a laissez-faire policy toward corporations enjoying special franchises or privileges. Increased regulation and strict supervision, including the fixing of rates at certain intervals, will undoubtedly be the early outcome of the present tendencies in the sphere of public utilities. But how are the "capitalistic trusts and combinations" to be treated? What is to supersede the legislation that has proved so ineffective? The United States Steel Corporation has not been attacked under the anti-trust law of any state within which it operates. It is not a trust in the technical sense of the word; it is a corporation of corporations, and is organized under the laws of New Jersey. The meatpacking companies, harassed by the federal government, might secure immunity and freedom of action by organizing a similar corporation. Legally that would alter the situation materially; economically there would be no improvement. The people would continue to demand protection against the misuse of monopolistic power, and what would the state and national governments do to meet that demand?

Nothing, it is boldly said in certain quarters. For the first time since the rise of industrial combinations, the repeal of all anti-trust laws of the negative sort is now openly recommended. The fact is of peculiar significance. In political platforms and stump or convention speeches the declarations against trusts are as uncompromising as ever, and no public man has yet ventured to suggest the repeal or liberalization of the anti-monopoly laws. On the contrary, the politicians are advocating more rigid regulation of combinations. A Republican House of Representatives passed a radical bill vesting in Congress power to regulate trusts, and between Mr. W. J. Bryan's position on the trust question and that taken in President Roosevelt's first message to Congress in relation to the same subject there is no perceptible difference. Nevertheless the sentiment for a laissez-faire policy is no negligible quantity, and before long it will be necessary to reckon with it.

We have the following situation with reference to trusts: Some favor non-interference, the reversal of the policy of centuries, the repeal of all anti-monopoly laws and of the common

law against restraint of trade. The average man, and his representative in political life, wants more legislation against monopoly rather than less or none at all. Many earnest, scholarly, and thoughtful men are suggesting publicity and other conventional remedies. The socialists regard the trusts as unconscious but powerful allies, and predict the early "expropriation of the expropriators" by the government. Finally, the individualists -unterrified or thoroughgoing, as well as those who are not severely logical—what is their solution?

Let us examine these several positions.

Repeal would indeed relieve the governments of crushing burdens and bewildering complications. There would be no litigation, no danger of "disturbing business," no doubtful injunction proceedings, no possibility of discrimination, no occasion for conspiracies, evasions, trickery, and subterfuge on the part of the combined corporations. But what would become of the interests of the consumers? How would extortion and oppression be discouraged? No one will contend that the consumers are not entitled to the care and solicitude of the legislature, or that monopoly is intrinsically good, so that consumers have no need of safeguards and protective laws. It is tacitly admitted on all hands that the rights and claims of the consumers are paramount. In fact, the theory of the law is that even ordinary corporations for competitive business are created by the state to subserve the convenience of the public, and not to increase private opportunity for profitable employment of capital.

But two answers are possible to the question as to the consumers' interest under a laissez-faire trust policy. One of them is perhaps as well framed by Mr. Andrew Carnegie in his new volume, The Empire of Business, as it has ever been or can be put, and it may be quoted as typical. To Mr. Carnegie, trusts are a mere bugaboo. He tells the consumer that he can smile at all efforts of manufacturers and industrial "barons" to defeat economic law by combination. Mr. Carnegie writes (p. 168):

There can be no permanent extortion of profit beyond the average return from capital, nor any monopoly, either in transportation or manufacturing.

The fashion of

Any attempt to maintain either must end in failure. trusts has but a short season longer to run, and then some other equally vain device may be expected to appear when the next period of depression arrives; but there is not the slightest danger that serious injury can result to the sound principles of business from any or all of these movements. The only people who have reason to fear trusts are those foolish enough to enter into them. The consumer and the transporter, not the manufacturer and the railway owner, are to reap the harvest.

This is a plea for a let-alone policy. If the consumer not only suffers no injury, but is positively benefited by the "folly" of trust organizers, it clearly follows that, so far as his interests are concerned, anti-trust legislation is entirely superfluous. But Mr. Carnegie qualifies his statement by adding that trusts are harmless to consumers "so long as all are free to compete." This, construed in a certain way, might be very material, but Mr. Carnegie evidently attaches no special meaning to the phrase. He advises the American people "to hold firmly to the doctrine of free competition," and to "keep the field open;" but as he, in the same breath, expresses the conviction that this freedom of competition the American people are not likely to surrender, the implication is that we have now all the freedom, all the competition that we need by way of protection against monopoly and its abuses-in other words, that there is nothing to do, or to undo, with reference to the trust phenomena. If this be true, the statutes for the prevention or dissolution or punishment of combinations are without utility or raison d'être.

