want to prevent over-capitalization you must have all these things
estimated periodically by some competent and disinterested au-
thority. That will be no easy task.
The requirement of publicity will do a great deal. In this
respect the provisions of the national banking act point out the
way for us to follow. But the information called for ought to be
a great deal fuller than that now required of national banks.
Periodical statements and examinations should be made not only
of stock, salaries, property, dividends, wages, prices of materials
bought and goods sold, but of all other matters which tend to
throw light upon the condition of the corporation and its man-
agement of the particular industry involved. This publicity will
restrain many abuses, and it will throw light upon the question
as to what further legislation is needed.
The trusts cannot be annihilated, but as to their regulation, I
have no doubt that our people will at last find remedies which
shall be sufficient to counteract many of the injurious conse-
quences of monopoly.
WILLIAM JENNINGS BEY AN.
There were loud calls upon Col. Bryan to respond to Mr.
Foulke, and he did so, saying :
I would hot occupy the time again but for the fact that the
gentleman from Indiana (Mr. Foulke) has referred to a plan
which I suggested, and I am afraid that he does not fully under-
stand it.
Just a word in regard to the plan. I want to repeat that it
was not presented as the only plan, nor is it necessarily the best
plan. It is simply a plan. I was sorry that, when the gentleman
got through destroying this plan, he did not suggest a better one.
Political agnosticism is of no great benefit to the public. Not to
582
know what to do is often a convenient position to occupy but it
contributes very little to the settlement of a question
_ My plan is this: First, that the state has, or should have, the
right to create whatever private corporations the people of the
state desire.
Second, that the state has, or should have, the right to impose
such limitations upon an outside corporation as the people of the
state may think necessary for their own protection. That pro-
tects the right of the people of the state to say, first, what cor-
porations they shall organize in their state, and second, what
corporations they shall permit to come from other states to do
business in their state.
Third, that the federal government has, or should have, the
right to impose such restrictions as Congress may think neces-
sary upon any corporation which does business outside of the
state in which it is organized.
In other words, I would preserve to the people of the state
all the rights that they now have, and at the same time have
Congress exercise a concurrent remedy to supplement the state
remedy. When the federal government licenses a corporation to
do business outside of the state in which it was organized, it
merely permits it to do business in any state, under the. condi-
tions imposed by that state, in addition to the conditions imposed
by the federal government. I would not take away from the
people of the state, any right now existing, but I would have the
federal government and the state government exercise the powers
that may be necessary to annihilate every monopoly.
I do not agree with the gentleman that you cannot annihilate
a monopoly. I believe it is possible to do so. While the gen lie-
man was speaking I could not help thinking of the lines of a
song. While he was destroying every remedy suggested, and yet
presenting no other, I thought of the lines:
"Plunged in a gulf of deep despair,
Ye wretched sinners lie."
Now, it is a great deal easier to find fault with a remedy pro-
posed than to propose a remedy which is faultless. Macaulay
I think he is the author of the remark has said that it' any
money was to be made by disputing the law of gravitation, able
men could he found to write articles against the truth of that
law. I have no doubt that any remedy that is proposed will be
assaulted. But those who believe that the trusts must go u
accept the best remedy they can find, try it and then accept a
583
better one, if a better one is proposed, and keep on trying until
the people are protected.
Now, this is a conference. We have not met here to destroy
the trusts. Every law for the annihilation of the trusts must be
secured through political action. We are here to discuss these
questions. We are here to contribute what we can and to hear
what others have to say. We are here to consider the various
remedies proposed. I am not sure the remedy which I propose
is unconstitutional. I am not sure that the Constitution would
prohibit such an act of Congress as I suggest. Suppose that Con-
gress should say that whenever a corporation wants to do business
outside of the state it must apply to and receive from some body,
created by Congress for the purpose, a license to do business.
Suppose the law should provide three conditions upon which the
license could be issued.
1. That the evidence should show that there is no water in
the stock.
2. That the evidence should show that the corporation has
not attempted in the past, and is not now attempting, to monopo-
lize any branch of industry or any article of merchandise ; and
3. Providing for that publicity which everybody has spoken
of and about which everybody agrees.
Suppose that is done. Who is here to say that such a law
would be unconstitutional? The Supreme Court in deciding the
Knight case, did not say that a broader law than the present one
would be unconstitutional. It is true there are things in the
decision which suggest that, but until that question is presented
to the court, you cannot say that the court has passed upon it.
It is also true that Justice Harlan, in his dissenting opinion,
assumed that a broader law would be held unconstitutional, but
no one has a right to say that if such a law as I suggest were
passed and reviewed by the Supreme Court, it would be held
unconstitutional. But, suppose the law is p'assed and held un-
constitutional ; then we can amend the Constitution.
The gentleman suggests that it is a difficult thing to get two-
thirds of both houses and three-fourths of the states to favor
such an amendment. That is true; it is a .difficult thing, but if
the people want to destroy the trusts they can control two-thirds
of both houses and three-fourths of the states. But what is the
alternative? Sit down and do nothing? Allow them to trample
upon you, ride rough-shod over you, and then thank God that
you still have some life left? The people are told to be con-
tented, but I think contentment may be carried too far.
I heard of a man once who had been taught to be contented
584
with his lot, and finally became very poor and traded off his coat
for a loaf of bread. Before he had a chance to eat the bread
a dog came along and snatched it away from him. He felt a little
indignant at first, but finally that feeling of contentment came
back to him, and as he watched the dog turn around a corner in
the road carrying the bread away, he said: "Well, thank God,
I still have my appetite left/'
Now, there are some people who seem to think we ought to be
satisfied with anything/ My friends, the American people are
entitled to the best that there is. The American people are
entitled to the best system on every subject. I believe when these
questions are presented to the American people they will select
and secure the best system. I do not believe it necessary for
us to sit down quietly and permit a great aggregation of wealth
to strangle every competitor. I do not believe that it is in ac-
cordance with our dignity as a people, or in accordance with the
rights of the people to say, that because a great corporation is
organized, therefore, it should be permitted to go into the field
of a rival, undersell it until it bankrupts it, raising the money by
higher prices somewhere else. I don't think it necessary for us
to do that.
I have only suggested a plan. It may not be the best plan.
If you have anything better, propose it. If there is any amend-
ment that you can think of that will improve it, suggest it. 1
am anxious to apply a remedy.
Let me suggest one other thing that I believe will be a step
in the right direction. The great trouble lias been that, while
our platforms denounce corporations, corporations control the
elections and place the men who are elected to enforce the law
under obligations to them.
Let me propose a remedy not a remedy, but a step m t
right direction. Let the laws, state and national, make it a penal
offense for any corporation to contribute to the campaign fund
of any political party. Nebraska has such a law, passed two years
ago. Tennessee has such a law, passed two years ago Such
measure was introduced in the state of New York, but so far
has not become a law.
You remember the testimony taken before a senate com-
mittee a few years ago, when the head of the sugar trust es
that the sugar trust made it its business to contribute to c, in -
paign funds and when asked to which one it contributed, replied
that it depended upon circumstances. n tttq? was
"To which fund do you contribute in Massachusetts? via.
asked "To the Eepublican fund." "To which fund in New
York?" "To the Democratic fund." "To which fund in New
Jersey?" and the man replied, "Well, I will have to look at the
Looks, that is a doubtful state."
Now, that is almost a literal reproduction of the testimony
of one great corporation on the subject of campaign contribution.
I don't mean to say that that remedy will be a complete one, but
I believe that when you prevent a corporation from contributing
to campaign funds you will make it easier to secure remedial
legislation, because some corporations are compelled to con-
tribute; they are blackmailed into contributions, and such a law
would protect a corporation that did not want to contribute, and
also prevent a corporation from contributing that did want to
contribute.
If the people are in earnest they can destroy monopoly, and
you never can do anything in this country until the people are in
earnest. When the American people understand what the mo-
nopoly question means, I believe there will be no power, political,
financial or otherwise, to prevent the people from taking pos-
session of every branch of government, from president to the
supreme court, and making the government responsive to the
people's will.
As Col. Bryan finished Mr. Cockran was called for.
W. BOURKE COCKRAN.
Just one moment while I express my complete concurrence in
much that Mr. Bryan has said, and my great satisfaction that by
taking the platform he has largely helped restore this debate to its
natural limits.
I agree with Mr. Bryan, that if there be an oppresssive monop-
oly in existence it should be suppressed, whatever may be the
measures necessary to overthrow it. No constitutional limitation,
no abstract theory of government, no mere human device, can de-
prive this people of the power to redress a wrong, when the exist-
ence of that wrong is clearly established.
The first question to which I think the attention of this con-
ference should be directed is whether an oppressive monopoly
exists, and if so, where it is. Before undertaking to discuss rem-
edies we should make sure that evils exist. If their existence be
established, the first step toward their redress is to define them in
terms which everybody can understand. To call an industrial or-
ganization a combine a hydra-headed monster or even an
octopus does not cast any light upon what it is, or illumine my
pathway m attempting to deal with it.
1 said yesterday that 1 have been suffering through every
portion of this discussion from that dangerous intoxication of
phrases winch seems sufficient to maintain magnificent periods,
but leaves us when all is over in such a state of mental bewilder-
ment that we don't quite know what we have been talking about.
I can understand how these phrases often produce great effect.
Nothing frightens people so much as incomprehensible noises.
Let an unaccountable noise be heard here now, and in a second
we would all be trying to escape by the windows. Men may be put
to intellectual as well as physical flight by the terrifying influences
of sound. If, however, we are to succeed in making any recom-
mendation of the slightest value to our fellow citizens we must at
the outset compose our nerves and endeavor by the use of plain
language to ascertain the precise nature of our industrial con-
dition. Are we prosperous, or are we suffering? Is anybody in-
jured, and by whom? Has this octopus of which we hear so much
taken possession of anybody or anything? On whom or on what
is it preying? Where is its lair?
To a very great extent these questions have been answered
in the course of these proceedings. Kepresentatives of labor or-
ganizations have told us from this platform that wages are higher
than ever before. Certainly, these laborers do not appear to suf-
fer from any form of oppression. But when we are about to ex-
press gratification at these comforting tidings, we are warned
in solemn but mystical language that we are seeking to "place
the dollar above the man." - Now, what in the name of common
sense can be the function of the dollar except to improve the
condition of the man? Again, when we seek to ascertain the ef-
fect of corporate organizations on production, that is to say. on
prosperity, we are told that a "God-made man" is one tiling, and
a "man-made man" is another; that the "God-made man" pos-
sesses in large degree the attributes of divinity, while the '''man-
made man" seems to have escaped from his creator, and to have
developed habits of depravity during the separation. If this
statement embodied a profound truth I am at a loss to understand
what light it could throw on the question before us. We are dis-
cussing the effects, not the sources of corporate existence. Rut
as matter of fact, is there such a thing as a "God-made man" in
the world? There is, but he is scarce and rapidly growing
scarcer. Why, the "God-made man" is the original savage.
