road stock books, showing wider distribution of stocks, might well extend to all sound corporations under laws securing honest management.1

Finally, There is No Lack of Remedies, it will be seen, many of them tried and proved in other countries; nor in agreement and desire, among the best thinkers, to take the action required by conditions. Bringing our corporations to the publicity and honesty prevailing in Europe, reforming the tariff, prohibiting clubbing, and exercising watchfulness over naturally monopolistic resources and services-in these and other lines, legislation safe and easy of enactment seems to be within reach. Public evils spend themselves now and then, and subside from notice for a time; but their causes usually continue, and soon, if not removed, the evils lessen materially the sum of human well being. Allowing the trusts to go ahead unchecked, until their excesses were removed by the laws of nature, would be little more excusable than to abandon a community to be thus relieved from a serious contagious disease. It seems that these monopoly problems have been considered long enough, and that the time for a start in action of a new and effective kind will be in the earliest sessions of Congress and of the

'New York's corporation law was slightly amended in April, 1901, making directors liable for paying from capital dividends not earned, and adopting partially the suggestions in the proposed law above as to the stock book for members' inspection, and as to consideration for issue of stock. Some such changes were made in 1900 in the law of New Jersey. Governor Nash of Ohio recently sent in a strong message on controlling and taxing corporations. The main purpose of the New York legislation of 1901, however, was not additional restriction, but greater liberality, to attract incorporated capital. Liability of stockholders and directors was lessened, the tax was reduced, and the power to borrow was enlarged.

The French and German corporation laws are now similar to that proposed by Professor Jenks, but in Germany a demand has arisen for greater publicity with trusts. (The Nation, Jan. 2, 1902.)

The part

state legislatures. Even a little legislation of the right kind would be of great benefit, especially in corporation laws similar to that proposed for New York. of each voter in the movement is carefully to inform himself, and to add his individual ideas to the great current of public opinion. Only through it does legislation come.1

1 Prospects Are Unpromising Just Now for the above reforms. Congress this session, to a larger extent perhaps than usual, has been occupied, not with legislation likely to result in (or even designed for) benefit to the people as a whole, but with measures urged in each case by a class expecting to reap personal profits, or urged by politicians hoping thus to hold or gain favor among voters. One of these measures is the bill to pay millions annually in subsidies to shipping, despite the facts that our shipyards are now vastly more prosperous than at any other time since the Civil War, and that we have enterprise and capital without limit to establish new lines of ships over every route offering natural profits. Another measure is the bill to tax oleomargarine out of existence, that poor consumers may not choose to use this cheap and wholesome article, but must buy butter or nothing. Another movement is the effort to retain every fraction of tariff advantage, without regard to consequences in Cuba, or among unprotected producers and consumers at home. And labor unions, whatever their resolutions on the wrongs of the common people, follow the custom of seeking class benefit at public expense, demanding eight-hour and anti-contract laws by which public labor must cost more than it naturally sells for. In all this class clamor there is scant attention anywhere to the only means for actual removal of wrongs complained of-to reform of railroad, tariff, and corporation laws on lines suggested by the Industrial Commission, and by Presidents, Governors, and economists. Widespread complaint of the raise of prices by the beef trust includes little demand for a real remedy-for revision of the Inter-State Law so as to abolish discrimination, and for free admission of cattle and meat from Canada and South America. In view of the ease with which capital prevails in a contest for special favors, it is not very surprising that Mr. W. J. Ghent, in his notable article in The Independent of April 3, concludes that now, as in ancient democracies, the people will let their liberties slip away, and that the power of wealth will be established in a modern feudalism, marked by benevolence to the classes ruled, because they can thus be exploited most effectively. But are not a series of unblushing demands and practices necessary to awaken the great honest public, and to force it into permanent reforms? That an irresistible movement for tariff revision is about to set in, is admitted by some who are are trying hardest to stave it off. With it may come other pressing reforms.

CHAPTER VII.

THE PROPER AND NECESSARY MEASURE OF MONOPOLY.

