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Origin of Trusts.

(Interview, "Chicago Herald," January 11, 1891.)

There is no doubt but that the formation of trusts is contrary to both the spirit and the letter of the law. Their effect is to arbitrarily make prices and to cut down the wages of the employe. Whenever they have been brought before the courts and their true character has been shown, the courts have held them illegal. The sugar trust has been declared illegal by the New York courts, and the gas trust here has suffered similarly. But they evade and ignore all adverse decisons, and frequently find judges who, while not holding that trusts


are legal, will yet help them out. The sugar trust goes right on as nothing had happened, and the price of gas in Chicago is just where the gas trust put it.


The question of trusts is a greater one than many people imagine and it is a problem for which it appears difficult to provide a solution. Trusts are the product of our development, and the line upon which they have come goes beyond the mere formation of trusts. They are the legitimate offspring of the concentration of wealth in a few hands. This started soon after the close of the war, and has acquired an accelerated motion as it has progressed. Its first effects men noticeable in the crowding out of the small merchant, the small manufacturer and the small farmer. The stronger of these prevailed, so that after a time there were fewer merchants, fewer manufacturers and fewer farmers in proportion to population. A few manufacturers, especially in the iron and machinery line, drove out of business the concerns with less capital, and thus monopolized the market. It was soon found that by enlarging the establishments and concentrating capital the cost of running in proportion to the business done was greatly reduced, so that the stronger could undersell the weaker and thus drive the latter out of business. The protective tariff was and other cause of the concentration of vast wealth into a few hands. Big establishments were built upon the lines of protection, and in time these were enabled to reach over into unprotected fields and drive out small manufacturers there. Having done this, they put prices up to suit themselves. Another thing which greatly facilitated this movement was the granting of special freight rates to large dealers, giving them an advantage over small competitors which in many cases amounted to a fair profit.

When the process of development had gone so far, and the weaker concerns in the various lines had been crushed out, there were left only the strong and powerful. The crushing out process now had to cease, and to avoid a ruinous competition they formed combinations and fixed prices which all agreed to observe, both as to the goods to be sold and the wages to be paid, leaving each, however, to compete for all the business it could get. Then a still further development came. They saw the advisability of limiting their output in order to maintain prices. This could only be done by bringing all concerned into one common pool. Then the trust was born, and generally it has resulted very profitably to its parents, for in this way they were enabled to still further reduce the cost of manufacturing their goods


and putting them upon the market by dispensing with the services of great many intermediate men.


In spite of the law these organizations seem to thrive, and while the law is based upon common justice, it is apparent to the most casual observer that the tendency of modern times is toward consolidation. In governments of the world, the little principalities and kingdoms are disappearing. In the commerce of the world larger ships are in use. In the mercantile world we have larger stores. In the railroad world, larger railroads; in the agricultural world, larger farms, and in the manufacturing world, larger factories. Wherever we see the comprehensive intelligence of the nineteenth century actively at work there seems to be a tendency to concentration and consolidation, to simplify and to enlarge. It is so easy for these powerful combinations to evade the law that it is very doubtful whether their growth can be arrested. It is a question whether there is any other way of preserving an equilibrium in our institutions than by organization and concentration of the counter-balancing forces.