Do you suppose that the oration delivered by Mr. Bryan tins
morning, or the rhetoric with which he moves multitudes to wild
587
enthusiasm in every part of this country, could be evolved from
the natural resources of man? The education which fits him for
the platform, the books which he has read, the very clothes that
he wears, have all been contributed to him by other men. He is,
himself, at once a divine creation and a human development. In
his natural abilities and disposition he is a "God-made man" and
a credit to his creator; in his acquirements and in his extraordin-
ary influence he is, thank heaven, a splendid type of the "man-
made man."
I listened to my friend from Indiana with great interest while
he advanced constitutional objections to remedies suggested by
Mr. Bryan for what both appeared to regard as some evil or other
in our industrial system. I wondered what the evil was of
which they complained, and I had hoped that he would make it
clear, but I am wondering yet. If there be an evil, Mr. Bryan's
proposition that it must be suppressed through the Constitution,
or in spite of it, is unanswerable. But, I repeat, what is the evil
of which gentlemen here complain? The chief cause of alarm
seems to be fear that competition will be stifled, yet the natural,
nay, the inevitable result of competition, is the object of their
most vehement denunciations. I confess I am at a loss to under-
stand the mental processes which lead men to laud competition
and yet to condemn the fruit which competition must always
bear. Do you want competition, or do you not?
A Voice : Yes, we want competition.
Yes, you want competition. There is a very frank man, who,
I believe, agrees in the main with the proposition of Mr. Bryan.
He wants competition. Can you have competition without com-
petitors? If there be competition must not somebody succeed in
it? If one competitor far excells all others, will not that excel-
lence constitute a monopoly? Will you suppress competition
when it develops unapproachable merit? Will you place limits
upon excellency?
A Voice: We object to the railroads being used for the
benefit of one set of fellows to the detriment of another. That
is a monopoly.
Mr. Cockran : I agree with you there. I would invoke all the
power of government to prevent that abuse and to suppress any
monopoly built on it or on any form of government favor. But
for the same reason that I would suppress the monopoly built on
favor, I would protect the monopoly created by excellence. There
is no way to suppress a monopoly arising from conspicuous merit
except by the suppression of merit. If the producer of the best
commodity may not dominate the market for that particular ar-
53S
tide, neither should the possessor of particular ability in anv
other department of human endeavor. Must we place restrictions
on capacity in law and medicine, so as to place the capable and
the incapable on a common level? Must we prohibit the com-
petent lawyer from being more successful in his advocacy than
his incompetent brother? Must we prevent the experienced
physician from being more efficient in checking disease and re-
lieving pain than the beginner who has just hung out his shingle?
Mr. Bryan's position, as he states it, is that monopoly in pri-
vate hands is always oppressive. Instead of distinguishing be-
tween corporations which dominate the market by excellence and
those dominating -it by favor, he appears to distinguish between
those which are successful and those which are not.
The concern which has never been able to extend its trade be-
yond the limits of one locality he would not molest, while, as I
understand it, his plan would practically exclude by a system of
federal licenses the most prosperous industries from inter-state
commerce, merely because they have succeeded in the field of
competition whether that success was due to merit or favor.
This would be ruinous to them, but it would also prevent the vast
body of consumers from enjoying the most efficient service and
the cheapest goods. But if those who succeerl in the field of indus-
trial competition are to be punished by the exclusion of their
products from other states, similar restrictions should be imposed
on those who succeed in the field of intellectual competition. The
most successfiil lawyer, physician or orator, should, so to speak, be
localized prevented from invading other states with his superior
abilities, except under oppressive conditions. Tf successful law-
yers are to be penalized. I know of one or two mvself, whom T
would be glad to see excluded from Washington and the Supreme
Court of the United States. But it is hardly possible that Con-
gress could be induced to pass a general law prohibiting excellence
in all departments of human endeavor. Mr. Bryan's suggestion.
like all other radical propositions, if it were ever brought within
the domain of practical politics, would most likelv result in a
compromise. Congress might decide to discriminate against the
successful in some one competition, but not in all. Its selec-
tion for repressive discrimination would very probably be the
most successful orator, for the majoritv of the members would
like to be his competitors, and thev might be crlnd to embrace an
effective plan for excluding from their districts whomsoever had
proved himself a superior in the art.
A Voice: Do you contend that all the dominating industrial
589
forces of to-day have secured that superiority from fair com-
petition?
Mr. Cockran : No. sir. As I said last night at some length,
perhaps at such length as to make it obscure, some industries
dominate the market through the merit of their products estab-
lished by free competition, while others control it with products
of inferior merit through government favor. Any industry main-
taining a domination or monopoly of the market by the aid of
government, direct or indirect, whether extended through favors
granted by corporations exercising public franchises or through
tariff laws, is necessarily an oppressive monopoly, because if it
could flourish beyond all others through the excellency of its
service, it would not need government favor and would not
accept it.
For the same reason that free competition leads to the dom-
ination of the best, restricted competition leads to the domination
of the baser, if not of the basest.
A Voice: Do you carry your principles of competition to the
competition of workingmen for a job? Do you carry that com-
petition that principle right down to that basis?
Mr. Cockran : Yes, sir. The effect of free competition among
laborers is to secure highest wages and steadiest employment for
the best. You surely would not profor to see the inferior work-
man preferred to the superior and one or the other must have
the preference.
A Voice : I would like to ask you also, will you kindly repeat
while you have the platform what you said last night in regard to
the relationship of the employer and employee?
Mr. Cockran : If you can stand it, I might try. But if the
statement was not clear last night to repeat it now would hardly
be profitable. I will, however, refer to it before I leave the plat-
form.
"We seem to have drifted into an atmosphere of bewildering
vagueness concerning what is called the evil of monopoly. I
repeat if there be an evil pressing on the necks of people, what-
ever its source, I am ready to enlist Tinder any banner to suppress
it. If the Constitution stand in the wav of redressing it, then I
say let us smash the Constitution and from its fragments let us
fashion weapons for the overthrow of the oppressor. If corporate
organization bo an evil thing, if you can show me an evil flowing
out of it and inseparable from it, I would not hesitate a moment
to adopt Mr. Bryan's remedy. But when it is admitted, as Mr.
Bryan admitted this morning, that these evils of monopoly have
not yet become apparent, that they are evils anticipated, not
590
siiffered, why, then, I say to him or to anybody who agrees with
him, you are simply exciting yourself over a fanciful piHure <>f
your own creation. Your excessive affection for your fellows \\>\<
conjured up a host of evils existing- only in your own brain. You
are constituting yourself a knight errant of political economy,
endangering the peace and prosperity of men by well-meant but
foolish attempts to redress imaginary wrongs, not, it is true,
like Don Quixote tilting against windmills, but attempting to
enlist the windmills on your side.
The change which has come over this world within the lasl
ten years is the great phenomenon of civilization. A dozen vears
ago none but the largest cities contained public parks. The pleas-
ure grounds laid out at the public expense, and the drives which
led to them, were fully available only to those who owned their
own carriages. To-day every town of considerable size possesses
its place of recreation, while every mechanic and laborer can use
the drivewavs on a bicycle of his own. The journey to and from
the place of labor which formerly the laborer made every day at
a snail's pace in wretched street cars, with spluttering oil lamps,
drawn by miserable horses or mules, is made to-day in rapid
comfortable vehicles, lighted and moved by electricity. Every
workman is better housed, earns higher wages, eats more abun-
dant and more wholesome food, reads more books r.nd better
books than ever before in the history of the race. Everywhere
we find the masses of the people entering into the possession of
their own, showing by the ruddier flush of health on their
cheeks and the increased efficiency of their arms that Cod
Almighty is guiding the race forward and upward. that the
height which man has reached is not a dizzy eminence from which
he will fall back to disaster, but solid ground from which he will
rise to still wider prosperity.
When we realize that this is an age of marvelous improvement.
that the conditions of men are growing better and better every
day, we ought to hesitate a while before we change the industrial
system evolved from experience, for fanciful experiments sug-
gested by exuberant rhetoric.
Mr. Morgan has called mv attention to the relationship be-
tween employer and employee, and T will sny one word about it
before I leave the platform. Tt is a grievous disappointment to
me that this conference which has wasted much time over what
1 cannot help calling fanciful conditions conditions about which
we are not agreed has almost completely ignored the prayed
peril to civilization, the most difliculf question which ch
man must solve.
While we have been discussing shadowy evils and impalpable
dangers, denouncing "corporate greed" and hurling defiance at the
"octopus/' we have paid little or no attention to these industrial
disturbances which at recurring intervals threaten to arrest and
paralyze industry. We may differ about the operations of trusts,
we may deny their existence, but no man can be indifferent to the
strike by which the convenience of thousands is invaded, the wel-
fare of hundreds of thousands imperiled, the peace of whole com-
munities disturbed, citizens ridden down and beaten in the streets
who are at least the equals in civic virtue of the officers who club
them.
A Voice : Is it not possible for the community as a whole to
take possession of the machinery of government, and through
that, the machinery of production and distribution, and taking
possession of that machinery of production and distribution, use
it to distribute the product among the men who produce, and
them alone?
Mr. Cockran : My answer to that is this : it might be possible,
but it would be highly imprudent. It may be that we are ap-
proaching a condition of socialism, but I don't think we are ready
for it yet. As I said yesterday, I am never frightened by a word.
If socialism meant a greater abundance of commodities I would
be the first to welcome it. I believe, however, it would neither
swell the total volume of production nor increase the laborer's
share of it. If the state took into its own control the whole busi-
ness of production and distribution, I do not believe that the
laborer would get a larger share of the product than he enjoys to-
day, or, in other words, that his wages would be higher. Under
our existing industrial system nearly the whole value of every
commodity is distributed among the laborers who produce it.
The gentleman who has interrupted me evidently assumes that
the difference between the value of the wages paid to the laborer
who finishes" an article and the whole value of that article repre-
sents the profit of his employer, but this is a grievous error.
When an article is finally placed on the market for consumption,
the price which it brings must repay not merely the laborer who
finished it, but every person who contributed to its production.
If this chair be worth five dollars and the wages of the laborer
who finished it be one dollar, the difference does not go to the
employer. From that fund of four dollars must be paid every
man who has contributed to the chair, at any stage of its manu-
facture, from the moment when the axe was first swung against
the root of the tree to the moment when the finished article was
delivered to the purchaser. In fact, the proceeds of that chair
592
is divided among laborers all over the world, the share of each
being fixed by the proportion which his labor bears to the total
labor bestowed upon it.
