Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1900-04-03
The Profits OF Trusts.

would work itself out through the mat
ter of profits. That is. if any great
corporation got to making excessive
and unreasonable profits, competition
would inevitably arise and restore the
profits of that particular line of bust
ness to their normal level. AS II IN IL
lustration of his argument comes the
troubles of the so-called great sugar
trust If trust is monopoly with unllm-
tied profits. it is time to call the sugar
trust bv a new name for it has never
been a real monopoly and just now it
is not especially prosperous.
The New York Mail and Express
eives these facts and figures of the
sugar trusts present condition, state
of affairs which ought to be very re-
assuring to those who have had the
octopus fever. The selling price of the
sugar trusts securities has fallen since
March. 1899. from 1S2 for the common
TO 972s. its low price, last week, and
for the preferred stock from 1913 to lilo.
The total capital stock is $75,O0O,O0O,
euually divided between common and
preferred. At market quotations of a
wear ago the owners had a property
valued at SOS, $50. 900 for common stock
and SAG, l25. 900 for preferred-a total Of
SHAFTS. 600 At last weeks market
valuation, averaging par for the COM
mon and 10 for the preferred, the to-
tai investment is worth $79,215, 900, or
sss5. 100. 600 less than it was twelve
months ago.
Nor is this the whole story. The
sugar trust is IS years old, having been
incorporated in 1887. 1t has always
paid per cent on it's preferred stock.
on the common stock 10 per cent. was
paid from 1887 to 1890, when dividends
were suspended to be resumed at 4
per cent. rate for two years, when l.
per cent rate was established and con-
tinued until this month. The current
and President Havemeyer states that
he sees no hope of continuing even
that rate unless the selling price OF
sugar is materially advanced. As that
be done. in view of competition,
the sugar trust finds itself facing a
serious situation, after having seen its
$25. 900. 900 cash surplus exhausted, its
stock deprecated $35, 100000 in market
value and its dividend payments on
stock cut in two, if not wholly
wiped out, for they are not being
earned.
Now, what has brought this situa-
ton about? Here is nearly 60,0Oo,OoO
in value swept away. and for what
reason? Simply because the sugar
trust ignored the fact that energy and
capital are too abundant and enter
prising in this country for any monop-
DIV to be maintained or exorbitant pro-
fits to go unchallenged by rivals. a
more inscrutable law than any
ever writ on statute books fixes the
limits of safety for combinations of
capital, no matter how great, and they
cannot go beyond those limits without
inviting their own destruction.
1t is this law that has operated
against the sugar trust which is no
trust at all in the sense of being a mo-
for it has had three years of a
trade war in which its competitors
prosper while it loses heavily. There
is probability that this will cease, for
it has always had more or less opposi-
ton, and the present one is only a little
more costly than others. The cash
surplus that the trust amassed in its
early days has gone back to the con-
sumers in the price rivalry be
tween competitors the past three years.
Dividends have vanished in the same
way. Stock values have shrunk mill
lions, too.
The condition makes plain the true
solution of the trust problem, and the
only one that will ever really control
combinations of capital. The shrewd
managers of great corporations realize
that their chief danger lies in too great
profits. They cannot afford to seek
them Undue profits invite COMPETE
ton, and lead to the combination of 9TH
er capital against them. The sugar
trust did this, and it is paying a heavy
penalty for its shortsightedness. Other
same experience.