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The Trust Question
Written for tho Chicago Tribune by W. J.
Bryan: Tho decisions of the United States
supreme court in tho Standard Oil and Tobacco
cases have brought the country face to face
with tho trust question as It bas not been
before.
When tho Sherman anti-trust law was passed
the trust development was comparatively
limited. Since then consolidation aud combi
nation have gone on until now, according to
tho attorney general's speech at Duluth recently,
nearly every great staple of industry is con
trolled as to prices and terms of sale.
Various efforts have been made to reach the
evil through prosecutions and the people, while
disappointed from time to time, still hoped for
the enforcement of the criminal clause of the
Sherman anti-trust law. In fact, there have
been recent Intimations, with increasing em
phasis, that tho criminal clause would be em
ployed, but the supreme court decisions-have
practically repealed tho criminal portions of
the anti-trust law and left the public to rely
upon civil suits.
After the decisions of fifteen years ago it was
supposed by the public that the law prohibited
all attempts at restraint of trade, whether
reasonable or unreasonable, the decisions of
tho court at that time having expressly refused
to construe the law so as to permit reasonable
restraint. The decisions in those early cases
were by a divided court, and it now seems that
the trusts had no idea of accepting these de
cisions as final.
Efforts were made to secure a modification
of tho law by act of congress, but these efforts
were unsuccessful, the last being made so by
an advorse report from tho senate committee,
which exposed the purpose of the effort and
pointed out the widespread demoralization that
would be worked by the proposed change.
Now, however, the court has done what con
gress would not do, and the judges who joined
Justice White in the opinion have tho pleasure
of seeing their logic, or rather lack of logic,
eulogized by all the trust magnates, the last
eulogy being pronounced by Mr. Parsons, who
.boasts that he organized the sugar trust, who
is now under indictment.
The question before the country at this time
is: What is to be done? With the staple pro
ducts of industry controlled by combinations,
with tho court obstructing the processes of
criminal procedure by a decision that renders
it all but impossible to convict trust magnates
criminally, what are the people to do?
Mr. Gary, head of the steel trust, proposed
regulation even to the extent of the regulation
of prices, and this principle is Indorsed by the
attorney general. The ' latter compares tho
trusts with the railroads, argues in favor of
regulation of prices, and puts the regulation of
prices upon the same ground as tho regulation
of railroad rates.
To clearly understand the situation, it may be
well to suggest that there are now three reme
dies before the country: First, tho national in
corporation of interstate industries. Second, the
regulation of interstate Industries by a board
of the court, which will have power to fix prices.
Third, legislation which will dissolve, within a
reasonable time, the private monopolies that
now exist and prevent the organization of new
ones, thus restoring competition.
Tho first and second are really one in essence,
since they simply contemplate different means
of reaching the same end. Those who advocate
national incorporation, expect, of course, that
the Incorporation will be upon conditions which
will in themselves constitute a regulation, whilo
those who advocate regulation only, without
national incorporation, will reach the same end
in a little different way.
. The objection to national incorporation is
that it is intended to do away with state regula
tion entirely and compel reliance exclusively
upon national regulation. This is objected to
and I think the objection is sound on tbo
ground that tho state is left helpless in case
federal legislation isnot sufficiently strict.
Federal incorporation is not only objectionable
but it is unnecessary. Tho federal government
now has power to employ any means necessary
for federal regulation without national incor
poration, and whatever federal regulation is
necessary ought to bo added to state regulation,
and not substituted fdr it.
The second plan is objectionable for two
reasons: First, because it is insufficient that
is, federal regulation is not a. complete remedy:
The influence exerted by monopolies is so great
that tho people would bo in a constant battle
with the great corporations to see which would
elect offlcials through whom control would be
exercised, and no one who has watched these
decisions can fail to recognize the helplessness"
of the masses when they have to fight a vigi
lant, sleepless group of financiers who have a
large pecuniary stake in controlling the govern
ment. The larger the control vested in the national
commission, or court, the more important it
would bo for the trusts to control the selection
of the mombers. If the court was intrusted
with the fixing of prices it would mean hun
dreds of millions a year to the trusts. No well
informed citizen need be told that with so largo
a sum at stake the trusts would bo active in
overy congressional, senatorial and presidential
election.
It has been suggested that the regulation of
prices would be socialistic, and there can be
no doubt that its tendency would be in the
direction of the ultimate ownership by the
government of the industries themselves. When
the country decides that competition can not
be r" stored that monopolies are a permanent
development of industry then the people will
be face to face with the socialistic issue.
The attempt to control water companies in
the cities resulted in so much corruption and
so much extortion that the cities have almost
all entered upon the municipal ownership of
waterworks. They are going through the same
experience with lighting companies, and they
will have the same experience with street car
lines and telephone companies.
If franchise-holding corporations were con
tent to furnish water, light and street car ser
vice upon a business basis' and at reasonable
rates the public would prefer private ownership.
But human nature seems too frail to be trusted
with the enormous power that monopoly gives
to those who possess it. They are not content
with that which is just and reasonable, and in
their effort to secure more they resort to means
which Bhock the public conscience and at last
compel municipal ownership.
The railroad companies partake so much of
tho character of monopolies that public owner
ship of them has been dtscussed as a means of
protecting the public from watered stock, exploi
tation and extortion. But public ownership of
railroads, if it comes, will not be nearly so
great a tax upon the government as the owner
ship of industrial enterprises.