If the state replaced the private capitalist in the task of or-
ganizing or employing labor, the cost of discharging that duty
would be deducted, as it is now, from the total value of the prod-
ucts, and I venture to say that the sum charged for that purpose
w.ould be more than the present profit of capital. Indeed, the
distinction between capital and labor in my judgment is largely
fanciful. Capital is but stored up labor. A man with his naked
hands can labor, but not effectively. With his fingers he could
turn over a few square feet of earth in a day ; with a plow he could
turn over several acres in the same period. A plow is capital.
The tools by which the making of that chair was facilitated,
the warehouse in which it was offered for sale, and the wagon in
which it was delivered, are all capital. They arc the products
of labor expended in other days. The function of capital in
production is to reinforce the efficiency of this day's labor by the
labor of other days, another instance of the close interdepend-
ence of men.
You ask me what are the functions of labor unions if the rate
of wages be fixed by immutable laws. I answer that if they can-
not change the relations between employer and employee, they
-can perform a better function. They can promote an enlightened
conception of what these relations are. When employers and
employees both realize that the rate of wages is regulated by fixed
laws, that it cannot be more and it cannot be less than the value
of the product, there will be'no room for disputes, misunderstand-
ings, or disturbances. That there is no inherent or insuperable
difficulty in distributing the fruits of production is shown by the
fact that strikes are not universal in the same fields of labor. It
is no uncommon spectacle to see one great railway system par-
alyzed in the throes of a deadly conflict, its service suspended,
its property deteriorating, its very existence imperiled,
while in the same city another railway system, where no higher
wages are paid and no longer hours of labor exacted, is in the en-
joyment of industrial peace and in the full tide of prosperity.
The laws governing both systems being the same, the difference
in their conditions must spring from a radical difference in the
characters of those charged with their administration.
I believe that as employers realize they are but captains of in-
dustry directing the labor of others, so as to make it more fruitful
ihey will encourage the formation of trades unions among then-
employees as a means of simplifying intercourse between them.
590
Employers and employees together cannot change the laws
that govern their relationship, but they can aid each other to dis-
cover what these laws are. They can save time in the discovery,
and the time saved from wrangling, disorder, riot and confusion,
will be expended in profitable production, and in improving the
condition of every human being throughout the country. In-
deed, it is not a Utopian dream that before another conference
of this character assembles, the great corporations which are the
largest employers of labor, will not merely insist upon the forma-
tion of trades unions among their employees, to economize time
in discussing the conditions of labor, but will require them to
elect representatives to sit in the boards of direction, thus im-
posing on them some responsibility for the management of the
joint industry the partnership in the prosperity of which all
must share in the decay of which all must suffer.
A Delegate : You have said we have been declaiming against
the trust, and that in the entire conference nothing has been
shown as to any evil committed by them.
Mr. Cockran: I spoke of those that don't enjoy any aid from
government.
Same Delegate: Take the Federal Steel Trust. It was or-
ganized with a capital of $200,000,000. In less than six months'
time every product of that trust, steel, iron, iron nails, barbed
wire, and all necessities of the farmers, and everything that en-
ters into the construction of buildings in every city in this coun-
try, and in the construction of every farmhouse in the United
States, has been increased from 100 to 126 per cent, whereas,
labor in those mills, as shown by the Amalgamated Steel Union,
has only risen about 10 to 25 per cent. Now, I wish to know if
the consumers of this country have not been robbed of that 90 and
100 per cent difference between the price of labor and the price
of the finished product furnished to the 50,000,000 farmers in this
country ?
Mr. Cockran: One moment; you have asked me a question.
I will answer it. (Mr. Garland rises.) I yield, however, to a
gentleman who represents an organization of workingmen.
Delegate Garland: They increased the wages from 10 to 15
per cent.
Another Delegate : Now, I wish to say, with due regard to all
the trades unions of this country, because I advocate their exist-
ence and I believe they are a public blessing, that any arrange-
ments between the trades unions and the capitalized trusts which
enforce from the consumers of this country more than an equit-
able wage, as compared with the product of the other producing
fae'iors, would be unjust.
Several delegates here arose and piled questions upon Mr.
Coekran.
Mr. Cockran : It is quite useless to repeat constantly the same
statements. I have said again and again on this platform that if
u corporation or an industry dominates the market by any other
means than the cheapness of its product, it is a public injury.
Now, I say that an industrial organization which dominates the
market by furnishing the best service, that is to say, the best com-,
modities, can maintain its pre-eminence only by the same means.
If it undertake to exact undue profits, if it abuse the advantage
derived from excellence displayed in competition, and the gov-
ernment remains impartial, competition would arise in an instant.
A Delegate : Your position is, then, that monopoly is impos-
sible?
Mr. Cockran : It depends again on what you mean by monop-
oly.
Same Delegate: What I mean by monopoly is the privileges
and business enjoyed by one institution.
Mr. Cockran: I don't think any further discussion between
you and me can be very useful (addressing delegate), as I can
answer your questions only by repeating what I have said many
times already. There is no way by which you can establish a
monopoly without government favor, except by excellence in
serving the public. While that excellence lasts 1 don't object to
it, even though you call it a monopoly. The industrial history
of this country proves that in the absence of government inter-
ference no monopoly ever advanced prices to exact undue profits
without by that fact provoking opposition, and effective opposi-
tion.
Delegate Lockwood : Do you mean by government favor, rail-
road favor?
Mr. Cockran: Any kind of favor. Favor by tariffs, favor by
railroads, favor by gas companies, favor by express companies,
favor by any agency chartered by government to perform a public
service I say government should always be impartial between
citizens. It should not merely be impartial itself, but every
agency through which it performs any function should be
partial. ,
Let me revert once more to the question which I considei
vital importance. I hope these gentlemen who by their ques-
tions show they entertain socialistic opinions will come on tn
platform and expound them. I think, however, we will all admit
that socialism, conceding it to be a remedy, is at least a distant
one. I am not here to indulge in abstractions or speculations
about remedies which are necessarily remote. I came to this con-
ference in the hope that we could make some practical suggestions
which might be immediately adopted. Everybody concedes that
discrimination by corporations between citizens is an offence
against economic laws, and should be made a serious offence
against statutory laws. I believe we all concede that publicity
if not a complete, is at least a partial remedy for this form of of-
fence. Surely we may hope that our concurrence on this subject
will take the form of recommendations which will soon be en-
grafted on the laws of every state. For my own part, I had hoped
that we would go a step further and agree on some measure which
might prove effective in preventing the recurrence of strikes.
While we are some distance from socialism, there are insuperable
objections to interference by government in the industry of pri-
vate citizens, but it is entirely within the power of the state to
provide that corporations exercising public franchises should be
held to some accountability when the convenience of the public
is disturbed by the suspension of their service. It seems to me
this power could be exercised so as to maintain industrial peace.
When. a railroad company fails to furnish transportation,
when a gas company fails to furnish light to highways or to in-
dividuals, when any enterprise chartered by the state for public
purposes fails to exercise its function, it is the business of the
state to ask the reason why; in the absence of a proper explana-
tion, its charter should be revoked, while ever) r citizen incon-
venienced by its collapse should have a right to substantial dam-
ages. I don't believe the state could settle industrial disputes
as equitably or as effectually as employers and employees them-
selves would settle them, if they could be forced or induced to
discuss them together. When, therefore, a railroad or other
public corporation which has been prevented by a strike from
exercising its functions can say we have met our employees by
agencies of their own selection, and we are ready at any time to
meet them again for full and free discussion of all questions be-
tween us, proof of that statement should be accepted as a com-
plete defense to any action either by the state or by individuals.
I had hoped that such a law might be recommended with the con-
currence of every person in this conference, and I cherish that
hope still. It would not be prescribing a new system of corpo-
rate management, it would be merely compelling a few concerns,
a minority whose management is ignorant and benighted,- to
adopt the methods pursued to-day by the enlightened, well man-
596
aged corporations which constitute a majority of all our industrial
organizations.
The employer need not fear that this would reduce him to
helplessness against unjust demands. There is no better method
of meeting an unjust demand than by insisting that it be made
public, and thus invoking against the laborer who advances
it that public opinion, which is his sole support, and which fur-
nishes him the formidable weapon of the boycott.
While the state, as I have said, would have no right to inter-
fere in the management of a private business or manufacturing
corporation to adjust disputes with its employees, it has a right to
exercise its undoubted control of corporations discharging pub-
lic functions in such a manner as to compel full and free
discussion between these corporations and their employees of
every question that threatens to interrupt their peaceful and
efficient cooperation. The result of such a system would be so
beneficial to the public corporations on which it had been im-
posed that private employers would be quick to adopt it and indus-
trial peace would be established on the sure foundation of justice
and mutual interest.
This is a suggestion of peace, of progress and prosper-
ity, not a suggestion to enact any new statute law, but to
obey an immutable economic law, to acknowledge that partner-
ship of all men in industry which has existed ever since free labor
was established by the spread of Christianity throughout the
world.
Mr. Bryan appears to think that the prosperity of the people.
or, in other words, the amount of wealth which they can create is a
sordid question. A sordid question! Why, upon the volume of pro-
duction every form of prosperity, industrial or material, depend*.
Could the poet spend his days musing on the sublime and beauti-
ful, if the necessaries of life were not supplied to him from the
commodities produced by others? Must not the philosopher, sur-
veying the wide expanse of the heavens, depend for his telescopes
and mathematical instruments unon other hands whose labor he
reinforces by his discoveries? Could the physician spend flays
and nights at the bedside of suffering, relieving pain and fighting
death, if the food that supports him. the house that shelters him.
the clothes that promote his comfort, and the medicines
reinforce his skill, were not produced by the industry of other men
whom he has never seen? "Does not the painter use the labor
and ingenuitv of a thousand persons in the pigments and paints
with which he reproduces upon canvas the conception* of his
dream*? Is not the marble which the sculptor fashion* into the
semblance of life, the product of a ruder toil? Which of us can
live independently of his fellows? Who can labor intelligently
for his own benefit without contributing to the prosperity of this
industrial partnership binding us all together in the great
scheme of cooperation which is at once the object and the vital
principle of civilized life?
Throughout Mr. Cockran's remarks there was a running fire
of questions and comments from the delegates. This broke into
his train of thought, but the speaker courteously replied to those
on the floor, and after some time the interruptions ceased and the
delegates onty broke the silence with which they listened, to ap-
plaud the points made by the orator.
HAZEN S. PINGREE.
Governor Hazen S. Pingree, to whom Prof. George Gunton
addressed some of his remarks Thursday night, replied in a letter
as follows:
Prof. George Gunton,
Dear Sir: I listened with great interest to your address last
evening before the trust conference, in defense of the trust. The
mental equipment and training of your profession are supposed
to enable you to comprehend a subject readily, correctly and
thoroughly.