Now, on what facts is Mr. Carnegie's optimism based? He, and those who agree with him, cannot be charged with taking too short a view upon the subject, but it is possible to take too long a view. To say that certain things will happen in the long run is not to say that the meantime will be entirely free from hardship, confusion, and injustice. Grant that, even with the amount of competition now existing, monopoly is impossible as a permanent evil, does it follow that the temporary success of monopoly is a trivial matter, deserving of no attention from the legislature? By no means. And this is a fallacy of which Mr. Carnegie, Mr. James J. Hill, and other irrepressible optimists are easily convicted. They see that certain mismanaged

trusts have gone to pieces. They see that in some cases inflation, Napoleonic financiering, and reckless capitalization of extravagant hopes have brought failure and disaster to the promoters and partners of wildcat enterprises, and they exclaim: "Behold the triumph of natural law, your best protector and guardian! Trust this automatic regulator, and have no fear of oppression or injustice!"

But there are other facts which are not so comforting, and which cause the consumer to pause and hesitate about consenting to the repeal of all anti-trust legislation. In the first place, not all overcapitalized and inflated trusts collapse after a short and troubled career. There is a suspicion abroad that many of the most powerful combinations now in existence are not as "economic" and sound as their representatives pretend. President Schwab of the United States Steel Corporation observed some time ago in a public address that "the original trust was a dead business proposition," because it was founded on the idea of restricting production and arbitrarily raising prices, and that the new, the vital trust was strong and beneficial because it was founded on the opposite idea—of increasing production, lowering prices, improving quality, and eliminating waste. The difference is radical, but how many of the surviving combinations answer Mr. Schwab's description of the sound, the safe, the use ful trust? A competent writer has argued that the steel combination itself is really insolvent-its liabilities exceeding its assets, owing to the overvaluation of its constituent companies. Is there any touchstone to enable us to determine which of the trusts are "dead business propositions," and doomed to a speedy collapse, and which are stable, conservatively conducted, and "economic"? 1

I

'Here is what an English "business-man" writes to the London Standard concerning our trusts: "We all know the general principles of an American trust. There are, I think, nearly two hundred trusts in America, and I believe about thirty of them pay dividends. An American 'trust' might be fairly described as a process of 'making money by force.' In America a trust is usually formed by a number of companies which, in their individual capacity, cannot pay dividends, and the directors of which hope by combination, and by increasing prices to figures which are not in accordance with the natural law of supply and demand, to control the particular trade they are interested in. The companies interested sell their business to the

In the second place, the wreck of a trust does not deter the "promoters" from continuing their efforts to "organize" the industry. Indeed, the beautiful theory that trusts are created to economize, cheapen production, and foster trade, cannot easily be reconciled with the notorious fact that financiers, who know nothing about manufactures or trade, are primarily responsible for the greater number of the existing trusts. The outside promoter cares nothing for the industry he "organizes." His interest ceases when he has received his fat commission and has "unloaded" his shares of stock on the public. He is then ready for further adventures in fields and pastures new. There are, undoubtedly, captains of industry among us who create opportunities and wealth, find new outlets, and benefit both capital and labor. But there are also buccaneers of industry, and there is a general impression that the latter have had too much to do with this business of trust formation. Had it been left to the manufacturers themselves, to the play of no other motive than economy or superior efficiency, the process of industrial transtrust usually at double its value, taking half cash (subscribed by a confident public) and the balance in shares; the cash portion of the purchase price representing more than the value of the business sold, so that the value of the shares is, in fact, imma

terial."

'President James J. Hill said in a recent speech that many combinations had been created "not for the purpose of manufacturing any public commodity in the first place, but for the purpose of selling sheaves of printed securities, which represent

nothing more than good will and prospective profits to the promoters." Commenting on this remark, the New York Journal of Commerce, a conservative, intelligent trade newspaper, wrote: "A recent computation of the securities of a score of industrials showed that what purported on their face to be worth nearly a billion and a quarter dollars were not worth half a billion dollars according to the quotations of the market. It is impossible to say how much loss is represented here; many of these securities were floated at much below their face. But there have been very considerable losses in the shrinkage of these securities which represent pure inflation, and there must be much greater losses when there comes a period of bad business. The decline of stocks acts sympathetically in depressing other stocks, and losses in dealings in stocks affect the means of investment and confidence in even the best of securities. For these reasons we have from the first greatly regretted the creation of these securities, but for which most of the combinations would probably not have been formed, as nearly every effort to form a combination on the basis of the existing capitalization of the concerns to be combined was abandoned." In view of such testimony as this we are entitled to ask for a bill of particulars from anyone who talks glibly about the wonderful "economies" of the trusts.