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The Commoner.
MAT 19, 1905
A REflEDY FOR THE TRUSTS,
For the purposes of this articlo a trust will be
'defined as a' corporation which controls a sufficient
quantity of the product or supply of a given ar
ticle, not patented, to be able to suspend the law
of competition and absolutely or approximattoly
control the price of such an article. The patented
article is excepted because a patent is granted
by the government for the purpose of rewarding
the patentee for a contribution made by him to
society in general, and it is not only granted for
value received by society, but it is limited to 'a
term of years. v
It will not be necessary to consider at this
time what are generally known as natural mo
nopolies. These belong to a class quite distinct
from corporations in restraint of trade It is
difficult to have several water plants, lighting
plants, street car systems, or telephone systems
in one city without great inconvenience and
waste. The railroads also have some of the char
acteristics of the natural monopoly, but there is
no good reason why all the steel plants, woolen
mills, cotton mills, sugar or oil refineries, or crack
er or starch factories shoutd be under one man
agement. Before seeking a remedy for the trusts it may
be well to enumerate the evils for which a remedy
is sought. A trust, defined as a private monopoly
and a corporation which, although it has not an
absolute monopoly, has such a control over the
product as to materially affect the price and con
ditions of sale, may, without impropriety, be called
a monopoly is open to a number of objections.
First, the inevitable tendency of a monopoly
is to raise the price of the product. It is often
said in defense of the Standard Oil company that
it has reduced the price of oil. That is not true.
In so far as the price of oil has been reduced, it
E. has been reduced, not because of trust methods,
if but by the inventions which have reduced the
cost of refining and permitted the use of by-
k products. That the reduction in price would have
been greater under free competition than it has
V. been under the trust system is evident from the
fact that the Standard Oil company, as a rule, sells
for less where it has competition than where it
has no competition. Selfishness is so widespread
in the business world that it is not safe to permit
the creation of a monopoly and then rely upon tho
benevolence of the monopolist to deal justly with
the public. The factthat most trusts begin with
the watering of stock is conclusive proof that
selfishness is the controlling purpose of the trust.
Second, the tendency of a trust is to reduce
the price of the raw material used by the trust.
If, for instance, all the woolen mills were brought
under one management and one purchaser bought
wool for all the mills, the natural, if not the inevi
table, result would be a reduction in the price of -wool.
Cattlemen complain that the beef trust is
now operating on this principle.
Third, the natural tendency of a trust is to so
arbitrarily fix the terms and conditions of labor
as to take advantage of the laborer, as well a3
the consumer of the finished product and the pro
ducer of the raw material. At first the attack is
made upon the labor, organization, and the attack
may be supported by high-sounding appeals for
the non-union man, but if the labor organization
can be destroyed and the trust left to deal with
the laboring men as individuals, the result is
likely to be disastrous, to the laborer, non-union
as well as union. While a trust is able to pay
larger wages because of its ability to extort a
higher price from the consumer, yet it is no more
willing to share this profit with the laborer than
it is to forego the collection of it from the con
sumer. If one corporation controls all the plants
engaged in a certain industry, then the skilled
workmen in that industry .have no choice but to
work for the one employer, and there is not the
same opportunity for advancement that competi
tion furnishes. The laboring men justly complain
of the black list when a number of employers act
together and each one refuses to employ a man
discharged by any of the others. The private mo
nopoly gives the only illustration of a perfect
black list, because with but one employer a mnn
who loses his position at one plant can not hope
to obtain a position at any other plant.
Fourth, the natural tendency of a trust is to
"produce an inferior article. Where there is com
petition the effort of each competitor is directed
toward the furnishing of the best quality at the
lowest price, and under this system we have seen
reputations established and the character of goods
so fixed that the stamp of the maker gave added
value to he product. When one corporation con-
Written for Public Opinion
by William J. Bryan; and
Reproduced by Courtesy of
That Publication.
trols the entire market, tho same influence which
leads corporations to push up the price of tho
product, press down the prico of tho raw material,
and encroach upon the interests of tho workman,
leads it to use adulterants and inferior material.
Where there is no competitor to point out the de
terioration and to offer a better product, the con-,
sumer is helpless.
Fifth, the trust does injustice to competitors.
When there is competition between a number of
corporations or individuals, and when a monopoly
is prohibited, no one of them will attempt to em
ploy against the others the usual method now in
vogue namely, underselling in one section whiio
tho price is kept up In other sections. If a private
monopoly is permitted, the nearer a corporation
approaches to a complete monopoly the more apt
It is to attempt to drive a rival out of business by
reducing prices In the -rival's territory while re
couping from consumers in other sections. It
would be difficult to estimate the amount of injury
done to the smaller producers by the trusts that
we now have. Under just conditions, success
would depend upon the honesty, the industry, and
the business ability of the man who engages in
business. Today a man may acquire experience,
invest a reasonable amount of capital, and attend
to the business with diligence and capacity, and
yet be driven into bankruptcy by some trust which
is able to lose temporarily on sales in his vicinity
until his capital is exhausted. For that reason it
is no longer safe for the ordinary citizen to attempt
to engage in an independent business. Under the
reign of tho trusts tho reward goes to tho con
scienceless rather than to those who possess dili
gence and capacity.
Sixth, another evil that has grown up with the
trusts is the freezing out' of the small stockholders.
