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THE ADVOCATE AND NEWS.
11 I n innrMT nicriiccmM III. Trusts the Good and Evil in Their Development. By Professor Edward W. Bemls. Every one la acquainted with the fa mous work of Henry D. Lloyd on "Wealth versus Commonwealth." An interesting story la told of that book. One of the most famous professors of economics In this country told me, as an. illustration of the condition of the development of polit ical economy, that in -the institution in which he was in charge of economics he was arguing the subject of railroad discriminations, and discussing the effect in building up trusts. He Bald that hith erto, in his previous lectures, he had al ways referred the students to the books in the library bearing on the subject On this occasion he wished to refer to the famous work of Henry D. Lloyd, but could not for before him was the son of one of the Standard Oil trustees. This professor told me that he felt it would not do to even name Henry D. Lloyd's book as being in the library, and therefore he was obliged to forego any reference to books bearing on the subject. He passed it over with the mere reference that if they were interested in the subject they would find well-known books in the li brary. We may come to the same conclusion that Mr. Lloyd has reached himself, al though he did not exactly say as much in his book. About two years ago the chairman of a certain committee of con gress, on some subject connected with combines and trusts, wrote Mr. Lloyd asking him to suggest a bill on the sub ject. Mr. Lloyd replied to him that he had no bill to suggest; that the country was not yet ready for a solution of the trust problem; but nevertheless it is very Important to study the situation, for the country will be ready for It in time. There are two classes of monopoly In this country. Monopolies of situation are one kind. These get their peculiar char acter from their location. There is hardly room in the streets of a city for more than one series of gas mains, more than one street railway system, more than one telephone or electric light plant; duplica tion of service is annoying to the people. The same thing is largely true of the tel egraph system throughout the United States, and with the railroad system in any particular section of the country. The other kind, which leads to the trust problem, consists of combines of largo capital. Monopolies of situation and monopolies of large capital are distinct. We have before us, then, the subject of these great combines of capital, such as the oil trust, sugar trust, the steel rail trust, etc. Again, as we enter into the subject we notice two meanings of the word trust as applied to these combines of capital. One is the strictly legal name. Among lawyers the word "trjist" has a technical meaning which is not as broad as the way in which the word is used by the mass of the people or among econo mists. Among lawyers we mean by "trusts" combinations of corporations, where each corporation retains its indi viduality but puts its stock in trust with a central body, and for this purpose each corporation surrenders its stock for the time being to a central body of trustees and receives in return trust certificates. This does not mean the absolute destruc tion of the corporation, but as a matter of fact the central corporation may close up the entire plant of many of the cor porations which are not efficient and con centrate the business in other corpora tions which are more efficient. Of late the courts have been attacking those forms of combination because of the laws on the subject prohibiting them, the sub ordinate corporations, which had com bined to form the central corporation, which is the trust, go out of business. They have accomplished the same thing in a different way. They- have simply given up the subordinate corporations en tirely, destroyed the stock In them and formed one great corporation. It is prac tically the same thing as before, and yet technically and legally it is no longer a trust. It is something which is as pow erful, in fact somewhat more powerful. There is no longer the Standard Oil trust, Certainly no Kansan, and probably no edu cator In the country, la able to speak more authoritatively on trusts than Is Professor Bemls. His Investigations, especially of the KM supply and the advantages of it owner ship by the municipality, have made what he ays expert testimony In all parts of the country. Dr. Bemls Is professor of economic science at the Kansas 8tate Agricultural College. but there is the Standard Oil Company which is as powerful as the Standard Oil trust. There was one advantage that the trust possessed over the enlarged corpo ration and that was the reason why it was organized. When the corporations entered upon the trust form they could, as they thought, innate their stock, water it more successfully through the great central trust, than they could from the great corporation, because there are cer tain technicalities in law which they could not easily get around. They would find their taxes somewhat increased if they formed one great corporation and watered the stock, but corporations are now being formed in New Jersey, which Is very Hnlent In the matter of taxation and they are therefore escaping even that difficulty. We have been accustomed, in the past to competition. We were born and brought up to think that competition was the general character of modern bus! ness. We were accustomed to think that only idealists or those horrid socialists were opposed to competition, but we are now coming to find that the hard-headed business man is opposed to It. In his own business with the destruction of competition he sees a series of profits, and more and more you will find that competition is becoming unpopular, not by the teaching of the socialist, not