When, therefore, you skimmed across the surface, and
trimmed around the edges, of the thought expressed in my ad-
dress, criticising things which I did not emphasize, and ignoring
the real truths which I sought to illustrate, perhaps I may be per-
mitted to register an objection, or at least to set you aright in
the matter.
You commenced by saying that the burden of my discourse
was that the trust leads to industrial slavery, that industrial
slavery destroys independence, and that without independence,
American manhood is destroyed. You then proceeded to de-
monstrate, in the manner natural to professors, i. e., with a regard
only to theoretical conditions, that where there is great wealth
there is ample freedom.
Then, with an impressive tone, you asked me if I wanted the
slavery that came with the poverty which would result if we check
the development of trusts. I can only reply that the deduction
P9S
which you make, from the statements in my paper, is unfair, hut
that, granting your logic, I- am and would be entirely satisfied
with the prosperity of this country before the trust reared its
head.
Now I have no especial quarrel with professors, nor with their
theoretical methods of dealing with things. But I do insist that
if they are to deal with practical questions, they should not wan-
der off into the realms of the speculative or the ideal by discuss-
ing things as they ought to be, and not as they actually are. I
find no fault with your generalizations respecting poverty and
wealth and slavery. I presume they are correct according to the
text books.
But you entirely ignored the thought it was my purpose to
express. I said that the actual, existing, present day trust, by
its unlawful, indefensible methods, deprives the very best element
of our people of that equality of opportunity which has been the
foundation, the rock-bottom, of our greatness as a nation.
The monstrous commercial deformity, which you defend by
the application of text book principles, by the crushing, con-
scienceless force of immense wealth and resources, inhumanly
used, denies the independent business man the right to earn a
living. Under trust domination, there will be no equality of
opportunity. That is the point I made in my address, and you
ignored it.
I think you will modify your opinions somewhat, if you will
burn your text books, lock the door to your study, and come down
into the market place and see the real thing at work. If you do
I think you will no longer defend, or apologize for the trust.
You will be glad, then, to leave that work to the newspaper?,
magazines, public men and orators who are paid for it. and paid
liberally, too.
When you enter into the market place, and perhaps enter
some of the secret chambers, called directors' rooms, it will not
take you long to find out that human selfishness and greed set
at naught all the beautiful rules and axioms of political and social
economy. You will then no longer be guilty of saying (as you
did yesterday in answer to my paper) that because of the trust
the purchasing power of the dollar is increasing everv day, that
with such increase comes individual wealth, that individual
wealth gives independence, that independence mean? freedom,
and that therefore my contention, that the effect of the trust (the
concentration of wealth and business into the hands of i
to separate our people into two classes-industrial mast,
slaves is all bosh.
599
I think that when you come face to face with actual condi-
tions, in the market place, when you gee the animals feeding and
see upon what they are feeding, you will not deceive yourself
longer into believing that any increase in purchasing power of
the dollar necessarily means that those dollars are being dis-
tributed by the trust in larger quantities than ever before among
all classes of our people. You are asking the people, the inde-
pendent' business men, whom the trust has forced out of business,
to believe that because a dollar will buy more, therefore they have
more dollars, than ever before. If this is not true, and it cer-
tainly is not, the beautiful fabric of logic which you have fash-
ioned, as outlined in the preceding paragraph, falls to pieces.
The trouble with it is that the owners of trusts are not philan-
thropists, and they keep the dollars themselves.
And that is the meat of this question. The trust tends to
concentration of wealth into the hands of a very few, and because
those few are nothing but men, they are ruled by the human
motives of selfishness and greed, and not by the text book rules
of social economy. When you are dealing with the trust, there-
fore, pardon me for suggesting that you recognize real condi-
tions, face the real thing, and not generalize about some industrial
organization that is entirely ideal.
I think you should also recognize that the trust is a human
contrivance when you are discussing the matter of prices as af-
fected by the trust. In the first place, it is your duty, as a
defender, or advocate, or apologist of the trust, to point out a
single instance in which a trust has voluntarily reduced prices.
In the second place, I ask you if you sincerely believe that any
trust, conducted by a human being, will ever reduce prices any
lower than is absolutely necessary to preserve the monopoly?
Your associate on the platform yesterday, the attorney-gen-
eral from Maryland, offered a panacea in the shape of government
regulation through a commission. Government regulation is the
remedy which the trusts themselves suggest. They would like
nothing better. Their newspapers and orators are already advis-
ing such a course. They say it is conservative treatment, and that
is catching. There are plenty of people who are eager to be
looked upon as conservative. They want to be patted on the
back by the "conservative press."
Why are the trusts satisfied with government regulation
through a commission? The reason is plain enough. They rec-
ognize that a growing hostile public sentiment endangers their
life. Therefore, it is important to them to pick out the remedy
which will interfere the least with their operations. Hence the
cry, quietly suggested by them, that government regulation
through a commission is the proper thing. What has been our
experience already with government commissions? I need refer
only to the poor, weak, crippled interstate commerce commis-
sion. Everyone knows that the railroads look upon it as one
of their best friends, and will continue to regard it as such as
long as the people believe that the commission is a protection
to them against rate discrimination and railroad oppression. Its
uselessness is chiefly due to the fact that it is absolutely shorn
of its power to do good work by lack of machinery and resources
to make it effective. A commission to regulate trusts would be a
similarly ineffective body. The power of money and organization
would see to it that such a commission, while it might have ample
powers, would have meager resources to execute them. We are
facing a similar condition in my own statej where a commission
whose duty it is to bring the tax dodger to justice, is being crip-
pled and hindered by the state authorities, whose duty it is to
furnish the funds necessary for the proper prosecution of the
work of the commission.
I am of the opinion that the only way to treat an ulcer i?
with the surgeon's knife. Trusts should be cut entirely out of
our industrial body. I am bold enough to predict that this will
be the judgment of the people, and if it is, the method of doing
it, the form which the legislation will take, is a matter of minor
consideration.
The temper of last night's audience is strong evidence that
the sovereigns of this country will not tolerate a temporizing or
compromising treatment of this great problem. It was a repre-
sentative audience. It plainly showed that it had opinions, and
positive ones too. Perhaps some of them were born of a bitter
experience. It is certainly true that this question comes home
to everyone closer than the tariff question ever did. The attitude
of that audience demonstrates that the political party or leader
who remains silent on this question, or who temporizes with r
(another name for conservatism) will dash itself to pieces agams
the rocks of a hostile public opinion that is crystallizing am
growing with a rapidity that will unquestionably make the rust
question greatly overshadow the artificial issues of imperialism,
war, conquest, new possessions, the glory oftte *> c ^
601
SAMUEL M. JONES.
Mayor of Toledo, Ohio.
I am inclined to regard the great growth of thece organizations
within the last few months rather complacently.
I believe in a large programme for society. I believe it to be
our duty and privilege in this republic to find a plan big enough
to provide for all of the people and I see in the growth of the trust
an indication of the growing social movement toward collectiv-
ism. I believe in brotherhood; so do the makers of the trust.
They believe in brotherhood for the fellows that are in the trust;
I believe in the brotherhood of all men. The trust is the Great
American Brotherhood (limited). We will yet learn to utilize the
trust by amending the title, leaving off the last word.
The trust is preparing the way, showing society the great
benefits that may be derived through association in industry and
the great economic value of association, both in production and
distribution. An invention that lightens the burden of the
world's toilers and makes it possible for one man to do the work
of twelve is called a "labor-saving machine." Does it matter
whether the machine is made of wood and iron or composed of or-
ganizations and associations of men? If the result is the same it
is a labor-saving machine. In this sense the trust is a labor-sav-
ing machine. The fact that the owners of the trust capture all
the profit produced by the labor-saving machine does not affect
the truth of this statement. That is the peculiar tendency of the
modern "captain of industry." Labor-saving machinery made of
wood and iron has done very little to lighten the toil of the work-
ers. It has usually resulted in saving labor for those who do not
Avork. Take the case of the sewing machine, one of the greatest
of the labor-saving inventions. It ought to bless the world to a
far greater extent than it does. All such inventions and com-
binations should lighten the labor of all, but within two years a
committee of investigation of the Massachusetts legislature found
women operating sewing machines in Boston sweat-shops twelve
hours a day making boys' pants at 19 cents a dozen pairs. Because
these women work in this slavish and dehumanizing way their
employer, the "captain of industry." and his family were enabled
to pass their summers at ISTahant and their winters in a big house
in the Back Bay.
According to the prevailing conception people who are thus
able to live an idle, useless life at the expense of other people's toil
are considered the fortunate members of societv. I do not think
this view, however, is the correct one. An idle life is a useless
602
life, whether rich or poor. Indeed, there is reason to believe that
if one is idle because of riches there must of necessity be guilt ap-
proaching crime in such possession and resultant idleness.
The triumph of the trust is one of the marvels of the closing
years of the nineteenth century; but they are an economic devel-
opment, strictly in the line of progress and our problem is not
how to destroy them, but how to use them for the good of all.
Like their prototype, the labor-saving machinery constructed of
wood and iron, they have come to stay. A labor-saving machine
might have great value on account of its producing capacity, but
might be so destructive of human life as to make it imperative
that it should be 'so improved that its "saving" power might be
utilized without injury to the operative.
Thirty-five years ago I saw a mob of teamsters trying to de-
stroy the first pipe line ever built for the transportation of oil.
They feared that the pipe line was an "attack upon their craft."
The movement against the trust rests identically on the same
moral basis as the rage of a mob against the pipe line, elevators
and labor-saving machinery generally, and I predict that it will
have the same result in the end. All the legislation thus far
against the trust has been almost as futile as a law against the
change in the moon's phases or the ebb and flow of the tides.
We are not going back to the individualistic method of pro-
duction. We are not going to pull down the department store in
order that the people shall sustain fifty small stores in place of
the one department store. If that is what we propose, let us con-
tinue the principle ; destroy the small store? and turn the business
over to peddlers. This will be carrying to logical conclusion the
senseless objection to the department store and the trust.
What, then, shall we do with the trust, with the continually
increasing army of unemployed thrown out by these organiza-
tions? I reply, we must organize government (society) in the
interest of all, for the good of all. so that we may utilize the
economic side of the trust.
We must leave off the word (limited) from the Great American
Brotherhood that I have referred to and own and operate the trust
for the benefit of the people, as we now own and operate the post-
office trust. The profit that accrues to the organizations known
as trusts, by reason of the economic production that arise* from
associating' ten or more companies together, does not belong to
those who compose the trust in anv ethical sense,
only made possible because the people are here, the cities are he
and the means of transportation and communication are 1
and available, and this profit that arises from amending t
603
of competition is in no just sense the property of those composing
the trust.