Those in charge of tho trust can make a good
showing and raise tho price of stock, and then
pass a dividend and lower the prico of stock, thus
manipulating tho corporation for speculative pur
poses or to enable themselves to gather in at a
low price such additional stock as they may desire
to purchase. It is not only unsafe to attempt
independent business outside of a trust, but it is
almost as unsafe to invest in the stock of a trust
Seventh, one of the far-reaching effects of the
trust is to discourage the man ambitious for inde
pendence, and when this discouragement becomes
permanent and wide-spread, it will mean a. tre
mendous loss in tho productive energy of the
country. It is said that wo now produce and
consume in the United States three times as much
as any similar population in the world. This can
not remain true if we permit a few great trusts to
monopolize the industrial system of the country
and condemn the wage-earners to hopeless bond
age. Eighth, the trust is a menace to the political
welfare of the country, for political independence
can not long exist with industrial servitude. If
a few trusts control the industries of the country,
they will bring such Influence to bear upon their
employes and upon candidates for office as to
make it difficult for tho people to assort them
selves at the polls. The influence of the trusts hos
already been felt in politics, but it will bo felt still
more as monopoly becomes more and more com
plete, and the control of the industries more'an.i
more centralized. Then, too, a single great trust
can afford to contribute more to a campaign fund
than can be collected by voluntary contributions
from all who are outside of the trusts, because the
trust can secure in favoriysm many times what
it contributes, while the mass of the people ask
for no special legislation, and therefore can not
bo induced to contribute liberally to campaign
funds.
The objections enumerated above do not ex
haust the list, but they are numerous enough to
justify the people in resolving to exterminate J,he
principle of private monopoly wherever and when
ever it manifsts itself.
The first step toward tho discovery of a rem
edy for the trusts Is a recognition of the fact that
private monopolies can not bo classified as good
or bad, but must be regarded as '-'indefensible and
intolerable." Nothing but ovil can como from nn
attempt to draw a lino botwoon private monopolies
"bonovolently mannged" and others managed by
persons who aro not benovolcntly inclined. Man
agers may die, resign, or bo removed. Bad men
may bo replaced by worso ones or better ones,
but tho position which a trust occupies beforo tho
law can not bo determined by tho virtue or lack of
vlrtuo of thono In charge In choosing botwoon
a monarchy and a republic, people do not docldo
according to the character of the man who may it
tho time bo at tho hcud of tho government. Thoy
decide accordlngsto tho. principles which underlie
tho government.
One of the objections to an attompt to classify
trusts as good or bad Is that arguments mado In
behalf of socalled good trusts will bo used In bo
half of bad trusts. But a still greater objection Is
that an attempt merely to rcgulatc-sHO-called good
trusts, without attacking tho prtnclplo of private
monopoly, results in tho trusts getting hold of
tho government and protecting all trusts.
The romedies proposed may bo divided Into
state remedies and national remedies, and thus fa
tho trusts have been qulto successful lir dodging
from tho one jurisdiction to the other. Whenevor
a trust Is prosecuted In a state It claims to bo an
Interstate Industry, and when it is prosecuted by
tho federal government it claims to bo a local
enterprise. While persons may differ as to tho
efficacy of ono remedy or tho other, there ought to
bo no differenco of opinion as to the Importance
of permitting both state and nation to omploy
their respective romedies to tho full.
Tho corporations engaged in interstate com
merce are incorporated under tho laws of various
states,, and each state Is In position to place such
limitations upon tho corporations organized by It
as aro necessary 'o protect tho public, but it
has been found in practice that while some of the
states have attempted to restrict incorporation
and to place limitations upon corporations or
ganized within their borders, many of tho states
have been led to make their charters very liboral
on tho ground that if thoy refused to do so other
states would secure tho advantages flowing from
incorporation. Tho state Qf New Jersey, for in
stance, is supporting its government by a small
tax laid upon corporations incorporated within the
state, and it has mado its incorporation law as in
viting as possible. Tho stato of Dolawaro ha
entered Into rivalry with tho state of Now Jersey
and the laws of Delaware have been taken advan
tage of by a number of large corporations.
A stato can limit the capital stock of a corpo
ration; it can limit tho dividends to be paid, and it
can limit the proportion of the otal product that
the corporation can produce or control. In other
words, a corporation created by a state can bo
limited and restricted In any way that the law
making power of tho state may consider necessary
for tho public welfare. As a director is in duty
bound to act in the interest of stockholders, the
law should be such that tho director of one cor
poration could not act as director of a competing
corporation, or as director of a corporation having
business dealings with the first corporation. A
director of two such corporations is likely to sac
rifice tho interests of one corporation to the inter
ests of the other.
Besides having the power to protect its peo
ple from corporations organized under its own
laws, the state has the power, or should have, to
place limitations and restrictions upon foreign
corporations doing business in tho stato, but there
is a difficulty about exercising this power. If, for
instance, a corporation has an actual monopoly of
the production of a necessity of life, and a stato
attempts to exclude it, either by direct prohibition
or by restrictions to which the trust refuses to
conform, the people of tho stato may punish them
selves while they attempt to punish the trust
Take, for example, the salt trust. But few states,
produce salt, and the salt trust, if it controlled
all tho output of salt, might seriously embarrass
a stato by withdrawing from it. In Kansas the
people, aro attempting to protect themselves from,
the Standard Oil company by the erection of a
refinery; and if the railroads join with tho Stand
ard Oil company to discriminate against the re
finery, tho people have it in their power to build1
a plpo line or oven a railroad. Kansas, howeverr
is fortunate in having oil wells; but few of tho
states are oil-producing, and therefore few of
them are in as good position as Kansas to fight
the Standard Oil company. While the state ought
to exercise all the power that it has, It is not la
position to give its people all the protection that
they need.
(Continued on page 15.)
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