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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