by that of any radical theorists, but through the experience of the business men of the country. Since a week ago I took occasion to notice how many trusts were being formed of late. In the last message issued January 6 by Governor Pingree to the legislature, he gives a list of over a hundred of the permanent trusts of the country. The Kansas City Star of No vember 10, quoted a very interesting two- column article from the New York Her aid, classifying the leading trusts of the country by occupation. It appears that in oil there is a capital of $153,000,000 in four combinations. In steel the total cap italization of a few trusts, which are really working together, $347,000,000; in coal $161,000,000; in sugar, $115,000,000; in whisky, and alcohol, $67,000,000. In the manufacture of electric light appli ances and power appliances for street railway purposes, $139,000,000. Within a week the following facts have appeared in the local papers. I notice in the Kansas City Times of January 30th, under the headlng"Mecca for the Trusts," a record of trusts of New Jersey, from which it appears that at the beginning of last year $1,500,000,000 of capital had been organized in the trust form in New Jersey, and $700,000,000 more last year, January 31st and Saturday, February 4th, the Chicago Record tells of a soap trust, also of the formation In Chicago, of a milk trust, and of a sewer pipe trust at Akron, Ohio. It i3 unnecessary to dwell further on the growth of these enter' prises. But what is their meaning? In the first place they are a development of the corporation as much as the corpora' tlon was a development of the partner ship; the corporation rendered possible the collection of large amounts of capital that could not be collected for railroad building, for the running of large fac tories and stores, and it has been cus tomary to look upon this concentration of capital, which the corporation ren dered possible, as a necessary thing In the development of our machinery and of the art3. Now the trusts represent simply an other step up the- ladder in the same direction. Business was getting so ex tensive that the trust was formed to In clude all the corporations of the country doing a certain line of business. The trust, then, is a development of business organization; that is one phase of It, but when we say that we omit an impor tant qualification, an important differ ence between the corporation and the trust. Great as might be the corporation it was not formed for the purpose of putting a close to competition; It was formed simply for the purpose of bring ing together a large amount of capital for business purposes. The trust is In tended to be all-embracing and to put a stop to competition; that makes It a very different problem, so that we are perhaps now able to see what Mr. Lloyd means when he says "monopoly Is sim ply business at the end of its Journey." Printed in the Advocate and News of November 16, 1898. There are advantages in this as I have indicated, In the line of economies econ omlea in throwing out of use all poor macninery and poor factories, and the concentration of business in the best equipped establishments. We have not been able to stop the development by machinery, or the development by in vention in the past; can we stop the further development of economy that may come from the trusts? I believe that it is as impossible in one case as it has been in the other. To attempt to pre vent the development of the trusts Is to stand In the way of the whole tendency of the age. We may steer the trusts; we may In time find methods of treating tnem wnich I shall refer to a little later, but as to trying to stop the trusts or to smash them it Is impossible. That point has not yet been accepted In Amer lea, however, and you still find political parties, and politicians talk about smash ing the trusts or of them stopping their growth. Now, while it is quite easy to denounce those who form these trusts for the political corruption, which we shall note in a moment, as often atten dant thereon, yet I think we ought to see that the trust formation is not an evl dence of depravity on the part of those who form them; that almost all business men In the same situation would be tempted to do likewise. For the average business man it Is either trusts or ruin. Competition has developed until a few great business plants only are left com petlng fiercely with one another for the market, with the enormous amounts of capital that cannot be diverted to any other channels. So the trust becomes al most a necessity to the great corporations of the country as they are to-day. Now, let us notice that the trade union is a trust In many respects, precisely like the trusts of large capital. Let U3 see some of the similarities and then some of the differences. You take the average worker, who has no special skill, no spe cial talent, simply an average carpenter, an average railroad brakeman or fire man. The employer Is not particular which man he has among the hundred who come to him for work. His chief thought is to take the man that will work the cheapest. Now, then, these men these wdrklng men, have two classes of expense, just as different as the expense of the great corporation. They have the operating expenses of food and clothing; they have the extra expense which would come if they would educate their children properly and prepare for old age. But for our purpose at present, we may say that the wage worker will compete with his fellow worker until the compensation for work is very low. The labor trust, therefore, becomes practically a necessity for the wage worker just as does the capitalist trust for the corporation. You notice that a certain class of wage-work ers, having Individuality in their work, such as teachers, physicians, artists, do not need the labor trust or trade union