It belongs to society, and may be properly called the "in-
crement of associated organization." Neither the cities nor the
earth have been created for the benefit of the trusts. It is clear
that the earth and the "natural opportunities" that have resulted
in building cities, highways, railways and commerce were created
for the benefit of all alike. Equality of opportunity or brother-
hood is the goal toward which the race is struggling, and the
trust, while thoroughly selfish in its inspiration, is the expression
of the great social spirit now stirring the hearts of the people.
I can see neither sense nor reason in the attempts to destroy
the labor-saving machines by legislation, but I see both reason
and hope for the American people in the movement that will
utilize all kinds of labor-saving machines, including the trusts,
for the benefit of the whole people. This can only come about
by the process of general education that will bring the classes to
understand and practice what the masses now believe in that
is, the brotherhood of industry.
The movement toward municipal ownership, toward public
ownership, toward co-operation of every sort, indicates the chan-
nel through which the people are to come into possession of their
own. When they are thoroughly enlightened they will simply re-
take in a perfectly orderly way the properties that have passed out
of their hands and become private possessions, usually through the
practice of deception and fraud. The people will own and operate
their own trust; its name will be the Co-Operative Common-
wealth.
HENRY W. BLAIR.
Ex-Senator New Hampshire.
Senator Blair, of New Hampshire, was called upon. He said
in part :
I would, for a moment, call attention to one aspect of this dis-
cussion, and that is the frequent assertion which we have heard
made during its continuance, that the tariff is the mother of
trusts.
If you remove the tariff from the productions of our great in-
dustrial enterprises, trusts, already international, and other em-
ployers will put their capital where they can produce goods the
cheapest. Their plants, machinery and money investments will
604
be removed to other countries, where goods can be manufactured
by cheaper labor and poured into our markets, thus destroying
the home market for our home people.
Several delegates here propounded questions to Mr. Blair
which led to a further statement of his views at some length, of
which no stenographic report was made. At the suggestion cf the
committee Mr. Blair has reproduced the substance of what he
said, as follows :
Speaking of the competition between home and foreign labor,
under free trade, it must be remembered that while American
labor is more intelligent and therefore more productive, yet nine-
tenths of the worjt of the world is done by machinery, and that
the European, the Asiatic, and later on, and not much later on
either, the African and the islanders of the Oceanic world, can
easily be taught to handle and manipulate the machine even if he
cannot invent it; that capital and machinery are easily portable
everywhere, while labor is not, and the more labor is civilized
and enlightened, the more it is confined where it is, that is, to the
locality of high conditions. Therefore the trust or any large em-
ployer of labor will go with capital and machinery wherever labor
is cheapest and most subservient, provided that ly free Iradc-lie can
still retain the American market.
Any man can take a million dollar plant of cotton, woolen,
sugar, or any product of manufacture to England, Kussia, Chin;i,
Japan, Africa or the Philippine Islands, in his pocket or in his
check book, while the thousand laborers who have lived by work-
ing that plant for half their lives, in this country, are obliged to
remain and starve, unless they choose to work for foreign pay.
He strongly emphasized the fact that foreign labor would
soon learn how to run the machines as well, or nearly as well, as
our own people. True they would not invent them or improve
them at first.
We should still invent and construct machinery, but it would
be for exportation to foreign lands, not for home use. In time
foreign labor would become intelligent and so inventive, under
the same conditions which have made us intelligent and inventive.
The truth is simply this: Free trade is the highest form of
protection to labor and capital in all the rest of the world, while
it ruins us. The highest civilization always costs the most, and
the people of every country have just what their wages, or the
income of their labor, will buy for them, measured in the stand-
ard purchasing power of the world. Commercially mankind an;
a unit and nothing on earth can prevent it and such they will re-
main. There is no escape from the laws of trade. The man who
605
gets five cents a day lives like a dog, or worse, because he has
nothing to buy a better life with, and if he gets no work at all, he
dies. There are gradations in the condition of mankind just be-
cause there is more work to be done in some countries than in
others. The plant, working capital, machinery, etc., and living
labor must combine in order that there may be work in a pro-
ducing sense, and a farm manufactures food just as much as a
cotton mill manufactures cloth. The cheapest production will
command the market provided that it can get there, and nothing
but protection can keep foreign products from ours.
The American market is the best in the world, and under
free trade (which is what this whole howl that the "tariff is the
mother of trusts" is after) the world will take it from the Ameri-
can producer unless he works and sells just as cheaply as the Ger-
mans and the Japanese.
If American laborers, farmers and other producers want the
American market, they have got to protect it, that is keep it to
themselves by a tariff so high that the foreigner can not get into
it. But it is said that we must have free trade in raw materials,
in order that we may meet foreign competitors in foreign mar-
kets, and thus build up our foreign commerce. We already have
free trade in foreign raw material for the manufacture of all such
materials into articles for exportation to any foreign market.
The rebate clause in the tariff law returns from the treasury
the duty paid upon the foreign raw material when the article is
exported. That keeps our capital and labor employed at home,
while we meet our foreign competitior on equal terms in every
market of the world.
Where now is your argument for free foreign raw materials?
And protection still takes care of the producer of American raw
materials and of everything else American, by preserving to him
intact the home market of seventy-five millions of the most highly
civilized people, and therefore the greatest consumers on earth.
In fact our home market alone is worth that of any other
three hundred millions of mankind.
So much for the rebate provisions of the protective tariff, in
which I feel some pride, as, so far as I know, I had the honor first
to urge their adoption as a general law. These provisions are
the only secure foundation of a colossal and perpetual foreign
trade.
Under them we manufacture the wheat of Canada at Minne-
apolis, and sell the flour in Canada, England, or anywhere else in
the world. If we can keep our laws as they are and their adminis-
tration in the hands of those who believe in them, and who are
not, either openly or secretly, working to destroy, then the future
of the country is stable and full of hope. If we cannot do this the
future is full of despair. We must not, we cannot trust any man
or party that is doubtful or shaky in the support of a protective
tariff, or of our existing gold standard of value. The contracts
and wages of the world have long been made and are now meas-
ured in gold. It is- impossible now, or for years, to abandon the
protective tariff or adopt a new standard of values, without once
more destroying business and dislocating society. Agitation, or
the suspicion that there may be agitation, upon these points by
men or parties in power destroys confidence, and loss of confidence
is calamity.
In this connection Mr. Blair filed two short papers previously
prepared by him further elucidating the relation between the
tariff and trusts, as follows:
I.
It is frequently observed that the trusts are a natural develop-
ment of the protective tariff, and the strong prejudice against the
evils which appear to be flowing from them is used as an argu-
ment against the protective system. That is to say, the existence
of the trust is an argument for free trade. The ordinary and per-
haps sufficient reply to this assertion is the fact that the trust
exists in free trade countries as well as in our own. This fact is in
itself conclusive that the trust does not originate in protection.
It must be remembered that trusts are international already, and
if unrestrained the tendency of capital to combine will become
worldwide. Capital will combine and locate industries wherever
in the world conditions are most favorable to cheap production,
and naturally will go, in the long run, to those points where labor,
the other great factor in production, is cheapest, the result of
which will be that the laborer must follow the location of capital
all over the world, in order to find employment at all. The ex-
istence of the people depends upon the work they have to do, and
if the work of the American people is not done by them, they
will have no purchasing power, and must starve. If the protective
tariff be removed, trusts will locate American capital in Canada,
in European countries, in Asiatic countries, and wherever la hoi-
can be employed at the lowest prices.
Perhaps nine-tenths of the productive power of the world is
in machinery and improved tools, all of which is owned by capital,
that is to say, by 'trusts, or will be if these great combinations
continue and enlarge. So that without the protective system to
interpose as an obstacle to the bringing of outside productions
to the markets of the United States, it will be impossible for
American laborers to obtain employment at all, unless their wages
be reduced to the level of the cheap labor of other countries. So
far, then, from the existence of trusts being an argument for the
abolition of the protective tariff, the protective tariff is the only
thing that can save to the American people their work, which is
only another name for their life, and their Status of civilization.
Various remedies are being proposed to cure the evils of the
trust system, and the wisdom of the country is likely to be con-
centrated upon them.
I do not feel that I can add any particular light to the subject.
I have sometimes thought that provisions by law nullifying con-
veyances to trusts, made with the understanding that while they
are not to be employed in production, dividends are neverthe-
less to be paid upon the consideration given for them; that, if
such conveyances were declared by law to be illegal and void, it
would do more to end these combinations than anything else.
Such conveyances ought certainly to be deemed against public
policy because there is little difference between such transfers of
property, with an understanding that the property is to become
useless or partially useless, and the transfer of the property with
the understanding that it is to be destroyed by fire; and when to
this is added another understanding that the community is to be
taxed in the form of increased prices for commodities to pay in-
come upon this useless property, there can be no doubt that the
transaction is injurious to the public, and should be made void
and criminal by the general laws of the land.
I am inclined to think that the application of this principle
would end the whole difficulty. It would seem to be easy of ap-
plication, for every member of the body politic would be injured
by the increased price of consumption, and would have the right
to attack such a conveyance in the courts, and if the transaction
were made a criminal offense the entire force of the community
could be brought to bear, as in the case of other crimes. There
are many establishments in various parts of the country which
have been conveyed to trusts, with the understanding that they
should not be used, and which have not been used as plants for
production since they went into the possession of the trusts, and
yet this idle capital receives dividends drawn from the public at
large.
I do not much fear the prolonged continuance of these abusive
trusts, for I believe that great financial disasters will follow their
general introduction, within the next few years, which will be
such a lesson to foolish and hasty investors that the system will
disappear in its own ruins. The best way to cure trusts of the
evils is to let them alone, to keep out of them. There are some
good things about them. They are labor-saving machines in a
good many respects, but what good there is in them can be applied
under our old system of competitive production.
II.
The most objectionable trusts originate in the efforts of the
owners of unprofitable plants to save themselves by combination
with others. It would seem to be a complete answer to the
proposition that protection is the mother of trusts, that trusts
exist in free trade countries as well as in this, where protection
prevails, and that the principal trusts of our own country are
not dependent on protection for their existence or for their
growth. The product of the Standard Oil Company nor the
sugar trust itself are dependent either for their creation or for
their growth upon the tariff. The attack of Mr. Havemeyer upon
the tariff is easily explainable upon the ground that the interests
of his trust would be promoted by a diminution of protection,
and probably still more promoted by absolute free trade in sugsfr ;
and in the long run still more promoted by absolute free trade.
You may be sure that if the tariff was the mother of trusts,
that trusts would not be attacking the tariff, but this is not in
my mind the real argument of the case.
