the industrial trusts, we had a fair competitive system of production and distribution. If it is possible, let us take up again the interstate commercial policy, that materially assisted us in developing the greatest union of states that is known to the history

of man.

My method of regulating and restraining the substance eating and never earning trusts would be to first have the Congress of the United States, as soon as possible, put upon the free list every article that is made, sold or controlled by a trust, and every one of the component parts of all articles manufactured by them. The answer to that would be or is, their magnitude is such that they break over any or all nations' barriers, and become international; but "sufficient for the day is the evil thereof," by the elimination of the protective tariff, we would not necessarily destroy or disintegrate them, but it would in a great measure relieve the people from paying the enhanced prices to them for such necessities of life as coal, salt, petroleum and its products, sugar, matches and the like; and then let the American Congress pass licensing or taxing act, in the exercise of the police power of the government, under the implied general welfare clause of the Constitution, as interpreted by Justice Marshall, the definer and defender of the Constitution, notwithstanding the opinion of Attorney-General Griggs to the contrary.

Are the people to be informed that it does not lie within the power of the general government to protect the government itself from the avarice and greed of some of the members of society? If such is the only power of the government, what is there to prohibit a combination of capital or wealth from buying up all the world's output of coal, or salt or any other necessity, and they saying to the other members of society, you cannot have a pound of either, unless you pay our price?

Ah! Greater than Griggs have been in error. The people will stand by the declarations of John Marshall in preference to Griggsology. Place upon all corporations a graduated tax, the rate of taxation increasing with the capitalization. You tell me it cannot be done under the Constitution. I tell you that at one time in the interest of organized wealth, the national banks, this government placed a tax upon their competitors, the issue of the state banks, that drove them from the fields of finance. Why can not that same power be exercised in the interest of the people and against aggregated wealth? Here is a way that I believe is safe and sure. One of the great political parties that is now in complete control of all branches of the national government,

will next year in its declaration of principles, declare its opposition to trusts, we are told by leaders of that party. We say, "act your opposition before you declare; you have the opportunity, give the people some performance and not so much in promise, for by 'their fruits ye shall know them.""

HENRY H. SWAIN.

Montana State Normal School.

There is no thought of entering in this paper into a comprehensive survey of the trust problem. Nor is there any attempt to seek some one simple cause for the growth of trusts. The rise of trusts has resulted from a combination of various influences, and no one cause alone is sufficient to account for all these phenomena. We have heard how an unwisely adjusted tariff has fostered the growth of some trusts, how others have profited unduly by the operation of patent laws, others have thriven because of unfair discriminations in railroad rates. No one of these causes tells the whole story, but all are important, and if the trust question is to receive any truly scientific treatment, all these, as well as many other phases, must be fully taken into account.

The case is very similar when we come to the relation between trusts and the currency. There is no disposition to claim that our currency system is the sole cause of the rise of trusts, nor that currency reform would, all by itself, settle the matter. It is maintained, however, that the relation between the trusts and the currency is so intimate that no consideration of the trust problem which overlooks this view of the matter can be other than partial and inadequate.

If we should ask any plain, intelligent business man what is the one matter of vital importance under our profit system of doing business, he would certainly reply that it was mainly a question of prices. It is utterly impossible for any enterprise to keep on if the prices obtainable on the market fall for any reason whatever below the cost of production. If the fall of prices comes about from causes wholly outside the business itself, the result is quite as disastrous as if it came from internal causes.

During the last quarter-century or so, while we have been. trying the experiment of gold monometallism, the usual course of general prices has, as a result of that experiment, with occasional temporary fluctuations, tended steadily downward. There was once a time when certain persons professed to be unconvinced

of this fact. I think that time is past. I have in recent months read efforts to show that this fall was not without its partial compensations, but I think the fact of the fall is itself no longer seriously disputed.

Now what is the bearing of this upon the trust question? It touches it at two points. In the first place, the fall of prices. resulting from an unstable currency has tended to magnify every disadvantage against which a weaker competitor was struggling. Does one enterprise sustain itself with difficulty because of unfair discrimination in railroad rates-then the possibility of success is still further diminished by the burden of falling prices. Is one competitor heavily handicapped because of a rival's possession of exclusive patents-then the additional weight of constantly falling prices breaks down the competitor altogether.

