GEORGE W. BERGE, EDITOR AND PUBLISHER
Volume 18
Lincoln, Nebraska, July 20, 1905
Number 9
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For Economic Ills
Lawson's plan to bankrupt "the system" is the plan of the specu
lator. With one wave of the speculator's wand he solves problems
that confuse and ba'ffle our best statesmanship. -
This picturesque Boston millionaire argues that if the public
will sell its stocks and bonds at present inflated prices "the system"
will have the bonds and the public will have the money. lie states,
however, that the selling of stocks and bonds by the public is merely
a necessary incident to a secret plan which he will disclose at
. the proper time. It is to be hoped that the main plan will be better
than the subsidiary plan which he proposed in his Ottawa, Kansas,
speech.
The only class of men who make money by a- big selling move
ment are the speculators. The bona fide owners of stock cannot
sell at inflated prices because as soon as a pronounced selling move
ment is under way prices fall and those who are actually selling
the stocks are the sufferers. The speculator who joins in this move
ment borrows a certain amount of stock and sells it. When prices
have fallen to a lower level, he buys back the stock and turns it over to
those from whom it was borrowed. His profit is the difference be
tween the price at which he sold and the price at which he bought
back the stocks. If the "Wall Street' Crowd" saw that the people
liad adopted the Lawson plan and were selling heavily they would
join in the selling movement and take, advantage of the "bear" de
vice just described. It is apparent that' with the great majority
on the selling side the prices of industrial stocks and bonds would
dump with terrific rapidity. At inflated prices there would be no
buyers, least of all among "the system." Only those who are known
on Wall Street as "lambs" would buy at high prices. When the
lowest possible level of prices was reached "the system" would again
buy. They would have made money all the way down from high
prices to low prices by "bearing" the market, and they would again
make money when they began to buy, for they would only buy at
. the lowest prices and would not again sell as bona fide owners until
the market began to rise.
It will be seen tnat by this method the speculators would simply
be repeating the old game which Lawson described in his speech.
But Lawson had another handle to his plan. He said to the public
not only "sell out," but "keep out." After the public have sold
their industrial stocks and bonds they should not buy them again.
If they must invest their money, they should buy federal, state,
county or municipal bonds. In passing, it is well to state that if
the public confined their buying to only this class of bond3 the
prices of such bonds would at once start skyward and the four or
five per cent that would be obtained at par would diminish to three
per cent or less at inflated prices..
Not only would the public be losers by each turn of the wheel,
but business generally would be disastrously affected. A panic would
be the result. With all buyers out of the market, business would be
at a standstill. ; .
- It is at this point that the suggestion of Judge Grossc up of
Chicago furnishes food for thought. He declares that. the great
industrial combinations should be "peopolized" as the public domain
was "peopolized." His idea is to "colonize" the trusts, so to speak. .
The wider the dissemination of industrial stocks the safer the peo
ple will be from trust oppressions.
. ... Lawson faithfully describes the means employed by "the sys
tem" to deprive the people of their money. The process is simply
to start a selling movement suclv as Lawson himself urges, then
buy in at low prices and' resell on' a rising market. This is a great
evil and it would seem as though it would be a wise plan to devise
such laws as would wrholly prevent speculation in stocks," bonds,
grain, cotton, etc. If the speculator could be eliminated from the
market the creation of fictitious prices Would be checked. Natural
conditions would control and the public would not be at the mercy
of gamblers.
Bewildered by so many patent nostrums, the people may bo
pardoned for making progress slowly. They aro interested but
not convinced by Mr. Lawson; neither will they be impressed by
the Grosscup plan, which has the same weakness as the Lawson plan,
in that it is impracticable.
On the other hand some progress is to be noted. Not only have
the people recognized the evil of centralized wealth, but they have
scanted -the remedies. Thev understand that if the processes bv
which the great trusts have been and are still being created can bo
eliminated there will be a more equal distribution of wealth in the
future. . . .. " ..;
There have been two important causes ministering to the cen
tralization of wealth in this country high tariff rates and discrimi
natory freight rates. For many years the people were deluded by
the tariff-barons, but within the last decade they have learned that
the tariff not only created trusts, but is a potent cause of their con
tinued existence. By sheltering monopoly the tariff permits the
trusts to fix prices, to sell abroad more cheaply than at home, to meet
competition in foreign countries by crushing out competition in the
; ' United States. A lower schedule of tariff rates would restore com
petition and check the trend toward monopoly. A certain amount
of combination in industry is a good thing, but combination has been
carried to excess in the United States.
The effects of a high tariff have been duplicated by freight
rate discrimination. The tendency of such discrimination has been
to build up favored shippers, -and the favored shippers have become
the great trusts and combinations. There have been low rates for
the trusts and high rates for the public, and the process by which
the money of the people has been taken from them by discrimina
tion in freight rates and placed in the hands of the trust magnates
is surprisingly like the process by which the tariff robs the people
for the benefit of the protected monopolist.
; The remedies, therefore, will be found in those means by which
discrimination can be removed and competition restored. In the last
analysis this means a radically revised tariff and the government
ownership of railways. Those who look upon the trust system a3
the natural result of economic evolution will not be pleased by such
reforms. They will contend that competition has disappeared in
accordance with the law of the survival of the fittest, which predicates
the elimination of the unfit. , . . . ;
But these high-sounding terms do not tell the truth. In no other
country of the world is a trust system to be found. Here and
there a monopoly exists, but the European trust is altogether differ
ent from the American, trust. In European countries the rail
ways have been owned by the government for maiiy years and one
cause of trusts, therefore, has been absent. In England, where
private ownership still obtains, there has been no high tariff system,
: and the other potent cause of trusts has been absent.
' ; But in the United States both causes have operated side by side
and the people will be drained of their money for the benefit of the
few so long as these causes continue to exist.
But while the doing away with discrimination will take from the
; favored ' shipper the special privilege which has permitted hm to