The leading trusts are already international. Their capital
is invested everywhere. Naturally, they will seek the other great
element of production, that, is to say, labor, where it is cheapest.
If the protective tariff is removed so that production outside the
limits of our country can reach our markets, capital will inevita-
bly be invested where that cheaper labor is to be found, and the
work of the American people would come to be done by the
laborers of foreign lands unless the American people are eon-
tented with a wage such as that of England, the continent, or of
Asiatic laborers, that is to say, the cheapest labor in the world
wherever it may be found.
Nothing can protect the American people in their work but
the tariff. Remove it, and the destruction of our industries
would be sure. The trusts, so far as they merely employ great
masses of capital in legitimate competitive production cannot lie
objected to. The great abuse connected with them seems to mo
to be the fact that they seek to destroy competition by combina-
tion of unprofitable plants, which they design to rloso up, and
substantially destroy, with those which are retained for active
production, and guarantee returns upon this idle capital, to
609
obtain the money to pay which they must unduly tax the com-
munity in prices unnaturally high. Having destroyed competi-
tion, the trust is enabled to fix the prices of commodities so as
to yield returns upon this idle capital. Idle property is no longer
property, and to pay an income upon it somebody must be robbed.
If non-productive it should be sold for what it will bring and
put into some new and active form.
Combinations of this description must be against public pol-
icy. If conveyances which have been made in the past are valid
because there is no public law against them, certainly new laws
could now be enacted which would declare such future convey-
ances illegal and void, and if in the future such conveyances were
declared illegal and void ab iniiio, I believe that evil would cease.
Such conveyances and guarantees of returns upon idle capital
could be prohibited by suitable penalties, and as the offense is
in its nature public, every individual in the community would
have the right to set in motion the remedy.
It would be found impossible perhaps without new legislation
to prevent the conveyances which until now have constituted the
initiation of trusts and are the very basis of the whole system.
Such legislation would not interfere with legitimate investment
and the* employment of great masses of capital in productive
enterprises. Thus we should get the benefit of gigantic combina-
tions of labor and capital without destroying naturally healthy
competition. The so-called trust, when organized and managed
in accordance with just business principles, is simply the idea
of the labor-saving machine carried into business methods and
affairs, and I believe that the objection to the trust system as
an improvement in business methods, thus saving time and ex-
pense in production, can be just as legitimately urged against
new improvements in labor-saving machinery. The thing is to
find a true line of action, which will save to us all the benefit-;
of the trusts in business methods and management, without
yielding to the tendency to abuse the law and the interests of
society by ripening the system into gigantic monopolies. Like
every other improvement and good thing the trust is liable to
abuses, and without proper restraint and wise legislation, and
the continual vigilance of society it is sure to develop them. But
to refer again to the main point, as I said in the beginning, trusts
are already international. More and more they will own the
capital which does the business of the world, and all the machin-
ery, which is but another form of capital.
Inevitably, then, they will seek the cheapest labor, for capital
and machinery are in their nature portable, and will go where
610
the cheapest labor is to be found. It is clear that the tariff, in-
stead of being the occasion of trusts, is our only protection against
them. One thing is very sure the trusts would never assail their
own mother.
In conclusion Mr. Blair presented the following resolutions
which he had proposed to offer for the consideration of the con-
ference had it been decided to formulate resolutions expressing
its sentiments. As it had been decided not to do this, he desired
that they be printed simply as a part of his remarks, and mere
personal suggestions.
Resolved, That all artificial persons known as partnerships,
corporations, trusts, and all combinations of like nature', which
may compete in business with individual .men, should be created
and should be permitted to exist only by the supreme power of
the state, or nation, within whose jurisdiction they may operate,
and with care to so limit and control the same in duration, cap-
ital, sphere and methods of action, and in all other respects, as
not to injure but rather to promote the general welfare.
Eesolved, Whenever such artificial person is created which
is to operate outside the limits of the state of its origin, it should
be made subject to supervision and control by the sovereignty
of the nation and of any state in which it shall transact business,
and to this end, and that there may be no longer any doubt of
its jurisdiction, we hold that the national constitution should be
amended so as expressly to confer such jurisdiction.
Eesolved, Whenever such artificial person shall have violated
any of the conditions upon. which life was given to it, that life
should be taken away by the power which gave or controls it,
and its property and franchises disposed of by law; while the
individuals composing, controlling, or responsible for the con-
trol of such artificial person, should at all times be held to rigid
accountability, both civilly and criminally, as private individuals
in like cases are held by the laws of the land.
Eesolved, We demand of the government, both in the nation
and in the several states, the most rigid scrutiny and control of all
artificial persons, the function of which is to develop and handle
the primal resources of the earth, and of those great lines of
transportation which distribute to the consumer the tremendous
productions of American agriculture and the commodities of our
marvelous manufacturing skill, to the end that everywhere the
evils of monopolistic combinations may be rooted out. exposed
and destroyed.
Eesolved, We recognize in full the rights of organized labor,
611
and would still further increase them and their sphere of peace-
ful operation. We have no sympathy with that theory which
classifies and confounds these organizations, existing only to
enable the individual man to preserve his power, capacity and
opportunity to labor, with his hands, in order that himself and
family may at least exist, and if possible, better their condition,
as being the same in nature with those gigantic artificial com-
binations which operate inanimate machines, dispensing with the
living labor as much as possible, by means of the wealth which
the laborer has already created by the sweat of his brow, and con-
tinues to pour out that he may barely live, while the combination
thrives. ' But in co-operation, arbitration, and the free adjust-
ments growing out of increasing mutual respect and good will,
we hail the glad assurance, for both the laborer and the employer,
of a happier day.
Resolved, That the protective tariff is not the mother of trusts,
but the protective tariff is the mother of American wealth and
power.
Resolved further, That the protective tariff is the only means
by which the American people can protect themselves against the
most dangerous of all trusts, which is the international trust, and
can also preserve to themselves, against all competition, their
own market for the results and rewards of their own work, thus
avoiding the destruction of their prosperity, independence, man-
hood, and civilization.
GEORGE A. SCHILLING.
Kx-Seoretary Bureau of Labor Statistic-* of Illinois.
It has been remarked by Mr. Cockran that in his judgment
before another conference of this character shall take place, that
a majority of the trust employers of the United States will
have associated with them their wageworkers as official partners
in their business; that is to say, they will be admitted to repre-
sentation upon their boards of directors. This, according to Mr.
Cockran, would be simply giving an official recognition of the
partnership which already exists in fact between the employer
and the employee.
I am myself a member of a labor union, though not officially
representing one here, but in my judgment, if this consolidation
between the labor unions and the trusts is ever consummated, it
will be for one of two reasons: First, either because organized
labor will demand recognition and organized capital will be too
weak to resist the demand, or secondly, because the trusts fear
that they cannot continue to perpetrate grand larceny upon the
public unless they take the labor organizations in witli them.
There will be no humanity about it; no sentiment nor brotherly
love whatever. It will be a cold matter of business.
But I did not rise for the purpose of further inflaming you,
but rather to make clear the problem and to see to what extent
some of the fog which has been diffused on all sides may be dis-
pelled. Generally speaking, there are two divisions in this con-
vention; closer sifting would classify them into four or five, but
there are primarily two. One division consists of those that do
not want the trusts to be interfered with at all, while the other
wishes to deal with the problem through restrictive legislation.
Now, in order to determine whether the trust shall be interfered
with at all, and how, we ought first to find out the difference
between the capitalistic trust and the trust known as the labor
union, and I think if we can clearly determine the difference
between the two we will have some light to guide us on our way.
Now, the workingman in any craft realizes that standing alone
in the presence of modern economic forces, he would be annihi-
lated and would stand no show to make any agreement satisfactory
to himself, therefore he joins himself unto his fellow-workmen
and multiplies his power through the law of association, and in
the character of this composite man he stands in the labor world
with sufficient influence to, at least in a degree, determine the
conditions under which he shall be employed.
The capitalistic corporations contending against unfavorable
conditions, likewise look about and ask what can be clone to get
rid of the wastefvil and injurious methods of business, and they,
too, invoke the law of association, and begin to consolidate all
the allied interests in their line.
Now, up to this point, there is absolutely no difference in the
character of the organization of labor and the organization of
capital. Both are utilizing their power to associate an attribute
that God has given to man to a greater degree than to any other
thing that walks or creeps on this earth. But right here the sim-
ilarity ends, and the paths diverge. It is this difference in char-
acter which these two organizations at this point assume that ex-
poses "the negro in the woodpile" and justifies public interference
with the capitalistic trust, but does not justify similar interference 1
with the labor organization.
I have said that up to this point both capital and labor aug-
ment and multiply their power many fold solely through the law
613
of association; but the workingraan has nothing but this law to
aid him, whereas capital has all of its advantages plus all of the
monopolies which are conferred through special privileges that
give additional power and strength to the trust. And it is be-
cause of this that Mr. Cockran in his otherwise very able speech,
was, in my judgment, so fallacious, when illustrating in the man-
ufacture of his chair his self -acting, unvarying law by which
wages were distributed regardless of the power or influence of the
trades union. Had Mr. Cockran taken an industrial society en-
tirely devoid of special privileges, then he would have proven his
ease. But he assumed that the law by which wages are distributed
operated now in that unvarying and equitable way.
Let us suppose that there is a train of cars loaded with grain
to be dumped through a chute into this building and that this
chute is made so tight that every particle of grain that goes in
at one end will surely be deposited at the other, there is then no
flaw from the point where the grain is received to the point where
it is deposited. But suppose instead of being perfectly tight this
chute had several holes in it known as special privileges through
which from 25 to 50 per cent of the grain would leak while in
transit. Now, anyone can see that under such circumstances you
cannot divide any more grain at the final point of deposit than
reaches it. That there are such holes through which industry is
despoiled no thoughtful person will deny. They are the monop-
olies of tariffs, franchises of public utilities, money, patents and
land and it is the possession of these special privileges by the
capitalistic trust that justifies public interference.
But I am not in favor of restrictive legislation. Instead of
"Be it enacted/' I would prefer to solve the problem by "Be it
repealed." The restrictive legislation enacted within the past
thirty years against corporate wealth has not brought the results
intended. Contrariwise, in many instances these enactment*
have been employed for the suppression of the masses. The belief
that our industrial ills can be cured by filling our statute books
with restrictive legislation, is delusive, yet everywhere this
tendency is taking shape, and everywhere it fails to remove
the evils complained of. Instead of cutting the Gordian
knot of monopoly and allowing the full play of industrial
forces to liberate man from his thralldom, prohibitory legislation
is relied upon as the panacea. Instead of crushing the head of
the serpent monopoly that poisons all the streams of our in-
dustrial and political life, we give it full sway and then consume
large quantities of restrictive legislation as a means of neutraliz-
ing the poison. The result is that society and industry are being
tied up in an inextricable tangle, llather than to continue thus
1 should prefer to take out from under these trusts the |>r<>|>s
of special privileges that give them this undue power to lleecc
the public.
