over the blowing up of the Maine, notwithstanding the fact that the disaster interrupted for a time the promotion of trusts. Equally jubilant and thrilled with patriotic spirit were the American people on hearing of Dewey's triumph at Manila, which was not diminished by the fact that the victory was the sunlight which brought the promoters of trusts out of their holes, so to speak.

Payments through the principal clearing houses of the country are now about 37 per cent greater than a year ago, and 57 per cent greater than in 1892. East bound railroad tonnage is nearly double that of a year ago. The number of business failures is about half of that of a year ago, and a third as great as in 1896. The country's gold reserve to-day stands above the $250,000,000 mark. Generally advancing prices in manufactured lines of goods have attended the increasing prosperity. Although such advances have not been confined to articles produced by trusts, but have included furniture, products of the packing house, and other articles in which trade is unquestionably regulated by conditions of competition and of demand to supply, yet there is a good deal of complaint that practically all late advances in prices have been produced by the trust arbitrarily and for their own profit, and that therefore they afford no indication of conditions benefiting the country. It is true that the trusts in nearly every instance after their recent formations, have marked up prices, and yet considering the increased cost of raw material entering into production and the fact that wages have been generally advanced, it cannot be correctly said that the trusts have made unfair use of their trade opportunities. Where they have advanced prices more than would seem to have been warranted by advances in raw materials, such advances seem usually to have effected simply an adjustment of prices to some basis of fixed profits such as had existed before the hard times period, or as in the case of the Biscuit Consolidation for instance, before a competitive war had brought earnings down below the cost of production, and had threatened practically the whole business with bankruptcy.

In the case of the best managed industrial companies the policy has been to keep prices of products high enough to allow reasonable profit on capital invested, but low enough to offer no inducements for competitors to enter the business. In the case of the Glucose Sugar Refining Company, which is the oldest of the recent industrials,* President Matthissen, at the annual meeting of stockholders last year explained as follows the application of this policy: "There is not at this time a bushel of corn being ground by any concern except those in our company. We do

*Organized August, 1897.

not intend to pursue the policy of making spectacular profit in the beginning and dwindling at the end. We are in business for a long pull. For instance, on a ten-year run we might have raised prices, made $5,000,000 the first year, $2,500,000 the next, $1,000,000 the next, and down to nothing at the end of ten years. It is better business to be moderate and earn $2,000,000 a year for ten years, which would be $20,000,000 in profits, against a loss of $10,000,000 the other way. We did for a short time make the mistake in the beginning of putting the price too high, but it did not last long. If we had maintained that policy, we would have had sixteen or seventeen competitors, against none as it is now." Generally speaking, from the standpoint of the investor, it is considered better to own securities of a trust which makes its money by saving money through especial economies, than it is to own securities of a trust which is known to make its money through practicing extortion on consumers. In the case of longlived industrial corporations like the Standard Oil Company, success seems to have been at least in large measure due to a policy of lowering rather than raising prices. This fact investors are beginning to appreciate, and is causing them to discriminate. Considerable blame has been thrown on the iron and steel trusts owing to the enormous advances which have taken place in prices of products in the iron and steel industry. Quotations on steel billets are about $37 per ton to-day as against $14.50 per ton one year ago, while various steel products are quoted relatively the same. As pig iron, however, is now $24 per ton as against $10 per ton one year ago, it is evident that the advances in finished steel products have been legitimate. Practically all the companies engaged in the iron and steel business now have contracts ahead which will keep their furnaces active at full capacity for six months to come. If the general prosperity had not caused an enormous demand for steel products, the price of pig iron could hardly have advanced, for manufacturers would not create a demand for more pig iron than they would expect to sell as finished product from their foundries.

Owing to the fact that the American Tin Plate Company is about the most conspicuous example of a protected trust, the sharp advances it has made in prices have drawn down upon it much aggressive criticism, which seems to be unfair in the extreme, as shown by the following data furnished me by President Reid of the company late in the month of August. Since the organization of the company pig tin had shown an advance from 124 cents to 33 cents per pound; 15 per cent more was being paid for skilled labor, and 20 per cent more for unskilled labor; the

price of acids used in making tin plate had gone up 25 per cent; steel billets, of which about 10,000,000 boxes were figured as the company's probable consumption for the year, had advanced one dollar per box; the increases in the bill for castings, etc., to keep the plants in repair, would, it was estimated, be about double what they would have amounted to a vear ago. Yet despite these great increases in the cost of supplies and labor, finished tin plates were quoted at only $4.37 as against $2.50 one year ago. As the protection on tin plate makes the price which would induce imports of tin plate $5.58, it is therefore evident that the company has not by any means availed itself of the full opportunity allowed it by the tariff.