Monopoly From Giving Best Values. — Any trust that continues to exist as a monopoly solely because no competitor can offer goods equally desirable, cannot be wisely attacked, either by law or by public disfavor. So long as it makes no effort to weaken or drive out competitors, but goes ahead surpassing them all in serving the public, it is a benefactor, and will not only deserve but will receive substantial reward. It is doubtful if there ever has been such a trust-one that long remained in power without help from a patent, a tariff, or a natural monopoly. If the Standard Oil Company has entirely given up evil practices, it may now be such a trust in part, so far as not made a natural monopoly by its pipe lines and terminals, unless present merit is lessened by bad methods in past attainment. If it surpasses competitors by means of valuable processes, it cannot be censured for keeping them secret, as any business man would do.'

1 Has Monopoly Caused Improvement ?-But the Standard's improvements in refining and distributing oil are no argument for trusts. Greater improvements and cheapening have taken place in other lines of business not combined into trusts. Perhaps there is no business not improved in some way. 'Charges for refining oil and sugar have decreased very slightly since the formation of these monopolies." Considering the value of many new by-products, it is thought the charge for refining oil, over cost of the crude, may have increased slightly since 1882. There are probably no trusts that have not raised or kept up prices (their main purpose) when it paid them to do so, though the most successful have allayed opposition and earned profit by making improvements. Comparison of the usual 5 to per cent gains of ordinary business with the Standard's 48 per cent on a

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Large Concerns Desired Where They Serve the People Best. The steel trust likewise would be a public benefactor if its vast profits, $54,954,871 for the first six months, were derived from production made economical by combination, with cheaper and better products than could be shipped in from abroad if there were no tariff duty. Massing capital into billion-dollar corporations could scarcely be legislated against if it were necessary to attain for consumers goods of best quality and lowest price. So far as combination into larger concerns gives each person a better living, society wants combination for the same reason that it wants invention. It could hardly be wise to attempt by legislation to keep an industry divided among small producers, despite the good effect on character, if economic law in cheapness and gain drew them together.

Have the Trusts Brought Benefits?—But apparently proof of public benefit from great massing of capital is not to be found in the steel trust. Its sales abroad, against world competition, it seems to be undenied, have

capital considered somewhat watered, gives an idea as to whether monopoly does not keep up prices. A large margin of profit over cost of raw sugar has been taken by the sugar trust from the start when not engaged in fighting competition. It has paid 12 per cent on common stock deemed to consist largely of water. "Practically invariably" trusts have raised or kept up prices. (Jenks, N. A. Review, June, 1901.)

Two Changes May Not be Cause and Effect.-Similar to the argument of attributing improvements to trust combination is the argument of attributing American prosperity to the tariff. During the last half century England has prospered almost as much under free trade, with outflow instead of inflow of people and capital, without any new land to settle, and with nothing to compare with the variety of American resources. In the last twenty years she has probably surpassed America in steadiness and wide distribution of increase of wages, and increase of favorable conditions for labor. Our tariff may have been good for certain purposes, but few would attempt to prove that without it our growth would not have taken place.

been regularly made at far lower prices than its sales at home. If that is the case, a portion of its profits are a tax it levies on home consumers by means of the tariff. German trusts have been doing this extensively, charging high prices at home and selling their surplus abroad for what it will bring. This is believed to be a common practice of American monopolistic trusts, in harmony with their principle of serving where they must, but of taxing where they can. Clear proof of public benefit from trust combination does not yet appear. Combination for the sake of cheaper and better products, as explained before, would scarcely have taken the monopolistic plan of buying out a majority of the competitors, and then of doubling or trebling capital with watered stock.

Enlarging Plant to Cheapen Product.-It is not likely that the leading plants are operated more successfully now than before being united into trusts, nor with greater improvement than they would have made if continued alone. They had then the best machinery made, and ample capital in other forms. Manufacturing is a business of decreasing cost and increasing profit, as the scale of operation enlarges, up to the point at which all the equipment is of the best kind, and sufficient in size to employ the best methods, with a force of men that includes every variety of talent required. Above this point of maximum efficiency, enlargement will usually be a disadvantage.1

How Large a Business Must be to Reach the Point of Lowest Cost, enabling it to sell at lowest prices to con

1 Greatly Lowered Cost for Added Business is the rule with railroads and municipal service companies, strengthening their other means of monopoly. A passenger train as long and as crowded as an engine can pull costs little more to operate than a shorter train partly empty.