The commoner. (Lincoln, Neb.) 1901-1923, November 01, 1913, Page 6, Image 6
r,yfslf,ifm'w'rmfm!:'i The Commoner iVOD. 13, NO. 31 Government Evolution and Industry The Trust Problem ! r X :h (II ' If ' An address by Josoph ID. DavieH, Commisslohor of dorpqraUons, before the National Association of Hardware Manufacturers, at Atlantic City, October 31, 3 913. Government and industrial society are both organisms, subject to the law of evolution, which Gladstone dpllnod as a continuous "series with devjplopnftmV' They are Intimately related and .connected. Economic laws in industry have produced conditions that demanded the enact ment of civil law; whereas civil law. on the other hanl, has created conditions which have de veloped now types of industry and have changed and'.mQdiflcd economic law. Change in either induces, and demands change in the other. ' RAPIDITY OF MODERN INDUSTRIAL , - CHANGE M'ddorn industrial society has changed much more rapidly than tho development of law in government with reference thereto. Steam, electricity, and invention broke down tho privi- . lotfe of both "baron" and "cild" of medioval times, 'and opened up tho modern era. The annihilation of space opened with great rapidity now ileitis. A now spirit of individualism came, and with it a Hood of now industrial energy. Out of these conditions came the modern era of Unprecedented organization and consolidation. Tho old partnership, with its individual liability of each partner, and with its limitod capital, soon became out of tune with the great move ments of tho time, and there was created by law a new artificial person, tho corporation, which insured continuity of management independent of tho life of individuals; which enabled many partnors to join capital in enterprises, freed from the individual liability of tho old partnership. Competition was alleged to be destructive, and tho advantages of size and combination were ex ploited; costs would be roduced, business could bo extended, prices could bo increased; but all animated and directed to one end, and inspired by one motive to increase the individual profit. The corporation Invented the "pool,'' an organ ization of corporations to control output and prices. The pool, in turn, gavo way to tho trust, tho trust to the holding company, and the holding company to common ownership in affili ated corporations, with interlocking directorates, which made for a concert of action quite as effectively as a single consolidated unit. Tho development of the last fifteen yoavs in corporate organization is unprecedented in his- h tory. Tho business world is organized on a dif ferent basis than heretofore. Giant concerns furnish our meats, sugar, Hour, woolens, kero sene our steel, locomotives, 'plows, harvesters, telephones, bathtubs, paper, schoolbooks, chew- ing gum our matches, gas, breakfast foods, bacon, bread, ice and all our long list of daily h- needs. BIG BUSINESS UNITS Within" the last decade and a half, two hun dred corporations have come into boing which ow.n property of the value of $22,500,900,000. Two hundred artificial persons, one ton-thousandth of one per cent of the natural persons Of this .country, own three times as much wealth as this country owuc ' -a 1850. This sura is throe and,, a half times the total interest-bearing debt 'M ofithe .United States. The gross income of one o? these artificial persons is equal to the total revenue pf the government from .internal revenue and customs. Twenty-four of those corporations have three and a half times the gross income of tbp federal government. CONTROL OF LABOR Jflo porporation employs 21$J000 men, which is"' more than the total population of New Hamp shire, Vermont; Florida, North Dakota, or South Dakota; another single corporation employs 38,000 mefi, more than the total male voting pbtmlatiori- of the, state of Nevada; and still an other corporation employs more men than there are maids In the sovereign state of .Nevada. 'These facts are not cited as mi indictment .against the men engaged in these enterprises.' They are cited simply to show the way in which wo are going. ., "'I'he framers of the Sherman law foresaw this development, and sought to anticipate it. The period of greatest development in this movement, : however, occurred in the face of the Shermau law and after its enactment, and prior .to 1904, when It was first sought to be made an active agency for government. Events in the development of industrial evolu tion have moved, therefore, with great rapidity in tho last twenty years. There has come an economic revolution. Changes of great import ance have come into our industrial life, which affect tho lives and purposes of many men and women. Primitive men first demanded lav and its en forcement to protect his private right in the fruits of his industry against tho encroachments of the unorganized' many. Conditions have now reversed. The unorganized many are demand ing that law shall protect their rights from the encroachments of the organized few. The covenant of our political faith in this govern ment, which was conceived with tho idea that it should be the trustee for all the men and women who made it up, is that government itself is in stituted among men designed to secure certain rights to all men, and it therefore becomes in cumbent upon a government of this kind to take cognizance of this evolution in the industrial world and these changed conditions, with the result that there confronts us today the so-called "trust problem," which is nothing more or less than the problem of what shall be the just, fair, and scientific attitude of government, in the interests of society, toward industry and busi ness in its present stage of evolution. GOVERNMENT AND A STATE WITHIN A STATE Government or society is concerned with these tremendous industrial units from several dif ferent angles. That which confronts us im mediately is, what effect liave these gigantic concentrations had upon the question of repre sentative government and its perpetuity? Is thore danger of a state developing within a state? Is there danger of the child becoming groater than the parent? What Safeguards, if any, must tho state throw about itself, so that the powers of government may not be subverted by reason of the greed of men and inherent human selfishness? An investigation of the con gress of the United States only recently con ducted has given evidences of certain insidious influences