Before the people admit that competition is
impossible and concede that monopoly is a
necessity, they had better look ahead for mo
nopoly in industry. It has none of the elements
of the natural monopoly.
Competition is practically impossible in the
matter of water, light and street car service,
and competition is being reduced to a minimum
by railroad consolidation. But in the' case of
industries there is no good reason for monopoly.
The corporations that now control the various
industries have many plants, and some of these
plants are quite independent In management.
The only reason for combination is to prevent
competition, and the only reason for preventing
competition is to secure larger profits.
The trust is not an economic development any
more than horse stealing or burglary. The man
who holds up the passenger on the highway acts
upon the same principle that underlies private
monopoly. Tho trust conducts highway robbery
on a more polite and more extensive scale. But
there is no distinction from a moral standpoint
between the trust methods and the methods of
the highwayman.
If the public does not see that the methods
are identical, it is because the glamour of finan
cial success has obscured the processes by which
the victims' money is extracted.
The third plan is, to my mind, the only one
consistent with history, with economic princi
ples, and with the publls welfare. Private mo
nopoly should be regarded as indefensible and
intolerable, and legislation should be enacted
which will compel the dissolution of all monopo
lies now in existence and make it impossible
for a private monopoly to be created hereafter.
The democratic platform outlines a plan, and
our new form of government m'akes this plan
easy of adoption. The plan is in substance, as
follows: Let a license be required of interstate
commerce corporations when they pecure a cer
tain proportion of the trade.
51 Monopoly depends- upon the proportion of
VOLUME -li;j NUMBER 49
control. A corporation that controls 5 per cent
of the product in which it deals can not regu
late the price or fix the terms upon which others
daljusiness. If, however, it controls 95 per cent
of the product, it can fix both price and terms.
Somewhere between 5 per cent and 9.5 per cent
the control becomes effective in the establish
ment of a monopoly.
As congress has complete control over inter
state commerce, it can fix the percentage at any
amount. Our platform suggests 25 per cent as
the point at which a license should be required.
But the percentage is not so material as tho
principles to be applied," and tho percentage can
be changed whenever experience proves that it
is too high or too low.
The proposed license differs essentially from
national incorporation. The license system
recognizes the right of the states to incorporate,
and it should also 'recognize the right of each
state to fix any condition it pleases upon foreign
corporations doing business in the state. A
license would not grant any new powers. It
would simply be a restriction upon the powers
already possessed by corporations.
The plan proposed in the democratic platform
contemplates a regulation of the corporations
that take out a license with a prohibition of
more than 50 per cent control. That is, a
licensed corporation would be permitted to en
gage in interstate commerce on such terms as
were fixed by the federal law and by state laws,
but would not be permitted to control more than
50 per cent of the total product.
The 50 per cent limit also is arbitrary, and
may be raised or lowered to conform to experi
ence, the object being to compel corporations to
come under federal supervision when they roach
a point where they may exert a harmful in
fluence over trade, and to stop when they reach
a point when a harmful influence may be pre
sumed. The license should require proof of
paid-in capital and absence of "water," and
licensed corporations should be prevented from
employing any of the means which are now re
sorted to for the elimination of competition, as,
for instance, selling at a low price in one section
and at a higher price in another.
It will be seen that under the license system
a change can be made at any time,,, not, only in
the percentage but in' the 'conditions upon
whioh the license is granted and in the regula
tion applied to licensed corporations.
The object of this systein is that it restores
competition and leaves competition to- regulate
price, terms, quality, and so fortlf. It has tho
advantage also of relieving from interference
those corporations which are too small to exer
cise a restraint upon trade.
In other words, the plan hits the evil at which
it aims and not only relieves the smaller corpora
tions from embarrassment but protects them
from such rivals as attempt the employment of
illegitimate means for the extension of their
business. The plan restores competition and
wards off the danger involved in regulation,
which has been fpund unsuccessful and would
likely be found so corruptive as to increase the
demands for government ownership.
The democratic plan also, avoids an Increase
of federal power, such as would be involved in
national incorporation, and it protects the right
of the state to deal as it will with corporations
entering the state.
This plan has been before the country for
eleven years, the principle of it having been set
forth in the platforms of 1900 and 1904, as well
as in 1908. The last platform, however, pre
sents the plan more elaborately and introduces
limitations which relieve the smaller corpora
tions from national surveillance. No other
plan except that proposed in the democratic
platform promises any relief to the honest busi
ness man who is anxious to obey the law.'
We have no definition of monopoly to which a
manufacturer can look for guidance, He knows
now that he can restrain trade in a reasonable
way the supreme court has told him that; Tiut
each case will be decided upon its merits and he
will not be able to learn without years of litiga
tion just how far he can go without being guiljy
of unreasonable restraint.
Is it not time to pay somo attention to tho
just demands of the honest business man and
relieve him from anxiety - and expense at the
same time that the country is relieved from the
conscienceless depredations of the monopolist?
Such relief is possible. The plan embodied in
the democratic platform protects tae honest
man, restrains the corporation which attempts
to control business, and does it without Invok
ing any new principle.
There is no tenable middle ground between
competition and government ownership. When-
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