The representative. [volume] (St. Paul, Minn.) 1893-1901, 1899-06-08
THE COMING CRASH
The Logical Outcome Of False
capitalization.

The following is from the Music
Trades, of New York city, and is writ
ten by the editor of that journal, John
C. Freund. The Music Trades is the
recognized leader of this class Of period
icals in the country. We reprint the
article because of it's scientific and logi-
cal treatment of the trust problem, and
coming, as it does, from such source,
it cannot be cried down as the ''vapor
ings of some anarchist"
There is a crash coming in the busi
ness world of stupendous proportions, a
crash SO great and far-reaching that it
will cast far into the shade any panic or
financial catastrophe that this country
has ever seen.
1t may come in two years, though our
tremendous prosperity may delay it for
five years.
1t can be seen as clearly ahead as in
'93 others besides myself saw that we
rould not expect any revival of business
till the year '9S.
The crash must come through the
tremendous and utterly reckless over
capitalization now going on through the
formation of trusts and combinations in
almost every industry.
During last year the capitalization of
such enterprises, only some of which
were listed at the stock exchange,
amounted to over 81 900, 100000.
This year the ratio has been greatly
increased, and in January and Febru
ary trusts were formed with capital
of over 81 900 ,OOO,O 900. 1t is not easy for
the ordinary mind to realize what these
figures mean, though it will not be diff
ficult to understand that when property
is capitalized at several times it's actual
value, there must come period when
the top-heavy structure will fall of it's
own weight, and things find their level,
as they invariably must in this life.
Modern business is undergoing an
immense revolution, which is on the di-
rect line of evolution and progress.
Unfortunately, in leaving the lower
plane of competition to attain the
higher plane of combination, the greed
of gain binds most people, and so
good thing, with the result that there
will be a crash, which cannot be long
delayed.
Herein. however, history will but
repeat itself, for history shows us that
no great change is ever accomplished
without serious disturbance.
There are those who sincerely believe
that the trusts can be checked, and
even stopped by legislation. Just in
the same way there were people who be-
lieved that the formation of corporations
rould be stopped, and it was not so many
years ago that laws were passed in Eng
land preventing firms" from being
formed, as antagonistic to the commun-
ity, and to the rights of the single
trader.
All these people have an idea that
great changes are wrought from the
combine by men who have tremendous
Such changes, which are long in prep
aration, come from the inside, and the
men who apparently bring them about
are simply those who have the brains to
see what is coming, and place them
selves at the head of the movement.
The formation of trusts and COM
bines, which are now sweeping through
the industrial world with cyclonic force
is not brought about by mere specula-
tors. 1t is the result of centuries
Of experience that competition has seen
Its day.
The business world has finally come
to the conclusion that there is better
way of doing business, but the new
idea is being run to death, and that is
why we are bound to have a gigantic
crash The crash is required to bring
us to our sober senses again.
When we have learned the necessary
lesson, we shall build again, with the
new idea to guide us, and build care
fully, soberly and properly.
1t does not need great deal of ar
gument to show that in all human
Industry the great item of expense is
not so much the cost of production as
it is the cost of bringing the goods to
market and then to the home of the
consumer.
Who has not heard the statement that
It costs almost as much to sell a piano
as to make it!
This is more or less true in all lines
Of industry.
Obviously, as the intelligence of the
business world increases and improves
better means of doing business will be
Invented and put to a practical test.
If you will look at the situation
calmly and dispassionately you will see
that all these trusts are being formed,
not because a few financiers want to
control the industries and business of
the country, but because the time is
ripe for better method of doing busi-