that attack '.he integrity of govern ment'itself. GOVERNMENT AND RELATION TO LIVING CONDITIONS The effect of those tendencies in our industrial life jipon the lives and habits of living of men and women who toil, and upon the standard of living of the present generation and the standard of health of futuro generations, is the problem of tho department of labor. CONGRESS AND THE TRUST PROBLEM The economic aspects of the problem, to-wit: what is the fair, just attitude of government to the capital invested in and the men interested in and directing these great enterprises, as well as to tho public at large, what shall be done to preserve freedom of opportunity for business, is tho problem congress will address itself to in the immodiato future. There aro wide variances of belief as to the treatment of this problem. Some maintain that the Sherman law in its present condition, with a -few amendments, is sufficient. Others there are who maintain that the Sherman law, oven though-amended, is negative in its effect, 'and not constructive in attacking the problem; that what is needed is not only a declaration of what can not bo done, but a definition of what can legally be done. Some offer in solution an inter state trado eommission, to proceed upon the theory that monopoly should be frankly recog nized and regulated, even to the extent of regu lation and control of prices. Others advocate a similar commission, whose object and purpose however, shall not be to regulate monopoly, but to regulate and control interstate business in supplementing the Sherman law by aiding the courts in the restoration of competitive condi tions, and in giving force to the decrees of the courts; charged with the additional power of de fining what shall constitute fair and unfair competition, what shall constitute reasonable restraints of trade, and what agreements, now apparently in violation of 'the Sherman law, are not in fact in restraint of trade and should im permitted, together with other similar nower Still another plan has been suggested which looks to keeping the control of this question more within the province of the individual states, by making it illegal for any corporation to do an interstate business unless the require ments of its charter, granted by the states re spectively, should contain certain inhibitions upon the activity of such corporation, looking to the prevention of the issue -of watered stock to the prevention of interlocking ownership and common directorates, and other similar condi tions which are alleged to be the operating causes for the evils of the present condition. QUESTION OF FACT FUNDAMENTAL But back of the immediate action to be taken to remedy certain evils that are patent, there lies a fundamental question of fact to be deter mined, upon which must rest the ultimate and correct solution of the problem and the final atti tude of government. In the last analysis, society is concerned with the question of which of the two types of industrial system is the most advantageous to the general welfare. The question resolves itself into whether the monopo listic system of large units or the competitive system confers the greatest advantage upon society. The advantages and disadvantages of each are questions of fact, and one of the para mount considerations therein is the question of cost of production. The efficiency of an in dustrial system will bo finally gauged by tho people, in a largo measure, by the difference in the cost of what they buy; and that system which produces most cheaply, and does not induce other and greater evils than those sought to be remedied, would be regarded as the final econ omic fact, in a large degree, by the consumer. One of the fundamental facts, then, to be deter mined is the question of the efilciency of the trust, the question of whether increase of the size of capital and organization necessarily means a lowering in tho cost of production and distribution to the ultimate advantage of the peoplo who buy. MONOPOLY AND SOCIALISM It is the contention of the -monopolistic school of -thinkers that the economies of large-scale pro duction do continue and increase with the size and organization; that through the processes of manufacture and distribution, costs are reduced extraction of raw materials from the earth and processes of manufacture and distribution, costs are reduced as size is increased; that size confers other and additional advantages in the develop ment of foreign trade, in the encouragement of invention, and the utilization of by-products; that . the system of monopolistic units is therefore the last word in the evolution of industry, and has displaced the competitive order of things as clearly as machinery displaced hand labor a cen tury ago. It is contended, therefore, that tho proper attitude of government with relation thereto is to take such action as will insure that the public generally shall participate in this scientific advance In industry, even though it must go to the length of regulating and con trolling prices. LAW CAN EFFECT ECONOMIC. REVOLUTION To attempt to do otherwise,-they claim, would be an attempt by civil law to stop the operation of economic forces and fundamental facts; to stop evol ition, which it is claimed would be as useless as an attempt to stem the tides or to prevent the operation of some other nat ural phenomenon. There is come truth in this ' position; but more fallacy. Because a condition exists is not conclusive that it is the result of fundamental natural and econ omic laws, or that it is right. Modern condi tions in industry aro the result of civil laws made by men. Economic society and its prosent day development has been directed, -shaped and formed by the laws of men. Property is a creation of law. The right to take property, the right to descent, comes only by virtue of law. Tho form of the' law of descent may shape the economic development of a nation. , The law of England gave landed estates" to th'e first-born male child. France abolished primogeniture a hundred and twenty-five years ago, and by law declared that property should descend to children equally. England's present-day economic de velopment and problem of landed estates, ab sentee landlordism and pauperism is due in a measure, undoubtedly, to the law of primogeni ture. The economic prosperity of France, as shown by the high average of individual wealth, is the result of equal descent of property, in large