the impelling power, and the banks are prepared to afford as much support to business as they were giving on the eve of the unsuspected panic. These certainly are not the sort of conditions that are ordinarily found at this early stage after an ordinary panic; and for this, among other reasons, I do not expect recovery in this case to follow the pace of former tardy recoveries.

"The most stubborn obstacle that now remains to be overcome is the suspension of business until the new tariff duties take effect. Here, also, I think the real probabilities are underestimated in the present gloomy public mood. We have already used up our stocks of merchandise to the verge of absolute exhaustion; our imports are declining to such an extent that the December arrivals of dry goods at New York were only one third of those of a year ago. With supplies in this condition, and with the current output of manufactures falling behind the requirements of consumption, it is not difficult to see that our closed factories must reopen long before the new tariff goes into operation; and, with the reduction in the prices of raw materials and the general concessions in wages that are taking place, there is no apparent reason why moderate profits should not be made upon an early resumption of operations. In proportion as work is resumed, labor will be better employed; and the better employment of labor will extend the market for goods. Under these conditions, the way seems clear to a gradual revival of business and a steady sliding into a healthier and more active condition of affairs. Any mere mood of feeling proves to be a transient sentiment among an active commercial people, and, in this case, we will soon recover our courage and cease to view the situation 'through a glass darkly.' By the close of 1894, I expect to witness a degree of recovery far beyond what most of us now dare to predict. To that extent, I am willing to become a prophet."

Now, this process of reasoning was based on a comparison of the past with the present, and the conclusions were drawn on premises that left out the surprises which never can be foreseen. Such results might have been as foreshadowed, even in the face of the semi-free-trade measure, had it not been for fresh agitation at the wrong time on the silver question in connection with the Sherman Act.

Nobody can now dispute my right to reason on the practical consequences of the Wilson Law after it has cost the nation

a positive deficiency debt of $200,000,000; to say nothing of the far greater loss in trade and commerce and the various national industries, together with the untold sufferings borne by the armies of idle laborers, the depressed and bankrupt condition of our farmers; and last, though not least, the business of Wall Street reduced to a state of stagnation never experienced prior to that time. I refer to the time between the passage of that measure and the inauguration of Mr. McKinley, and for a month or two after the latter event, while free-trade consequences were still at work and ably assisted in their depressing effect by obstructionists in the United States Senate.

CHAPTER XXII.

THE TRANS-MISSOURI CASE.

A ruinous decision of the Supreme Court of the United States. — Destructive influence on values and a blow to general business. - A pool law wanted that will ensure railroad and business prosperity.

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HERE has been no other subject, perhaps, in the industrial world or in finance and economics for a long period, on which there has been a greater variety of opinions than on the decision of the United States Supreme Court in the case of the Trans-Missouri Freight Association, on the 22d of March, 1897. Nor has there been any other decision in a long time which took by complete surprise so many judges, lawyers, financiers, railroad managers, and newspaper men.

It is my opinion that this famous decision has done more injury in the disturbance of values and the wrecking of fortunes than any half dozen judicial decisions that have ever been rendered in this country. It came, too, in the very worst possible time, just when the country was making the hardest struggle for recuperation.

This Trans-Missouri Association, composed of eighteen railroads beyond the Missouri River, as its name indicates, and covering territory between that eastern boundary and the Rocky Mountains, had entered into an agreement, the real purport of which was to maintain rates up to a living standard on the "live and let live" principle for all, and so as to prevent any of the properties from being driven into bankruptcy by what is known in railroad circles as "cut-throat competition."

Looking at the matter from a common-sense point of view, there seems to the ordinary mind, unbiased by any predilec

tions, nothing unfair in a proposition of this kind. It was merely an arrangement for mutual defense, the bond of mutuality being assurance that the weaker brethren would not or could not readily shirk the maintenance of the principle of the Association upon which its efficiency, vitality, success, and very existence depended, namely, that of inseparable union for one and the same purpose― protection to all.

The essential motive was to maintain reasonable rates, and the object of the association is stated clearly by itself in the following language, "For the purpose of mutual protection by establishing and maintaining reasonable rates, rules, and regulations on all freight traffic, both through and local."

The particulars of the agreement, which are described in detail, relating to management and disposition of freight throughout the territory of the Association, are of no special interest.

In 1890 there was a law passed of which John Sherman, then United States Senator from Ohio, was the father. This law was directed against trusts that were organized in restraint of trade and against public policy. The act was termed "An Act to protect Trade and Commerce against Unlawful Restraints and Monopolies." The first short section describes, in brief, all that is material in the act, for the purpose of understanding its design. It reads as follows:

66 "Every contract or combination, in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations, is hereby declared to be illegal. Every person who shall make any such contract or engage in any such combination or conspiracy shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments in the discretion of the courts."

Now, the point to be proved in this case is that the Association in question had been guilty of the offense against which the act is directed, namely, "conspiracy in restraint of trade," and arguments of great length were used for the purpose of

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proving this allegation. The opinion was written by Justice Wheeler H. Peckham and consisted of about 25,000 words. Some of the arguments are strong, but some of them are farfetched, and, to the minds of the able minority of four judges of the Supreme Court, were far from being conclusive regarding the guilt of the defendants.

If the Sherman Anti-Trust Law and its latest interpretation by a bare majority of one in the Supreme Court are to stand, it is difficult to see how any business where more than one is concerned on either side, can be transacted legally. Almost any transaction can, by strict literal interpretation of the words of the statute and the nature of the case, be construed as implying "conspiracy and restraint of trade."

It seems to me that the effect of the Joint Traffic Associations is to hold up the weak roads, whereas the decision of the Supreme Court is to drive them into bankruptcy, which will enable the strong roads to acquire them on their own terms. This will make poor corporations poorer and rich corporations richer. If railroads are to be compelled to surrender to the decision of the United States Supreme Court, then consolidation of roads will be the inevitable result, and before the close of the next decade we may witness in this country four or five great systems of railroads, instead of, as at present, several hundreds of them. Already strong evidences of this appear in the New York Central and Pennsylvania acquisitions. Neither the Supreme Court nor Congress can interfere with one road leasing itself to another, nor preventing one road from buying another; therefore, instead of discouraging consolidation of roads, which should be the case for the general good of the country, the Sherman Anti-Trust Law, under the Supreme Court decision, will drive them into a confederation comprised of few.

This process would certainly be in "restraint of trade," and would so far restrain the smaller roads as to wipe them out of existence, making the monopolistic circle of management more and more circumscribed at every freezing-out operation, until the supreme managerial power would be in the hands of a few