The increase in legitimate business in this country during the past year has resulted in the establishment of a fairly normal ratio between the supply and demand for money. It has put a limitation on trust promotions, practically ending the movement before it could cause a financial crash. At the present time the prosperity of the country allows opportunity for unlimited business development of all legitimate kinds. The trust movement was an early incident of our present prosperity. Trusts are, however, no longer the product of our prosperity. Whether or not we would be more prosperous without the trusts is a question concerning which views and theories now may differ and which can only be definitely and thoroughly settled by the economic data of the next few years.

JOHN I. YELLOTT.

Member Maryland Bar.

The "trust" problem is of that character to-day that the American people are called upon to deal with a condition, rather than with theories on the subject. The consideration of facts as they exist in consequence of what the "trust" and the "combine" are doing with the masses of the American people, is of more practical importance than any indulgence in nice and finely wrought-out theories as to what the "trust" ought to do-as to what it can do, as to what minor laws found in the trade and financial circles of business may compel it to do, and what it may be expected to do for the public good in the future-if let alone. To me, the competent theorist is always entertaining, but I am ever slow to adopt theories that I know to be contrary to certain fixed laws, and unsupported by present or past facts.

In the matter of production and distribution, there is one law

regulating both the buying and selling interests of civilized man so fixed and so unvarying in its long operation, that it has been looked upon as a natural law. It is the law of competition. It, in conjunction with the recognized laws of supply and demand, is the one great force all the time at work for the healthful regulation of production, distribution, and values. Any system of production, or of distribution, including the commanding industry of transportation, that is in contravention of, or, at variance with this great law can have but one result, to-wit: injustice and wrong to the weak and undue imposition upon both the consumer who must buy in the market and the producer of the raw material who must sell! When you destroy competition in the production of the finished article required for the use of man, you destroy two open markets-that in which the consumer may buy to advantage, and that in which the seller of the raw article may sell to competitors. You do more, you give to the producer the right to dictate the price which the consumer must pay for the finished article, and the power to say to the producer of the raw material what he shall take for the product of his labor; you give to that producer the right to dictate and fix the price that shall be paid for the labor required to convert the raw material into the finished product. You do what is worse, you make a favored class of the few chartered producers and transporters, and give to that class unlimited authority to say to the millions of our population what they shall pay for food, raiment and everything used by them for comfort, luxury or necessity, and what every man shall receive for the product of his labor. A condition of things abhorrent to the common law, before the American Constitution was thought of.

No legal authorization for, or acquiesence in, any system of production or class favoritism can be, under the American form of government, without violation of its every valued principle. Our government is founded upon the eternal foundation of human equality. When organized after the vindication of this principle in the war of the Revolution, the object of the Government was declared to be: "To establish justice"; "to promote the general welfare"; "to secure the blessings of liberty". Later ir our history the fourteenth amendment to the Constitution was adopted, which embodied all that statesmanship of the country had ordained for accommodating the organic law to our then condition. It provides. "No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law, nor deny to any

person within its jurisdiction the equal protection of the law." The meaning of these privileges and immunities has been defined by the courts as those rights which are fundamental under every free government, including the right to acquire and possess property of every kind, and to pursue and obtain happiness and safety, subject to such restraints as government may prescribe for the general good of the whole.

All monopolies in any trade or manufacture are an invasion. of these privileges, for they encroach upon the liberty of the citizen to acquire property and pursue happiness, and were held to be void at common law as long ago as the reign of Elizabeth.

No State of the Union can have the power to create a monopoly in any industry by incorporating a number of men into one body, without doing violence to the Constitution of the country. What it cannot directly do it is without power to do by indirection. The incorporation of any body of men with monopolistic power is in contravention of the spirit and the letter of our form of government and its written Constitution. If the organized trusts and combines are possessed of monopolistic powers and have monopolistic tendencies, then they should be abolished or brought within legal control, without regard to the fact whether they be advantageous or disadvantageous. They are an un-American institution, though flourishing in America only, and should not for that reason be allowed to grow and multiply.

Now, Mr. Chairman, it would seem that the all-important questions involved in the trust subject, are:

First: Are trusts and combines as now existent in the United States monopolies, or of monopolistic character and tendency?

Second: Are they of such character in their operation and modes of business as to infringe upon the Constitutional rights of the American citizen?

Third: If monopolistic and an invasion of the rights of the citizen, what is the proper remedy to apply?

I desire to discuss briefly the first two propositions, and in doing so I hope to be pardoned for dealing in facts more than theories. The origin or birth of the "trust" in our general industries is a mystery, but necessary to be inquired into in order to discover the laws that are likely to control its existence and growth.

One, and perhaps the greatest trust magnate of the land, has solemnly affirmed that the protective tariff is the mother of the "trust," but when we remember that it was that magnate's ox that was gored by the tariff of which he was speaking, this charge of