The sun. [volume] (New York [N.Y.]) 1833-1916, 1893-05-14
TRUSTS AND THEIR LIMITS.
SUCCESS CIN COME OSIY ID
~LEGITIMATE LAWS OF IR.fDE.

II Is TO Their Tnterc-t Constantly TO Improve
Their Material Dealt In md to sell ut ,
Fair Pront-This They Can DO Far BET.
ter Than Gan small Detached Companies.
Public interest in trusts has been greatly
renewed by recent events in Wall street.
There have been violent fluctuations in the
securities OF every big trust except tho Stan
dard Oil, which Is the oldest and most solid of
them all. and sells ut the highest price a share.
Tho fluctuations In tho Wall street values OF
the trust securities recall ell tho discussion
over the methods and ex pedlency OF tho trusts
when they first sturtcd. and tho limitations
which the laws OF trade impose as well on
trusts as on any other business corporation.
The great difference In principle between
the Standard Oil Trust and most OF the trusts
which have been organized and foated within
tho last few years Is that the Standard Oh
Trust tries to cheaper. no matter how little.
tho selling price Of its product. and rolios for
Its profits on economy OF management facili-
ties in handling. and control over tile sources
and production OF tho raw material. This Is
Increased by the limited area in which potro-
leum is found. and by the great advantage In
refining 1t which the big corporation with a
large plant. its own steamers. pipe lines. and
distributing agencies has. Tho Standard oil
Trust learned by experience that this was tho
best policy. In that 1t prevented competition
tbioukh Nho vi tHo laws VI lThu6 anu
secured to Itself a monopoly OF tho consumers.
There are natural advantages In trusts and
also disadvantages. II the disadvantages can
be eliminated by careful management and ad-
herence to good business principles. the adj
vantages will prevent competition and make
unnecessary the buying out OF competitors.
Up to the limit OF the executive ability OF the
management Of a trust the cost of production
can DO diminished. This should be tho real
aDnrpa pf nrnnt RI n fr,.t ,nk tkn
OF business secured by tho buying out of com.
petitors nor the raising Of prices to the public.
The laws o. trade. which are as memorable as
the law ofGravity. prevent the permanent rails
Ing OF prices by a trust beyond tho competi-
tive point. II thrust were formed to-day ia
any OF tho big industries in the United States.
and that trust should embrace every factory
at present used in that industry. it would still
DO Impossible to advance prices materially.
because every advance would encourage free
capital to invest. and other factories making
the sumo product would comoNnto existence
better and its executive management so mncn
ADLER than could be secured by, the outside
slde capital would havs to wait for Sf i nriscs = t.
f prootpa I5iiG ior to II Pc 70 raised ais ID before 81 re it would DO
by the trust outsiders could make 10 per cent.
there would be plenty q Outside capital goin:
Into the business. with the result that the trlis:
would have either to buy its com petitors out
and SO encourage the development OF new
the prices at which outsiders could manufac.
ture at a profit, but so low that tho outside
1actories would have to close.
The. fact that prices had been unduly raised
once for any length Of time would mean the
productions wonid amount to more aot nan aG the
consumers could absorb mt a profitable price.
overproduction and constant pressure 10 a
solliDg price lower than the profit which could
nave been secured had prices never been I'M
tits not by overcapi.sllzntion that a trust will
management and disregard Of the laws OF
1t Is well known that almost every
f 1a rssr T. tha eaP ,ho at a sum considerably
good Wills. and franchises which were consol.
llated to make up the trust Al over this
time, Is water. II the trust earns dividends
On fh az its capitalization, # simply means that
well MANAGED that 1t can pay an Unusual profit
= Val s ssssn and the public discount water.
They not only discount 4. but they often dis:
;Su It. too much; During a recent break in
Wall street value than tho original properties
s sH'SI N SIX per 20 % eeas u div !as RaE'' Steadily 4 s :sssF
IN and yea, out. with books open to the stock
hS,dst eo asa to dnS VII Ripi seii for Sel m sHs t fsas WE
IS much g share as q three per cent. speculn-
:Rs market for them fa"n' Is li 1sHsfi'' and ip the isrss
! rs OF conservative investors Is excluded. It
. tnio LIMBS WbiCu uuyb u ellI-euSe.- SteAuy
nnarks ct and are not often handled on martins.
'aise any break or panic in them.
Except wh~re q trust can control the source
# R pESase + av and thus proven. fomIstition.
'hises. there is nothing which the pu blio has
ate Of reasonssl sn proHt w Tftss Rf enso SGysnia
i SS f # tho d slsisls is s oes t Il ,h e.. Of pu6 GiHi9 bsss
y raising the price + will restrict
yeli-Enovn fact in eommsrce and trade that
ne market Tor any product depends greatly on
I 10 R5Isf Tho q sa sHaaS %hiTs An A. P gnere al g n thi prIa @syy
quarter may diminish the demand BY, half.
l rnas mutt rs Mhd aes sESs{ yo ms hIm IN ih arg his Of D e Sp 81
oss depends on that d%eclsiop. The true ruls
,ric Ice mesns a constantly Increasing de-
Here Is where a We'll organized tr ust has its
over a small corporation or an In
iyldual. 1t has greater capital. better credit.
aG Of raw matsrlaIs In bulk, for cash. in the
a sylns n n s.i.riss ..ndi n insIda in shc f fS.4s ls
iiee msi iaf et q %b snd t ea,f G in:, sst Of exseatiy:
2rpH5stI3n ThiSShh was absorSsd to make
an be secured at the. season at which
h ; ass most cheap. credits can be arranged
gents. branch onises and dIstritntsrs can 10
'~aterially reduced: better terms can be made
erlntcndents and fewer salaries. 10 Nv :"
There Is no reason whythe trusts should not
ni,. f for tb PsHs oSn and and, be %sn good i1vestmcnts:
c interest. they, must not regard Themselves
> executions to business rules, and they must
OF attempt to ride over the laws Of trade.
A Gre ut Military Invention.