The trade union differs from the trust or combination of large capital in several important respects, chiefly this; the la bor trust gives an equal vote to very member, independent of his wealth, or the amount that he gives to the union; virtually every one gives an equal amount in the shape of dues, etc. Every man has an equal vote in the manage ment; not bo with the trust. A few con trol the trusts, although there may be many investors. Again the laborers trust admits every one to membership who belongs to the trade, and he can at any time become one of members in the management of the trust; not so with the trust of large capital. The labor trust is a combination of the weak usually in the Interests of the weak, not of the strong in the interest of the strong, as Is the trust of large capital. We pass laws that will prohibit trusts of large capital, but it is very difficult to frame a law that will apply to one form of combination and will not apply to another in the form of absolute prohi bition with penalties, but yet there are evils in the trusts we mu3t admit They do not stop with restricting prices to that which would give a normal profit. There is another evil which we find and that Is the Increase of the number of the un employed. This Is done directly by the concentration of the business in a few of the best-equipped factories and the closing up of the rest. That, however, ia only the same policy that is the result of all invention; that which comes from every development of the arts e sad ac companiment of Industrial progress, but since we have not considered it a suf ficient motive for stopping Invention how can we say that that alone will be suf ficient In the case of trusts. Then, again, the trust tends to Increase the inequality of Income or inequality of distribution. It tends to Increase the por tion of the product that goes as rent, in terest and profits relatively to that which goes as wages, although possibly those that continue at work will get as high EEP WATCH fiT5 TTTO NFIr-VBS i n L . - - - J..- OfSIttl j.i 6'), brants ;itcurts catarrh. 4uyi Louisiana, Mo., says: "From a pain-racked skeleton I waa chan (red by Pe-m-na in to a robust man. " Mrs. Emma Miller, Loh merBburg, Barry Co., Mo., says: "I suffered with chronic catarrh of the head, noso and throat I used three bottles of Pe-ru-na and was cured." Mr. W. T. Dabney, Carl, Tenn., says: " I can recom i mend Pe-ru-na as one of the best medicines for nervous ; t prostration and liver or stomach troubles, evei heard of. I am now well. H Mr. F. Bushwall, Sealy, Tavnn nnvn! "ThaVO tried consider them the bc8t!,, medicines lor general a&'rA billty. My wife waa alsoV';j greatly benefited by them." ""V" V' Mrs. J. Carpenter, Perry, Okla., says: "I suffered from nervous headaches, M JVh4'44(-. l and my nervous system was . i ' 1 cfimnlotelv broken down. .k'.u' I received great benefit II. Goldman, Mansfield, La., says: "I have used several bottles of your Pe-ru-na for catarrh and sick neaaacne, aim io una uunswi.wi'i me more good than any-llAliJiJ thing I have ever used. I shall slvtjt recommend it" wages as they did before. That is one of the most alarming features of organiza tion. It is the most serious factor per haps in the economic situation of the world to-day, because nine-tenths of the population receive as their income only one-half of the product; they are only able to buy one-half of the product. The other one-tenth that receive one-half of the income do not care to buy the other half of the product; they prefer to invest so that they can have 60 per cent of the product ten years hence. And it is that that is responsible for the unrest of the business man, for the demand of Eng land, Germany and the United States to clothe the Philippine Islanders and the Africans, as an oulet for our mills and workshops. The time is coming when the existing situation will grow worse and worse and then something that will attack the question of the distribution of income will have to be considered, but that Is not pre-eminently a trust problem any more than it is broadly speaking a great social problem for all. Then the trust has special evils. I have thus far been speaking mostly of general evils more or less character istic of the whole social system. It has, however, some special evils. One of the most serious is Its treatment of competi tors. Perhaps I can give you a simple illustration that occurred in my own town of Manhattan, Kansas, because we like to have things concrete. I met a man on the street in Manhattan the other day who was driving an oil cart. Asking of whom he bought his oil he replied that he obtained it at the railroad sta tion from a big tank of the Standard Oil Company. Then the question arose as to whether he could get it cheaper of out side parties. He said he had tried that once.) One of the business men there had a barrel of oil which he desired td dispose of as the barrel had began leak ing, so this gentleman bought the barrel of oil of him. This was done several times. In a short time the Standard Oil Company's agent came around and said, "You are not buying as much oil as you used to; what is the matter?" He told him how it was, and the Standard agent said, "Well, you will have to stop that or we will put a wagon In here and sell oil at 3 cents a gallon or give it away, if need be, In order to run you out, if you don't buy of us." There was nothing left for the man to do but to buy of the Standard Oil Company. Now, there is something about this which is very dis tasteful, very degrading to a man of spirit. It is not so much the profits in volved. They may offer him as much as he got when independent, yet even if the financial results are as good, a man cannot help feeling pretty small when he has to give up his Independence that way, and realize that he has been clubbed; he