332.$ "^ 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 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