The representative. [volume] (St. Paul, Minn.) 1893-1901, 1899-06-08

De maze tnan Dy doing the old way.
That some trusts have already been
wrecked by bad management or by over
capitalization has nothing to do with
the argument
The great fact that stares us all in
the face, is that men are beginning to
| realize that there is more money to be
made in pulling together than by trying
to cut one anothers throat in business.
The trust, therefore, is on the direct
line of evolution in business, and has
come to stay.
The trouble, however, in the immedi-
ate future will arise from our inability
to at once adjust ourselves to the new
order of things.
1t is human nature to overdo every
thing, and that is just what is being
done now with the trusts.
Because expense can be saved, better
results obtained, and the general
burden be made lighter by combina-
ton, it does not follow that the gain
made will be sufficient to warrant a
general generalization of property and
products.
Let us take an instance, the proposed
pottery trust, which may be still born
through the greed of the promoters.
The total fair value of the business of
the plants involved is said to be about
$1O,O00,000. The trust was capitalized
at just s3O,0OO,0OO.
| 1t is a we'll known principle that a
| business in order to be successful must
turn over it's capital at least once
year; but with a capitalization of $780,
100000 this trust would turn only one
| third of it's capital year.
This trust was a failure from it's
very inception.
Had this trust been capitalized at
100000, 900, had each plant been put in
strictly at it's proper value, it is equally
obvious that the trust would have had
an excellent chance for success, and it's
stock would have been quoted above par
almost the first year of it's existence.
If this is so obvious why is it not
done?
The answer is easy.
| The promoters are wise in their gen.
Grafton. They not only expect to make
"big pile themselves In the shape Of
| stock which they will throw on the mar
ket, at the first opportunity, but they
know human nature sufficiently we'll
to tell them that they are far more
| ilyo1u To IN,
tion by Offering it three times the value
of it's business than if they offer the
actual value.
| A man has a plant worth $5O,OOO He
is offered $150,OOO for it by a promoter.
The offer captivates him, especially
when he hears that his competitors are
in the combine. He doesn't figure that
he will get little, if any, cash, and that
it will be impossible to make enough
money on such fictitious values to send
his stock anywhere near par.
| Some trusts have been formed on a
sound business basis. These will live.
The great majority, however, must fail
| from OvercapitaliZatiOn, because they
| represent lCIlClOuS ana uOC real values.
At the present rate of progress an
other two years will see the formation
of about all the trusts that it is possible
! to make.
By that time the promoters will have
unloaded. They and their associate
financiers will then have no interest in
holding up the market, and the whole
top heavy scheme will come to the
ground like house of cards.
And when the crash ooes come, as
come it must and will, it will for time
create the greatest ruin this country
has ever known.
But the recovery will be very quick
Things will find their level Men will
be wiser, and the next generation will
accept the trust as benefit, because it
is founded on principle that will en-
dure, and that principle is to give the
community by combination better
things for less money, and also by
combination to tighten each mans bur-
den.