In a superficial view of the case it might seem that such a condition would affect all competitors alike, and so not prejudice the race at all. But while the effect upon all is similar in kind, the weight upon each is not necessarily in equal proportion. Under normal conditions a small advantage in draft of river vessels is only of slight importance, but in a stage of low water the importance of this advantage is greatly enhanced and a very slight difference of draft may make all the difference between complete ' success and hopeless failure. So, under stable prices, many competitors may remain in the field even in spite of unfair discrimination. But when prices continue downward for a long period, there is less hope for all competitors, and the enjoyment of some exceptional favoritism may prove the absolute sine qua non of survival.

An appreciating currency accelerates the development of trust combinations in the second place, because it greatly increases the stimulus to strive for a complete mastery of the market. Under these circumstances even the possession of unfair advantages may not suffice unless these advantages are such as to create a practical monopoly. Now, if an industry can be so monopolized that, while general prices are falling, the products of this industry can be made actually to increase in price, or even to fall less rapidly than the average of general prices, it may be possible not only to escape from the mire of general business depression, but even to attain exceptional prosperity. All depends, however, on securing practical control of the market. Hence all energies which, under normal conditions, might be given to improving the product and cheapening the process are now bent to combine the strongest competitors and crush out all others by whatever means may appear necessary.

Thus all causes tending to the growth of monopoly combinations have been stimulated by an appreciating currency. Now let us note what occurs when this unstable currency takes a turn in the opposite direction. In the last few years gold-mining has increased so rapidly that the production of gold in 1898 exceeds in value the production of both gold and silver for any year prior to 1891. This increase in gold production which, under an established system of general bimetallism, would scarcely have disturbed the general price level at all, now occasions a decided rise of general prices, giving a bonus at the expense of the public to producers generally. In so far as industry is controlled by a trust combination, this combination of course also gathers its bonus from this source. While therefore the long-continued appreciation of the currency has been of material benefit to the trust combination in its efforts to crush competitors, the combinations which have survived and have freed themselves from effective competition, now find an unstable currency beginning to depreciate just in season to enable them to reap an extra profit at a time when they are prepared to monopolize it.

Hence, while a currency which will keep prices always at an absolutely unvarying level, is something not yet discovered, still it can be seen that any plan for dealing with the trust problem must be at best but partial and inadequate if it does not contemplate as one of its features such changes in our currency system as will tend as much as possible toward stability of prices. Still worse would it be if, by the retirement of our national paper currency and the substitution therefor of currency of private issue, the power should be given to any private combination not only to control the prices of its own specific products, but even to manipulate the general price level in behalf of special class interests.

T. B. WALKER.

Minneapolis Board of Trade.

J. W. Gaines, of Tennessee, was called to the chair, and introduced T. B. Walker, of Minnesota, who spoke on "Trusts from a Business Man's Standpoint":

To intelligently consider the question of the modern trusts. it is necessary first to examine and analyze the principles and practices on which the trust is based. Not a prolonged discussion of the meanings of words, but to know what the object, aim

and intent is in forming these combinations and to trace the practical results reached by them.

The general foundation principles of the trust and that which if taken away would entirely obliterate all the trust methods, is the intention to combine together, under one central control so much or so large proportion of any industry that the production of that particular commodity can be so limited that prices can be fixed arbitrarily and maintained at any price within certain limits which the trust may determine to fix.

If this result could not be reached in the expectations of the formers and investors in the trust, there would be none organized. This is the essential object in forming the combination. The question of the intention is evident from the fact that people will invest their money in these trusts under an excessive capitalization, where it is known undoubtedly and unquestionably that without the advantage of fixing and maintaining high prices dividends could not possibly be earned or paid on such an enormous amount of capital stock.

For instance, the tin-plate trust was organized from plants which with their good will under legitimate valuation would probably not exceed ten million dollars, or twelve million dollars at the outside, was organized for fifty million dollars. Twenty million dollars of preferred stock, drawing a good rate of interest, and twenty million dollars of common stock were paid for the plants. Ten million dollars of common stock was distributed to the promoters and others who were influential in forming the combination. Before the company was formed, tin-plate was worth $2.75 per box. It is now worth $4.25. Earnings of fifteen to twenty per cent are estimated as being made on this fifty million dollars of capital stock.

As another instance, it has been proposed to me several times to organize a lumber and timber trust. A trust that is formed and can handle and control the supply of raw material has a better chance for permanency than one where the supply of raw material can be produced by competing producers to an unlimited extent. It was urged upon me that the pine timber of Minnesota and northwestern Wisconsin might be put into a deal where the lumber prices would be controlled to such an extent that the trust could afford to pay the timber owners a large price for their timber, mills and lumber stock, and very readily add enough to the lumber price to cover the excessive purchase price and to make dividends on the enormous amount of stock that would be issued. It was the general proposition to pay us a large sum of