First of all, I would repeal the entire tariff laws and place
the United States upon an absolutely tree trade basis with all
the world. This would compel us to revise our entire fiscal sys-
tem, in the remodeling of which we might place many of the
burdens where they properly belong. It would even give the
Single Taxers an opportunity to present their views, and it: en-
acted into law would rob landlordism of its power.
I would repeal the 10 per cent tax on banks of issue, and
the national banking laws, and would make the issuing of money
as free as the air.
While I am not clear as to the utility of repealing all of the
patent laws, I believe that the time permitted under the present
laws could be reduced one-half to the general benefit of the
public.
F. E. HALEY.
Secretary Iowa State Travel inn Men's Association.
The commercial travelers of the United States almost to a
man are decidedly against trusts and trade combines. In fact,
I might state with accuracy, the people in general are opposed
to the combinations that have been capitalizing themselves with
the sole view of enriching the few at the expense of the masses.
Trusts are, in my opinion, a menace to the people. Their prin-
cipal object is that the army of consumers should pay tribute to
the few. They should be placed under federal control, but the
law enacted to bring about this state of affairs should be straight-
forward and not evasive, as it seems to be at the present time.
.A constitutional amendment, clearly defining the rights of the
capitalists as well as to protect the purchasers or consumers,
would be productive of the most good to the greatest number.
It is self-evident that trusts are looked upon with mistrust by
the wage-earner and common people. If such i
just to such an extent are trusts a menace to the interest of tin-
country. The question of trusts and trade combines, by con-
centrating the wealth of the country into the hands of the few,
is and has been producing discontent for the past year. Hence,
a readjustment of affairs in the near future is absolutely neces-
sary in order that the business interests of the country may be
put upon a calm and businesslike basis.
61!}
HENKY W. PEABODY.
Merchant, Boston.
Combinations bear most lieavily upon the individual pro-
ducer, or the middleman, who before constituted the machinery
of business. Large numbers of heretofore active and successful
producers, tradesmen and agents are being frozen out of business
by the combinations, and opportunities to build up anew with
small capital are very hard to find in any department.
I regard very seriously the advancing strides of combinations,
especially the joining of already colossal capital with other mul-
timillions, and in one interest producing the raw material, and its
manufacturers and also utilizing it in structural work. Such
monopolies by the already rich tend to make the very rich richer,
and those before well off, poorer, as their opportunities are shat-
tered.
A monopoly which appropriates to itself all the benefits of its
economies and capital, and establishes high prices unduly, will
make no friends in the community.
So far only as combination can produce, and so can sell more
cheaply than an individual manufacturer, it may be able to better
compete with other countries for the world's trade, but the com-
petition would be more national, and in accord with trade cus-
toms, in the hands of the larger number of producers, bidding
against each other.
There is a tendency in foreign as well as domestic trade for
combination to dispense with the middlemen, the jobber, the mer-
chant.
Labor organizations can only be regarded as the counterpart of
the combinations of capital, when their power is violently ap-
plied in strikes to compelling or demanding better wages, when
they are a menace to society. At other times they are useful to
protect the rights of wage earners who as individuals are not in-
fluential. Labor organizations will naturally be opposed to trusts,
as employers having increased power, and including the element
of large capital. The labor organizations are often useful to all
employers, in so far as they establish uniformity of wages and
hours of labor.
There is a tendency of the rapid growth of trusts and com-
binations to create new allies to the organized labor, in the thou-
sands of men of business who are being thrown out of all busi-
ness by the absorption of their establishment or inability to profit-
ably continue or to apply moderate capital in a new enterprise.
The large numbers of these joined classes will constitute a power-
fill agency in opposition to the trusts, for the shaping of legisla-
tion, or m the exercise of the franchise.
.The contention of labor and the unemployed with great wealth
and combined production ought not to be a political issue, but
there is danger that it will- assume that form.
EMERSON" McMILLIK
Banker, New York.
Emerson McMillin said in part:
Combination will decrease cost of production. It will benefit
society in this, that it will tend to do away with spasmodic and
extreme advances in prices, followed by long periods of depres-
sion and the discontent of the masses incident thereto.
The consumer and the laborer should be the chief beneficia-
ries. By combination a solidity is given to investments that
makes the investor, content with smaller net returns.
In many instances the share capital issued is ridiculously large.
The excess of engraved sheets of paper can profit no one, and it
may be a source of danger to uninformed investors, and in times
of depression the collapse of these excessively capitalized com-
panies will tend to create alarm and distrust in the financial sys-
tem of the country.
Wages ought to be higher, owing to absence of ruinous com-
petition and consequent disposition of employer to reduce ex-
penses. The condition of the wage-earner should be improved.
Eegular employment at fair wages is what the wage-earner desires,
and is essential to his contentment.
I am not clear in my own mind as to result with middlemen.
But even if disastrous, that fact should not condemn combina-
tions if the general result is "the greatest good to the greatest
number." The change must come slowly, if at all, and middle-
men will adjust their affairs to changed conditions. This has
always occurred, and will continue to occur so long as civiliza-
tion progresses.
I do not regard the tendency to combination with any appre-
hension on the ground that it does or may create monopolies con-
trary to the general welfare. But to quiet any apprehension in
that direction there ought to be national legislation. If the
general government can assume control of a bankrupt's affairs
and discharge his debts, it can protect him from being driven to
bankruptcy by the strong.
617
Patents are monopolies; much of the prosperity of our coun-
try is due to our patent laws. Gas, electric light and street rail-
ways are practically monopolies in most cities. The public would
profit by making them absolute monopolies as they are in a large
measure in England. The strongest argument in favor of
"municipal ownership" is the fact that all possible competition
is destroyed and duplication of capital prevented.
Combination will benefit this country in competition with
other nations for the world's trade. Goods can be produced
cheaper and excess unloaded on foreign markets at cost, if neces-
sary, to prevent shutting down works in America.
Way 8 i n which combinations may and will injure the public
will doubtless develop during the next few years. None occur
to me now.
It will be a serious mistake to recognize "class" in any form.
Labor organizations or combinations should be, in the eyes of
the law, the same as combinations of capitalists. Labor organiza-
tions are right and absolutely essential to the preservation of the
rights of labor. This, of course, in general and not applying to
particular cases. These unions should have the same lawful pro-
tection as is given to incorporated capital. Their efficiency would
be greatly augmented if they were managed in about the same
way.
Quite positive legislation must be had by Congress. Utter
confusion will result if states are depended on for protective legis-
lation. Again, state legislatures are governed by local preju-
dices. In one state, at least, it is now lawful for the farmer and
the stock raiser to form combinations, but illegal for the mer-
chant, the miner or the manufacturer to do so.
JAMES W. ELLSWOETH.
Merchant, New York.
The combining of producing agencies will decrease cost of
production and therefore be beneficial.
The amount of decrease in cost of production should increase
as progression is made under the proposed changed conditions,
the combining of producing agencies resulting in lessening the
cost, the same as labor-saving machinery has accomplished.
Kegarding combinations as employers of labor, and what
should be the effect on wages or the condition of the wage earner,
I think the result should be beneficial. The proposition is sim-
ilar to the question that was raised when labor-saving machinery
was first introduced, and the protest of labor still comes to the
618
surface as advancement in this direction is made that labor will
be crowded out of employment. The opposite has been th.< result
On account of labor-saving machinery the cost of production has
been reduced, thereby multiplying the demand, and in place of
lessening the demand for labor, the effect is to increase.
Combination of similar interests will cheapen the cost of the
commodity, and, as in all cases where radical change is made, the
individual must give way to the principle. Many employees will
be thrown out -of work, but it will be for the reason that their
labor is not required and therefore wasted, or a tax on the public.
New fields will be created, on account of the changed conditions,
which will give adequate employment at remunerative wages;
believing as I do that on account of the changes that are no^
working out in this connection, products will be so cheapened
that it will open up new markets at home and abroad, resulting
in a prosperity to this country that has never been equaled before
in the world.
In individual cases monopoly may result, but it will be at the
expense of success to the interest so managed, and which will be
readily demonstrated, as the greatest gain accruing to both em-
ployer and employee comes by cheapening the cost of produc-
tion, thereby multiplying the output.
I do not regard labor organizations as being in the same cate-
' gory with other forms of combination. Labor, as at present
organized, destroys, while capital is creative. When labor organ-
izes with the same idea that actuates capital for the purpose of
obtaining solely better results, discarding all thought of coercion
and taking into consideration simply supply and demand, both
labor and the product created by capital and labor (when produc-
tion is oversupplied curtail in every way possible, husbanding the
resources, and when changed conditions come, expand), then the
laborer will own his own home and peace and happiness will sur-
round his fireside.
Legislative action is desirable for the purpose of preventing
extortion and coercion. Kightful combination of interests will
cheapen production to that extent that there should be no fear
of non-competition, and such laws should be enacted as will pro-
tect any individual or combination of individuals from persecu-
tion; it being my belief that if the latter protection is given there
will be no danger of extortion, except in rare cases where there
is an absolute monopoly, and then legislative protection should
also be given.
619
CHARLES J. BONAPARTE.
Attorney, Baltimore, Md.
I regard the tendency of combination as an inevitable feature
of mode/rn civilization from which no free and enlightened coun-
try can escape, and which has force in proportion to each coun-
try's freedom and enlightenment. It does not follow from this
that I regard it as a good thing, for I consider it- a complete fal-
lacy that all the changes brought about by modern civilization
have, been for the better; not a few of them are, to my mind, dis-
tinctly harmful. I am not, however, prepared to say that this
tendency is harmful; it has a good side and a bad side, and there
is the less reason to make up our minds as to its merits, because,
whatever we may think, we cannot prevent it, except at the price
of liberty and civilization. There is an antidote to its excess in
the fact that, as a business enterprise may be on too small, so
this may be on too large a scale to be profitable; the difficulty
and consequent cost of effective supervision become, when a
certain stage of growth has been reached, too great for the
attendant profits, and, usually, although not, perhaps, always,
this point will be reached before a seriously injurious monopoly
can be created. As the tendency is in no wise confined or peculiar
to this country, but exists in all the more advanced foreign na-'
tions, it does not seem to me likely to injuriously affect our com-
parative commercial standing, although it can hardly benefit this.
