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About The Conservative (Nebraska City, Neb.) 1898-1902 | View Entire Issue (Nov. 2, 1899)
. -tnfUHISHf. . . . - > - - * * MJftjVM "ir ! i' ' M- Ifr1 " ' -S"5' * , ' * ' . < * 8FSSK $ * * \ * * " ' ' * > " & - * * * rTrjw * t S" i * f : f vS vyJv1 * - , Conservative. WHY CANNOT TIIUSTS CONTROL 1'KICES ? [ From The Now York Evening Post. ] To the Editor of The Evening Post : Sir : There has boon a surfeit of loose , ad-captandum discussion of the trust question by the partisan political press and in partisan political speeches. Such discussions are , as a matter of course , a mixture of bad and good with the bad usually predominant. But in a publi cation of dignity and high standing , consideration of an economic question , such as that of trusts , should perhaps be left to those who are well grounded in economic science who have the eco nomic grasp and the scientific habit of thought and exact expression. It is , therefore , with a feeling of timidity that the writer ventures to point out some grave and misleading inaccuracies' : v and other faults of an article by Mr. Roberts , director of the mint , entitled "Why Trusts Cannot Control Prices , " which appeared in the September num ber of.the Review of Reviews. The , * . ' , confident conclusion of the title betrays \ a temerity which presages its ripening into rashness in the body of the dis > cussion. The leading proposition of this dis cussion seems to bo that "the impelling motive that has brought on this general ' movement of the industries into combinations v4 . nations has been the low returns recent ly earned by capital , " and that "these , instead of signifying aggressive action by capital , represent capital on the defensive. " Now , the proposition that the returns or earnings of capital are too low is an economic self-contradiction v" " under the competitive system , whore it w must be presumed that they aiv > governed and adjusted in an open market by the law of supply and demand ; and there fore , as to such earnings , "whatever is i $ is right. " This principle is so obvious that the wayfarer has no need to go to an economic authority like Marshall to find it confirmed in the proposition that freedom is the test of the earnings to ' which capital is entitled. The assump tion , therefore , that the earnings of capital are too low involves the assump tion thit either labor or the so-called "natural agents" these two making up with capital the three agencies in pro duction has organized a trust which has arrested the free play or competition of capital and illegitimately forced its earnings down to an unnatural and therefore too low rate. We do not think that Mr. Roberts would press his proposition in view of its corollary. Under the competitive system , capital is equitably as well as economically worth | T\ Ti just what it will bring in the free and i i open market , and it cannot complain or logically aver that such returns are too low. Mr. Roberts' statement that "the f-V , * earnings of capital have been continually W- . : i. * T ' , ' , - * > < < declining , and this loss to capital has been distributed , commonly by means of lower prices , to the millions , " also makes a bad economic moss. For "it is not tenable iu theory that the increase of capital produces , or tends to pro duce , a general decline of money prices. Neither is it true that any general de cline of prices as capital increased has manifested itself in fact. " ( See Laugh- lin's Mill , Bk. 8 , oh. 11 , andBk. , 4. , oh. 8) ) . The above fallacies might doubtless be traced to a prevalent obliquity of economic vision which looks upon natural economic laws as inadequate or wrong and seeks to supersede them by man-made laws. They are close kin to that hoary contradictory contention that arrest of freedom of trade , by means of protective tariffs , is beneficent to the few protected producers by insuring them higher prices for products and beneficent to the many consumers because they have the compulsory privi lege of paying the elect producers a re ward in the shape of ho aforesaid higher prices for carrying on their private business ; as also to that other protectionist economic untruth that there is such a thing as economic over production which ought to bo restrained by statute. Indeed , any teacher in the protectionist school might write , "Why Trusts Cannot Control Prices , " "on compulsion. " Mr. Roberts' reasons for the organiza tion of trusts thus appearing to be irra tional , we are loft to take the public into our confidence ; and the public belief or opinion that trusts are formed with the primary object of monopolistic profit is EO positive and widespread that it cannot be amiss to take "judicial notice" of it. And it should be noted that this advantage is perforce to bo gained by a part of the producers and a part of the capital at the expense of the rest of the producers and of consumers in general. The comprehensive way in which Mr. Roberts uses the word capital conveys the idea that all capital has made com mon cause by going into trusts , "on the defensive , " against the wicked assault of free competition ; whereas in fact only a minor part of capital has thus assumed the defensive against the righter or the effort of the major part of capital and the major part of producers to par ticipate in production on equal terms with all other capital and agents of pro duction , the only test of such equality being free competition , which that part of capital combined in trusts evidently seeks to prevent. Mr. Roberts offers us no ground for hope that some part of the total capital or other agency of pro duction may not go on indefinitely under the trust combination levying un just tribute on all the rest. The trust is an economic disease with epidemic characteristics ; like yellow jack or the Philippine insurrection , its fiqld is wide , ' " . l' * Like these other posts , also , it mayseoui to accommodate Mr. Roberts' theory by starving out iu one spot and at the same-1 time break out in a dozen other places.- Moreover , it is an economic , if not amoral - moral , contradiction to say thtst the1 primary object of any class of business men is a public advantage or that it is- not private gain. And in the case of trusts the discriminating private gain is' secured by choking com petition , as Mr. Roberts admits , through "some kind of an understanding about prices. " But does not Mr. Roberts demolish his theory that trusts operate as a check on themselves to prevent the raising of prices above the competitive point when he demands the suppression of the evil workings of the trust family through the arbitrary regulation of one of them , namely , the railway trust ? Is not'Mr. Roberts logically driven by his own statement of his railroad diagnosis to say to this Dr. Railway Trust , Physi cian heal thyself ? The monopoly prac tice of this Dr. Railway Trust which Mr. Roberts says must be stopped sum marily by legal device has flourished in spite of his self-acting check a quarter of a century , and never was in a more prosperous state of economic outlawry than now. Competition no doubt tends to check- the natural intent and effect of trusts to' arbitrarily and inequitably raise prices ? but when would it have any appreciable1 effect ? Will it be next week or next year ? No , nor within any reasonably definite time , so far as Mr. Roberts throws any light ahead on our industrial pathway. On one phase of the question only does he relieve our anxious sus pense ; as to railroad trusts we know that "our chains are forged.For the rest his theory ' Keeps the word of promise to the ear , But breakH it to the hope. " Nevertheless , there is much valuable thought and suggestion in Mr. Roberts' paper , and it is to be regretted that it was not worked out along natural eco nomic lines. Trusts no doubt work in a general way along such lines the bettor to meet competition through more com plete division of labor and by prevention of waste in other ways. It is this economic fact Of condition" which exposes the holy terror ot the politicians anent the trust question W largely mere hue and cry , and dis courages any hope that their proposed empirical suppressive laws would , if enacted , bo of any more value than those already on the statute-books of most of the states. The politicians ap pear to strike in a Quixotic way at the outcroppings of the evil. The root is whatever interferes with freedom of production , whether protective tariffs , the so-called natural monopolies , or. what not , If these obstructions to free dom of production cannot be removed , under pur present
