Page:The New International Encyclopædia 1st ed. v. 19.djvu/580

* TETTSTS. 502 TRUSTS. petitive system, provided the interests of the various competitors are harmonized. Without discussing in detail these wastes of competition, there may properly be mentioned the salaries of traveling salesmen, the expense of keeping up expensive show windows, the cost of competitive advertising, the loss from undue extension of credits, the loss of custom which comes from carrying only a partial instead of a complete stock, the loss from the payment of cross freights, the loss from running manufacturing plants to only part of their capacity or part of the time. There may be mentioned also as a gain from combination the saving from standardizing the macliinery and from prevention of the waste of time due to stopping and changing machinery, the saving from the most efficient organization of laborers and from managing all plants in an enterprise by the most skillful men instead of having part of them directed by men of meager ability, the certainty of a regular supply of raw material, and the most efficient use of by- products. Other Influences as Causes. Aside from the industrial conditions that have led to the organization of Trusts, certain other influences are to be noted. (1) The promoters of the large enterprises have in many cases succeeded in making very large profits from the organiza- tion. Likewise the financiers who have under- written the stock have been able to exact very large payment for the risks which they have taken. The immediate personal interest of the ])roinoter and financier has thus been a very powerful factor — sometimes even the most pow- erful factor in bringing about the combinations. (2) Governmental favors of various kinds have sometimes tended in the same direction. Al- though the protective tariff can scarcely be men- tioned as a direct cause of the organization of industrial combinations, it is doubtless true that when an industi'y which otherwise would not have prospered has been first made very profit- able by a protective tariff, so that numerous rival establishments have invested large sums of money in it, the consequent rivalry has led to the formation of combinations. It is also probable that in certain instances the protective tarifT, by lessening foreign competition, has promised to the promoters of a combination the opportunity for greater profits than could have been anticipated without the existence of the tariff. In tliis indirect way, therefore, we may well consider the legislative favor of the pro- tective tariff under certain circumstances as an indirect cause of the Trust. Similarly, the monopoly granted by the patent laws, by copy- rights, by trade-marks, and other legislative benefits, have led to the organization of some of the great combinations. Extent of Combtnation Movement. As yet, there are no satisfactory statistics regarding the extent of the comlnnation movement in this country. The only material of this nature that is trustworthy is that secured by th« United States Census of 1000, published in volume vii., part i.. of the Report on Manufactures. This report included only those 'Trusts' which con- sist of a number of formerly independent mills which had been brought together into one com- pany under a charter obtained for that purpose. Accordingly many establishments which might properly have been included under the word "Trusts' were excluded. Moreover, many of the largest corporations organized during the last few years, including the United States Steel Cor- poration, were organized later and hence were not included. The figures given, however, in- clude 18.5 combinations with 2040 plants. The total capitalization was $1,430,62.5,010. The total cost of materials used was .$l,O8!1.060„3.'?4, and the value of the products .$l,(l7..350,04!l. The total gross value of all manufactured prod- ucts enumerated in the census was .$13,004,400,- 143. For the purpose of comparison there sliould be subtracted from this total the value of the products of the hand trades or the me- cluinieal and neigliborliood industries, since these are not adaptable to the form of management known as the industrial combination. There remains a total gross product of industries sus- ceptible of combination into Trusts of .$11,820,- "84,665. Comparing this with the product of the industrial combinations, it seems that in 1900 the Trusts produced nearly 14.1 per cent, of the total gross product of the manufacturing industries of the country, as enumerated by the census. Doubtless at the present time this ratio would need to be somewhat increased. Yet it would ])robably be fair to say that even at the present time the Trusts do not manufacture more than 25 to 30 per cent, at the outside of all the in- dustries in the country readily susceptible of in- dustrial combination. It is impossible at the present writing to say more than that the Trusts have developed very rapidly of late years, and that they apparently, though not certainly, are absorbing steadily a continually growing per- centage of the entire industries of the country. It seems, however, to be equally clear that there are many lines of industry which are not suscep- tible of management under the Trust organiza- tion, and a point will probably be reached within the not far distant future when industries which, from their nature, can be advantageously or- ganized into Trusts will all substantially be so organized, and those not capable of advantageous organization in this form will be recognized as industries normally managed by independent pro- ducers. The M0NOP01.T Character of the Trusts. JIany of the Trusts are closelj' connected with natural monopolies which give them a decided advantage over their competitors. It is well known that the Standard Oil combination, in its earlier days at any rate, derived great advan- tage from the special rebates which it received from the railroads. There is also reason to be- lieve that many other of the later combinations have received somewhat similar favors. The United States Steel Corporation, as well as some of its constituent companies, has made it evi- dent that one of the great advantages possessed by these organizations is the ownership of mines from which they derive a large part of their raw material. Through this ownership of a large percentage of all the available raw material in the cnuntry they are able to put their rivals at a decided disadvantage. Certain Trusts also may in certain localities control so large a per- centage of the raw material that they may