paid by the above companies in the years after 1890.1

The opinion of financial circles as to the value of securities of that sort may be seen from a table of quotations for a longer period; a third table gives, for the same securities, the monthly quotations during the panic-year 1893, with the addition of a few other leading companies, and the price of silver bullion certificates in New York.

The foregoing tables show remarkable features, which will be discussed later from a general point of view.2

A great and striking difference exists in the position of the several companies, in consequence of their methods of management. Some of them, as the American Tobacco Company and the Standard Oil Trust, are model organizations, which look forward only to a continual betterment of their position. The same is true of the reorgan

1 From Bradstreet's.

2 The financial results have by no means been in all instances as favourable as were expected. This may to some extent be ascribed to the enormous salaries voted to the managers by the boards, i.e. their friends. A disproportionate amount of the earnings is absorbed in this manner; and this, of course, absorbs a good deal of the benefits derived from economies. On the other hand, it is argued that men possessed of extraordinary business ability would not otherwise be induced to offer their services.

ized Cotton Oil Company, and as far as business management is concerned, of the Sugar Refining Company, and others. Some, however, have been subject to the most scathing criticism. Thus far two great disasters have gone on record: in 1889 the old Cotton Oil Trust suspended payments, and on May 4, 1893, the National Cordage Company went to pieces. Both were ruined through very apparent mismanagement. The managers misused the companies' funds for gambling purposes on the exchanges, and did not concern themselves with the development of legitimate business, but with Credit Mobilier transactions, and speculations for rapid gains. It is one of the most disastrous holes in the corporation law of the United States, that stock companies are not forbidden X to buy or sell their own securities. In Europe such transactions have been punishable for many years. It has occasionally happened in the United States that managers, when successful in operations on the exchanges, have pocketed the profits, but when unsuccessful, have thrown the loss on the stockholders.

In the Whiskey, Linseed Oil, and Starch trusts, actual crises have not yet occurred; but in 1892 the Distilling and Cattle Feeding Company was very near the verge of ruin, and to-day it is again

a question whether it will not go to pieces entirely.1 The two others were both, during 1893 and 1894, regarded as being in a situation but little less delicate.

How little confidence the public has in the socalled "Industrials " may be seen from the fact that the second preferred stock of the American Tobacco Company, which has always regularly paid 12% dividend, was quoted during the crisis not much above 60%. Again, there was the rapid fall in values by which the disaster of the National Cordage Company was reflected in all the other trusts.2 The cordage shares fell, between May 1 and May 7, preferred from 101 to 39.

1893, from 57 to 151, General Electric com

mon declined from 791 to 58; American Sugar

1 Since the above was written the progress of events has been rapid. In 1894 the Eastern wholesale merchants in the liquor traffic, dissatisfied with the business methods of the Distilling and Cattle Feeding Company, combined and started distilleries of their own. For a while it seemed as if the two parties were about to come to terms again, but recently the war has been reopened. The leaders of the Whiskey Trust declare this and the recent bad times to be the causes of the impending disaster, which they propose to avert by a new assessment on the stock. Their opponents think the troubles are due to inside speculations on the exchanges.

2 The Financial Review, 1894, pp. 105, 106; The Financial and Commercial Chronicle, vol. lviii., May 7, 1893.

common from 991 to 62; Chicago Gas from 83% to 59; Whiskey from 25% to 13; National Lead from 37 to 26; Cotton Oil from 50 to 30.1

Before going into a further discussion of the details, we must, in a few words, touch upon the formal changes which have taken place in consequence of the recent anti-trust legislation.

1 The Financial Review, 1894, pp. 105, 106; The Financial and Commercial Chronicle, vol. lviii., May 7, 1893.

CHAPTER VI.

THE LATEST PHASE OF CORPORATION LAW, AND ITS EFFECT ON THE FORM AND NATURE OF COMBINATIONS.

I. THE essential provisions of the anti-trust legislation passed in the different states are summarized by Mr. Dodd1 as follows (the word "persons" being used for "persons, corporations, associations, and partnerships," and the word "agreement," or "attempt," for "contract, combination, conspiracy, understanding, arrangement, or act"):

In sixteen states, it is a criminal conspiracy for two or more persons to agree to regulate or fix the price of any article, or to fix or limit the quantity of any article to be manufactured, mined, produced, or sold. Regulating and fixing prices necessarily include increasing and reducing prices, but in most of the statutes these are also specified as criminal.

In six states, it is a crime for two or more persons to enter into any agreement whereby "full

1"Present Legal Status of Trusts," Harvard Law Review, vii. p. 164.