In this connection it must be remembered that there are already
international combinations of capitalists, as well as of laborers,
and that the former, at all events, seem likely to greatly increase
in number. There are, however, two points at which the forma-
tion of combinations affects the public interest injuriously, in
my opinion. As a matter of convenience, although not of neces-
sity, it often involves the aid of the legislative power, national,
state or municipal, and thus debauches our public men and intro-
duces a deplorable element of venality and corruption into our
politics. Moreover, through the natural jealousy with which such
"combinations" are regarded by the laborers whose interests they
affect, their formation furnishes a theme for declamation and
consequent profit to a class of insincere, unscrupulous and gen-
erally ignorant demagogues, inflames class prejudices and favors
the spread of socialistic and other false and mischievous doc-
trines.
Labor organizations resemble what are commonly known
as trusts (a very inaccurate and misleading name, by the way)
620
in that they constitute organizations designed to advance the
S?f ^, St0 *: ln - trade <*. th member. V shutting outeot
tao anddisadvan-
tages to the community are both altogether different from those
of the trusts, and, while I am neither a blind admirer nor a
fanatical enemy of either, I do not think they can be satisfactorily
thought of or dealt with under the same category.
I think the consolidation or combination of railway companies
into large systems has been shown by experience to be desirable
t concentration is carried so far as to create a practical
monopoly of the product, the cost of production may be further
decreased from the facts that the combination will become the
only purchaser of the raw material and the only employer of the
specially skilled labor needed to produce this, and can therefore
bring down the price of the former, and the wages of the latter
indefinitely, provided it stops short of- the points where the pro-
duction of the raw material ceases to be profitable and where the
labor is driven into other forms of employment. If a combina-
tion of producing agencies means, or includes, a combination of
laborers, as in a trade union or a federation of such unions, the
result of such a combination, in so far as it affects the cost of pro-
duction, must be to increase this, since its purpose and tendency
is to raise the wages of the labor employed.
The consumer will, other things being equal, profit by a de-
crease in the cost of production, whenever there is free competi-
tion among producers in the market. If, therefore, the combi-
nation of producing agencies does not affect the freedom of com-
petition, the consumer will benefit by the reduction in the cost
of production thereby caused ; if the combination creates a virtual
monopoly, the consumers will not ordinarily benefit by the de-
crease of cost; on the contrary, the tendency of such a combina-
tion is to increase the price, whilst reducing the cost, of the
product; although it must be remembered that this tendency
may be, in a greater or less measure, counteracted by fear lest
increase in price may lead to a decrease in consumption, or call
into existence rival producing agencies or, under certain circum-
stances, lead to interference by the state.
The productive wealth of the country consists of the mate-
rial products of past labor which have not been consumed, but
economized, and which are now employed as agencies to produce
further wealth, and-of nothing else; the country is therefore ren-
dered neither richer nor poorer by the placing on the market of
large amounts of share capital in such combinations as those
under consideration, unless possibly this may, to some extent,
cause foreign capital to seek investment here ; I do not feel com-
petent to say whether it could have this effect to an appreciable
extent; if it could, pro tanto it would he desirahle; otherwise I see
nothing desirable in it, for it simply changes the form of owner-
ship of the things which alone have real value. On the other
hand, I see no peculiar dangers which it involves either to the
individual investor or the financial system of the country. The
former may often lose his monev through injudicious invest-
ments in such share capital, for it is an old maxim that "a fool and
his money are soon parted," and a large proportion of individual
investors are too greedy and conceited to show common sense in
their investments ; but their money, although lost to them, is not
lost to the community; it goes into the pockets of others who are,
on the whole, at least, equally deserving and more shrewd and
judicious, and therefore more likely to make a beneficial use of it.
The tendency of the combinations must be to decrease the
demand for the kinds of labor employed in their work, and conse-
quently to reduce, at least temporarily, the compensation received
by wage-earners generally throughout the country. The natural
effects of this on the condition of the latter, speaking very
broadly, would be, first, more or less individual hardship and
suffering, and, afterwards, in the United States, the conversion of
"some among them into agriculturalists through the cultivation
of a larger area of our land.
Emphatically no legislative action in regulation or restraint
of combinations, whether by Congress or State legislature, is de-
sirable. ' Our public men (with, I need not say, some honorable
exceptions) are wholly unfit to deal with any such matters. The
attempt will be highly demoralizing to all concerned, the practi-
cal results (except in the levy of blackmail) altogether nugatory.
CHAELES A. SCHIEKEK
Ex-Mayor, Brooklyn.
I am deeply interested in the subject. It is one of the leading
questions of the hour. Evidently trusts have come to stay. They
are formed in almost every commodity manufactured in this,
country.
I have watched with special interest the progress made by
the United States Leather Company so-called Leather .Trust
"it being in my line of business. This trust was formed about
six years ago. It has only been partially successful. It has not
checked competition; on the contrary, those tanners outside of
622
the trust seemed to have profited by the formation of the big
company. While the trust, by operating all their tanneries upon
a uniform plan, may have reduced the cost < f tanning leather,
still their fixed charges on their enormous capital are so large
that they cannot reduce prices if they wish to earn a small divi-
dend on only their preferred stock. This enables their competi-
tors not only to meet prices, but in some instances make the mar-
ket price of leather.
The principal cause is overcapitalization and buying old and
unproductive properties, thinking thereby to stop competition.
The result has been that active, enterprising men with sufficient
capital for their business have erected modern factories with
up-to-date improvements, and successfully compete with some
of these trusts.
There may be exceptions, but the average combination or
trust is built upon these lines, and with their antiquated facilities
and watered stock they expect to compete with wideawake busi-
ness men. While trusts may be a menace to business for a while,
on the whole they are not as dangerous as generally believed to be.
Overcapitalized trusts must either reorganize on a proper
basis, or reduce their capital to real value, else fall to pieces of
their own weight. When reorganized with actual capital, they
will come into line with business concerns having actual capital
invested. No special legislation is necessary nor desired. Such
laws hardly mitigate the evil. Business laws are based upon com-
petition, and that will suffice to bring even our immense trusts
to terms.
WILLIAM WIET HOWE.
New Orleans Board of Trade.
' When I came to this meeting as a delegate from the New
Orleans Board of Trade, I prepared, at the request of the Civic
Federation, a paper on some of the questions here in debate;
but when by your kindness I was called to preside over your
deliberations, it was deemed more becoming that your chairman
should not undertake to express any views on these questions,
or undertake, even if I could, to influence any opinion. _ Am
with a little of that paternal anguish which may have visited
soul of Abraham when he thought himself in conscience bou
to sacrifice his son, I suppressed the little paper The suppres-
sion was fortunate, because if the paper were to be written tbii
evening it would be a better one, for the reason that-:
has learned a good deal in the last four days.
623
In what are called courts of conciliation, in some jurisdic-
tions, the constant aim of the presiding magistrate is to note
those admissions and concessions of the contending parties them-
selves which may be found even in apparently hopeless disputes,
and to make those admissions and concessions a basis for a judg-
ment substantially just.
Now, following this sensible idea, where do we stand after
four days of discussion, always interesting, often profoundly sci-
entific, and sometimes passing into the brilliant sphere of ora-
tory? It seems to me simply as an individual, of course that
almost every paper or address we have heard has made some ad-
mis'sions or concessions which may form a basis for some conclu-
sions, and if you will allow me I will formulate some of them
only, as follows :
1. Combinations and conspiracies in the form of trusts or
otherwise in restraint of trade or manufacture, which by the
consensus of judicial opinion are unlawful, should so be declared
by legislation, with suitable sanctions, and, if possible, by a
statute uniform in all jurisdictions, and also uniform as to all
persons, and such a statute should be thoroughly enforced, so
that those who respect it shall not be at a disadvantage as com-
pared with those who disregard it.
2. That the organization of trading and industrial corpora-
tions, whether under general or special laws, be permitted only
under a system of careful governmental control, also uniform,
if possible, in all jurisdictions, whereby many of the evils of
which complaint is now made may be avoided.
3. The objects of the corporation should be confined within
limits definite and certain. The issue of stock and bonds, which
has been a matter of so much just criticism and complaint, should
be guarded with great strictness. If mortgage bonds seem to
be required, they should be allowed only for a moderate fraction
of the true cash value of the property that secures them. As.
for issues of stock, they should be safeguarded in every possible
way. They should only be allowed either for the money or for
property actually received by the company, and dollar for dollar,
and when the property is so conveyed it should be on an honest
appraisement of actual value, so that there may be no watering
of stock.
4. And finally, there should be a thorough system of reports
and governmental inspection, especially as to issues of bonds and
stock and the status and value of property, whether cor-
poreal or incorporeal. Yet, at the same time, in the matter of
trading and industrial companies, there are legitimate business
624
secrets which must be respected by the general public. In short
we need to frankly recognize the fact that trading and industrial
corporations are needed to organize the activities of our country,
and that they are not to be scolded or belied, but controlled, as
we control steam and electricity, which are also dangerous if
not carefully managed, but of wonderful usefulness if rightly
harnessed to the car of progress.
5. We agree without dissenting voice in thanking tbe Civic
Federation of Chicago for furnishing this opportunity for edu-
cation, and the people of Chicago not o'nly for a hospitality as
large as its limits, but for the object-lesson their city affords to
teach us what can be done in America by enlightened public
spirit in associated effort.
Gaines, of Tennessee, introduced the following :
"We have met here in convention through the courtesy of the
Civic Federation and the city of Chicago. We bave been royally
entertained, not only by the convention itself, but by the citizens
of Chicago. A vote of thanks is extended to the Civic Federation
and to Chicago; to our distinguished chairman, who has proved
himself peculiarly efficient and manifestly fair; to the conference
secretary, and to those who by their participation have made the
conference a success."
The resolution was unanimously adopted.
The report of the committee on resolutions was presented by
Chairman Luce as follows : -
"Your committee begs leave to report that after discussion
and careful deliberation it has adopted' the following resolu-
tions :
"Whereas, The call of the Civic Federation, under which this
conference is gathered, inviting us to consider the subject of
trusts, contains the following language:
"'While it is not expected that a thorough investigation of
even any branch of this great question can be made in so short a
time, it is hoped that a beginning may be made and a plan adopted
for following up the work along practical lines. The local com-
mittee in charge of the arrangements is composed of representa-
tives of all political parties and, as indicated on this letterhead,
is chosen from the" various walks of life. The committee has no
ideas or schemes of any kind to place before the conference,
members have different views on the problems to be discussed, but
625
are agreed on the proposition that a fair hearing should he given
at the conference to all sides, and that everything should be done
to make it of value to the public from an educational rather than
a political standpoint/
"Therefore be it resolved, That in the opinion of the com-
mittee on resolutions, this conference is without authority, and
it would be inexpedient for it to adopt resolutions purporting to
declare the sense of the conference upon any aspect of the subject
of discussion."
The report was adopted without debate.
On motion of Louis F. Post the convention, at 5 :50 o'clock,
adjourned sine die.
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