The mirror. (Stillwater, Minn.) 1894-1925, 1900-06-28
Are Trusts Beneficial Hgencies?

ators and congressman, that he has too
many shares in some one of the big
corporations.
Next comes the question, who forms
these trusts? That's where the schem-
ers, spectators and promoters come
on the scene. For be it known that
not every trust is trust, in fact about
seven out of ten are frauds that are
gotten up to swindle the small in
vestor who invests his savings buying
shares in the vain hope that he will
receive share of the dividends and
thus be enabled to get some benefit
from the trust. 1t is not unusual to
form combination of manufacturing
industries, representing a total cash
valuation of say five million dollars,
and to incorporate for fifty millions.
The promoter receives in money or
stock five or ten millions for his
services; lot of preferred stock is
issued to the manipulators or combin-
ing companies, while the common
shares are placed on the market,
doomed with favorable announcements
and sold for par, very near it, to invest
Ors who become stockholders.
Prior to entering into the combine
the companies who united to form it
were perhaps paying very small divi-
dends, or even running at loss, and
the stock of the trust is so heavily
watered that it is simply impossible to
pay dividends. The usual result is that
the investing stockholders are fleeced
and we read of some trust that has
gone to pieces. What about the pro-
moter and these preferred stockholders :?
Why they are simply a few millions
the richer; ready to form new trust,
and that the f1eeced ones are generally
ready to be done up again is only too
evident when we take look at the
stock market report. Here are the
figures for the past two years. In 1898
the number of shares sold were 112
billion. In 1899 the number of shares
sold amounted to 175 billion. Next
comes the genuine article, such as for
example the Steel Trust. This is the
kind that Mr.. Carnegie claims are so
beneficial.
Trusts, as they are now constituted,
no doubt have their good and objec-
tional points; but think the latter far
outweigh the former. The good points,
it is claimed, arise from the concentra-
ton of capital under one management,
creating saving in actual expenses of
millions annually. For instance sup
pose ten corporations form a trust
Before doing so each corporation had
to have its corps of officers, salespeople,
clerical help, warehouse, etc.. etc.
While under one manageme; it re-
quires but one set of men. True, it
must be larger force; but it is ap-
parent that the expenses will be re-
duced at least so per cent, which would
permit the manufactured article to 90
to the consumer at much lower prices,
leaving ample. margin for the stock
holders.
Now this would all be true and
would be done no doubt, and so prove
beneficial to the masses if the consoli-
dation was effected on a basis of net
values. But here the difficulty arises
in forming the trust. Every corpora
tion looks upon its own property as
being immensely valuable. II the
property is actually worth million, it
wants million and half or even two
million of trust stock. Then in addi-
tion the promoter must get from "a to
"a of the whole capital stock for his
services in bringing all these interests
together, so that by the time the whole
| matter is consummated the capital on
which dividends must be earned is
more than double what it should be,
and the benefits that should arise from
the fact of their being under one
management, are lost sight of, that the
stockholders may draw their dividends
Hence the consumer pays for his goods