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

money, if wanted, and a large block of stock, and it was intimated that a portion of the promoters' portion would also be paid over.

The only object whatever in proposing to form this trust was to put so much of the timber together that the prices could be controlled and maintained at a high price. If it had been shown to these promoters and investors that prices could not have been controlled by means of the control of the supply and the limitation of the output, it would not have been considered for a moment at even much lower figures than they were willing to pay. In order to provide against competition the trust, when organized, makes it a practice to pay to those from whom the plants were purchased, as large an amount of stock as they can be induced to take as payments, in order that their interests may induce them not to build competing plants. They also give employment to as many of them in the new deal as they can conveniently manage, in large part for the same purpose, namely, to prevent competition.

Another method of destroying competition, which is practiced by some of the large trusts, for instance, the Diamond Match Company, the National Biscuit Company, and the Sugar Company, is to give to the wholesale dealers a certain discount to each one that will buy exclusively of the trust and in no instance to any extent from any competitor.

The Sugar Company, for example, pays one-eighth of one. cent, and all of the wholesale grocers in Chicago are in the deal, with one exception. This places the competitors where they cannot sell goods to these firms even though they would discount a much larger amount than that offered by the trust, as the agreement prohibits any such purchases. As this, then, drives the competition to seek trade among the retail dealers, the trust follows up and offers to sell to the retailers at a competitive price.

Perhaps the friends of the trust will say that this is competition for the benefit of trade. On the contrary it is the throttling of trade to prevent or destroy competition. The competitors are not able to sell goods at even less prices for a better quality, for these trusts control so large a proportion of the output that the wholesale dealers are not able, or feel that they are not able, to maintain their trade without accepting these demands. The trust is, then, in a position to control the market without recourse on the part of the public.

Competition cannot, then, be looked for excepting there should come into the field a powerful organization of experienced competitors with modern methods and machinery and sufficient capital to meet the trust in the contest for trade. The measures

taken by the trust to prevent such results and the prospect of a final collapse of trusts and all other business interests with them, are likely to make the public a heavy bill of expense before relief is reached.

We are told that a trust is a corporation. That corporations and large aggregations of capital have been the essential means through which our industrial progress and great advance in wealth and prosperity has been made. Those who understand the business world are readily agreed on these general facts. The organizations of capital under the laws of the different states has enabled small capitalists to perform the work that could be performed only with large capital, but it is begging the question when we are urged not to oppose corporations and aggregations of capital because such organizations have been of great value in the past. An invading army might be a combination and we could say that combinations are beneficial and hence we should not defend ourselves against the invasion. Trust methods were applied in other ways until the laws of the states trying to prevent these combinations drove them in defiance of public sentiment to seek protection under laws intended only for the organizations of legitimate business corporations.

The ordinary corporation in the industrial world is to bring new capital, new plants and new competition. It is for the interest of the commonwealth and the general prosperity.

The trust, however organized, is essentially a combination for throttling, and in many cases the destruction of plants that otherwise would be competing one with the other and furnishing goods at a relative price proportioned to the amounts received by others for their work or the use of their capital.

An eloquent appeal made by Mr. Cockran in favor of corporations in general and the vast advantage received from the use of capital and the necessity for peace and good will between capital and labor in our industrial affairs, while very fine, and to which all could agree, is not only unfair as an argument in favor of the trust, but when rightly applied will justify the most extreme measures to wipe out and prevent the organization and operation of trusts in this country. Mr. Cockran also appealed strongly for the protection and maintenance of competition and excellence. Now what excellence there is in the combination to defeat competition and what competition there is in the excellence of the trust methods and practices seems very ludicrous to consider. There has not been one single excuse or argument presented in favor of the trust. It is a method so opposed to fairness and equal individual rights that the most stringent laws

and rigid enforcements are justifiable and necessary to protect the plain, unquestioned rights of the community at large. The fact that many who are hostile to all combinations of capital and to the use of large aggregations of capital, are arrayed against the trust, is used to show that the opposition to these combinations is essentially from this class of people.

This is not true. There is a very strong undercurrent and in many cases unexpressed hostility to this form of business overreaching, and many who have even taken part in these combinations where they have thought that they could not avoid it without heavy loss, are strongly opposed to such combinations.

Mr. Cockran recommends as a method of regulation and to provide against the encroachments of the trust upon the public interests and to expose their unfair methods, that full and specific annual reports should be required from them and these subject to public inspection and publication. This he dwells upon largely as a specific remedy for the evils which he by inference admits are the result of the trust combinations.

This is a very plausible theory, an excuse and a make-shift which would be practically worthless as a remedy against the evils of these combinations. Most of the large corporations do make annual reports which the public is not sufficiently interested in to consider more than as to the summary of the year's receipts and expenditures.

To trace with any degree of certainty the unfair methods of the trust it would be necessary to examine in detail all the accounts and all items of expenditures. To authorize the examiners to demand explanations and to investigate under oath the officers of the company to find out the actual considerations for moneys expended, for rebates made, and the object and motive of many proceedings and work of employees. This would require a perfect army of auditors and an inquisitorial intermeddling with the business management that could be justified only by a knowledge of the wrong motives, intent and practice of the combinations, that would justify direct legislation to prevent the formation or continuance of such combinations; and the rigid enforcement of such acts.

All the publications that could be squeezed out of the trust without the application of laws that would be less justifiable than in prohibiting of trust organizations would result in no material public advantage.

Others have recommended heavy reductions of duty or free importation of all goods and manufactured products, the domestic production of which is controlled more or less by the trust.