"TRUSTS" IN THE UNITED STATES.
WE referred last week to an extraordinary legal case lately decided by Judge Russell of the New York Supreme Court, in the course of which it was shown that a private firm of chemists had been forced to seek, apparently in vain, for the protection of the law against the measures taken by the National Wholesale Druggists' Association to prevent the trade from dealing with them. Such cases as these are only too common in the United States, whose enterprising citizens, ready to develop any tendency to its extreme, whether of good or evil, have given the rest of the world an object-lesson in the evils that may be wrought by combinations, or "combines," as they are more characteristically called, for trade purposes, when their power is not tempered by the wholesome in- fluence of Free-trade.
The process is a fairly simple one, though it requires a certain large-minded daring and a good deal of unscrupulous tenacity. A group of powerful producers is formed, sufficiently strong to obtain such a hold upon the market in any particular commodity that it can practically dictate the price; it then proceeds to buy up the other producers and absorb them into the "ring," generally on terms named by itself, and if any are found to be recalcitrant, it either kills their trade and drives them into bankruptcy by offering goods to their customers below cost-price, or adopts the less expensive method, objected to by the plaintiff in the case to which we referred last week, of " circularising" the obstinate firm's clients and advising them to deal with it no more. Such tactics as these, assisted, if joint-stock industrial concerns stand in the way of their success, by such devices as "bear" attacks on the companies' shares and the concoction cf rumours damaging to their credit, are bound, if the " com- bine" is sufficiently strong, well capitalised, and un- scrupulous, to overthrow the most securely established opposition, and to bring a whole industry into the grip of a gigantic monopoly. The system requires tactful manage- ment; it must not be applied to a commodity which can be supplied in indefinite quantities without much preliminary outlay,, or can be easily dispensed with and replaced by substitutes. Such conditions as these are unfavourable to the aspiring monopolist, but within certain obvious limits it is practically impossible, under a protec- tive regime, to fight against the system of Trusts, which has been developed to such perfection in the United States as to provoke legislation, and has then snapped its fingers at the law which it evaded by dropping the name of Trust and assuming the more high-sounding title "Association." Now it is absurd to suppose that all such combinations in the United States force their way to supremacy by unfair means, though Englishmen are very apt to do so owing to their soundly based detestation of anything that smacks of monopoly and trade restriction ; but we have no hesitation in asserting that the power of these associations, whether fairly or unfairly built up, is an unqualified evil from every point of view. The extent to which this power has been developed is astonishing. To take an example at a venture, we find that the American Sugar Refining Company "became, in January, 1891, the owner of all the property theretofore belonging to the Sugar Refineries Company, originally organised in 1887. Capital stock, originally $50,000,000, was increased in January, 1892, to $75,000,000 to acquire the capital stock of the four Philadelphia refineries, and to a controlling interest in the Baltimore refinery," &c. In January, 1893, a list was made of all the refineries in the United States neither controlled by, nor working on an " understanding " with, the Company in question. There were but four in all, and their aggregate daily capacity, at an outside estimate, was three thousand eight hundred barrels, whereas "the daily capacity of refineries operated or controlled by the Sugar Refining Company was said to be about forty thousand barrels a day." Here, then, we have a corporation with a capital of £15,000,000 sterling, and assets valued in its balance-sheet at £21,000,000, "operating or controlling" refineries which can turn out more than ten times as many barrels as all the other refineries in the United States put together. It is not surprising to find that it has been finan- cially successful. The Commercial Chronicle, from which we have gleaned the foregoing figures, tells us that the Company's ordinary stock has received the following dividends since its formation :—In 1891, July, 4 per cent. ; in 1892, 101 per cent. ; in 1893, llt- per cent. and 10 per cent. " extra ; " in 1894, 12 per cent. ; in 1895, 12 per cent.
There is no need to insist upon the fact that the exist- ence of such corporations as these, holding a position of tyrannical supremacy in a certain industry and paying large dividends on an enormous capital, is detrimental to the interests of the consumer. It is the fashion to abuse competition in these days, and to contend that the race to outstrip one's fellow-creatures in producing a good and cheap article is not consistent with the highest ideals of humanity. Without attempting to soar with modern criticism into the empyrean of transcendental economics, we may perhaps point out that there is something to be said for a system which provides our poorer classes with the necessaries of life and many of its lesser comforts at a rate which leaves the most modest income some margin to be devoted to culture or other purposes. The effects of the "combine" system, though its organisers have worked A tactfully and discreetly, always endeavouring to stop just short of the point at which their exactions would become intolerable, may be judged from the fact that one of the great parties in the United States has been " captured " by enthusiasts who can see no way to salvation except through the destruction of the whole commercial fabric of the country. It is not only that the consumer has to pay more for his goods, and that the power of the Trusts is closely connected with the truck system which nearly provoked a revolution in England in the days of the Chartists. Owing to the existence of these huge monopolies individual enterprise is crushed ; no one can dare to "set up for himself" with the cer- tainty that if he works up a business worth having, he will be driven out of the field and his connection will be seized on by a corporation with millions of capital and a centralised organisation behind it ; and thus opportunities for the legitimate development of trade are hopelessly lost, because the great corporations, though their existence keeps the small trader from starting, cannot possibly spy out all the openings into which their industry might flow under normal conditions. Assisted by a tariff which prohibits foreign competition and by the restrictions which legislation has imposed upon banking, thus checking the free supply of credit, combination has been developed in America to a point which justifies the existence, if not the methods, of a party sworn to overturn the country's commercial system. We often hear that this is an age of amalgamation in England also, and it is certainly true that large combinations both of retailers and producers are encouraged by the limited company system ; but here such unions tend rather to cheapen prices by centralising the administration and diminishing working expenses, and we have no need to fear any possibility of " corners " as long as an abundant supply of credit is ready to the hand of any enterprising com- petitor, and as long as we have not only England but the whole world in which to make our purchases. The only matter in which freer competition is perhaps needed here is that of transport. If the great competing lines choose to combine to keep up rates, it is out of the question to build a new network of railways merely for the purpose of bringing them down. So that the railways from the nature of the ease have something like a monopoly, and, if we are to believe a tithe of the assertions of traders when they are airing their grievances, make a bad use of it. In such a case as this there is no remedy but Parlia- mentary interference ; but we may at least be thankful for the free play of competition which our fiscal system secures for us, and for the fact that though a" corner" in financial articles of restricted supply such as stocks and shares is not unknown in England, we are not liable to the tyranny of trusts and combinations in the world of pure commerce.
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