The new dominion. [volume] (Morgantown, W. Va.) 1876-1904, 1889-08-10
TRUSTS AND M0N0P0LIES.
FEDERATION OF CAPITALISTS.
The Capitalization of Industries.
How Factories May be Closed and
Stockholders Get Diyidends-Pro-
duction Cheapened and
Prices Increased.

device or scheme by which competi-
tion transmits itself into combina-
tion, but actually speaking such as
are built upon the general lines
sketched in my former papers. The
trusts examined are types of which
we have secured authentic photo
graphs, and from these we may
judge all others for while their fea-
lures differ as becomes sisters, the
general family likeness is unmis-
taxable. According to these types
trust is an arrangement under
which parties engaged in the indie
pendent and competing pursuit Of
BUSINESS consolidate their properties,
their business and their skill into
one great organization whose control
and management are vested in a
small central committee or board.
HOW TRUSTS ARE FORMED.
The general and approved method
of forming trust is as follows:
The several concerns or companies
become corporations, if they ale not
such already The owners of the
shares of stock in these corporations
transfer all their stock to a small
number of trustees, generally Sc
lected from the chief stock holders in
the several companies. These trus-
tees thus become the stockholders
of all the companies, possessing as
to each one the legal power and
authority which belongs to the stock
holders of any corporation. They
elect its officers and receive all it's
dividends, By previous agreement
capitalization is agreed upon for
the entire organization that may be
increased as new members enter,
which generally represents not only
all the properties put into it, but a
liberal addition of water. For this
capital certificates of shares in the
trust are issued and apportioned
in the quotas agreed upon to the
several companies for distribution
to the former stockholders in the
same, according to their respective
amount of stock held therein. The
several companies preserve their
identity and continue the business,
each under its separate and indepen-
dent management-at least in theo-
ry-paying their respective net earn
ings to the trustees, who receive
and distribute them to the certifi-
cate holders, who are now no longer
stockholders in any particular com
pany, but shareholders in all
suBTLETIEs OF THE ARRANGEMENT.
This arrangement" as it appears
on its face, would seem to contem-
plate nothing more than a general
pooling of earnings or profits in the
hands of q committee for distribu-
ton upon common basis, while
every company pursueN as before,
its own business career, for the trus
tees, being simply the common stock
holders of these companies, can
exercise their authority but once a
year-at the annual election of Off
GERS, dlsplacing an unsatisfactory or
continuing a satisfactory manage
ment. But here appears one of the
subtleties of the trust. In the
board of directors of each one of the
corporations will appear enough Of
the trustees to control its manage
ment. In all the deeds made public,
and especially in that of the sugar
trust, the power and authority of
the trustees are left conveniently
indefinite, appearing to be just what
the law vests in the stockholders of
corporation. 1t was proved that
these trustees had meetings, but
kept no minute of their proceedings,
had no office or known place of bust
ness, but gathered informally at the
place of business of any mem Der of
the board. 1t was difficult to elicit
anything definite as to these gath
erings. A president of two of the
sugar refining companies, who is
also trustee, denied that any vote
was had, any action taken or any or
der given for the shutting down of
refineries, the controlling of produc-
ton, the raising Or lowering of prices
In his words, the trustees '.just felt
each other" but took no action;
hence there was no necessity for
keeping minutes, all of which looks
merely like passing the time of
day" between the individual stock
holders in number of joint ven
lures.
But the fact that these trustees
were also officers in the several com
panies, and their meeting in the
guise of trustees or stockholders was
really . meeting of actual managers
Of the companies, will show that it
was only necessary for them "to feel
each other" without formal vote or
minute, to know what should be done
as to running or shutting down each
refinery, depressing or raising prices,
and like vital matters, which the
trustees, as trustees, Indignantly de-
ny their doing Or ever intending to
do.
GENERALIZATION OF INDUSTRIES.
Omitting the last feature and ia
king the trust scheme in its general
outline, it might really seem, as its
friends and defenders are claiming,
but another and healthy step in the
concentration of industry in great
establishments instead of small ones.
This is one Of the most familiar and
significant tendencies of our day.
The small mill, the local factory and
the individual capitalist have van
ished. In their place and out of the
ruin have grown up huge establish
ments at favorable points of produc-
ton and distribution and great cor
porations.
This is largely due to the mechan-
cal inventions which have replaced
and indefinitely outstripped human
labor, the use of steam power, and
the marvellous development of our
transportation system, not emitting
the still more marvellous advance of
science. With greater command of
capital come better administration,
more minute economy, superior ia
cilities for buying and selling, the