Evening star., 1901-08-10
TRUSTS AND COMBINATIONS
sUBJECT OF REPORT TO DEPART
MENT OF LABOR.
Question of Wages and Prices and
Control Exerted by SO-Called
Combinations.

The work of the Industrial commission Is.
at the request of that commission. being
supplemented by the United States depart
ment OF labor, and In a report on Trusts
and Combinations" prepared by DIR. Jere--
miah W. jerks of the bureau, considerable
interesting Information on those two sub
jects Is given. The report states In part
that the principal results Of the inyestiEa-
ti0n would bs more accurately Indicated
if the title OF the paper were THE eco-
nomic effect Of trusts and industrial COM
binations upon wages and prices" The
present broad title might suggest a more
general discussion Of all the economic
phases Of these combinations than the re-
suits OF the investigation may seem to JUS
tifs. But the facts for such general dis
cussionsl were sought by the agents of the
department with care and persistence and
the meagerness of the material secured on
some important points is due either to the
inability or unwillingness OF the man
ayers to furnish the Information.
Wages and Prices Considered.
Dr. jerks says that specifically the de-
partment has sought to collect such facts
as would carry out legal Instructions by
showing the general course of wages and
prices, the employment of labor and gen.
eral economic conditions under combina-
tions and private concerns. OF these two
points. those relating to wages and prices
have been fairly we'll brought out.
This study of facts regarding Industrial
combinations embodies the results of re-
ports made by forty-one combinations
Twenty-fOur of these reporting as to date
of organization were formed in the years
1898 and 1899; of those formed before 1895
five were organized in 1SYI
The thirty-nine combinations reporting
as to capitalization Included many Of the
larger ones. the total amount Of stock is
sued being 81 .3.1 ,069, 525, if one includes
the bonds in the capitalization, 81. .:s5. .5;j0,
32l. The total amount of capital stock
authorized was $f,5iS, ,0oe The larger
part of these combinations are those whose
/ stock Is widely scattered. although some
have but few stockholders and their stock
is not put regularly upon the market.
Most of the combinations manufacture
/ for the worlds market; four or five or
them find their markets limited to the
United States, while one sells to only four
states Of the union.
stock Issued by Combinations.
So much has been said during the past
few years regarding the issue OF stock by
the larger combinations that 1t is worth
while to note the circumstances of some OF
these issues. Some of the larger combina-
tions are organized for the purpose Of mold
ing the stock of other corporations. Such
combinations do not directly own the
plants nor carry on, as company, any
of the business of manufacturing. That
is done by constituent companies. When a
large company, therefore, buys up all the
stock of several other companies and Is
sues its own stock substantially In ex-
change therefor, the total amount OF, stock
capitalization of the country is, of course.
thereby increased II should, however, be
understood that no added capital IS called
into existence, nor Is there Oh necessity
la,,, nd for further
paid to stockholders. The profits or the
constituent companies form the fund from
which the dividends Of the holding tom-
panies are paid. In other cases on the
formation Of a combination the new COM
pany buys for cash or stock, as the case
may be. and all the plants of Inc uniting
companies and these companies ara then
dissolved. When this form of combination
Is made 1t is quite possible that the total
amount of capital stock of the country Is
not Increased at all; it may even be de-
creased.
Preferred stock I'm Lieu OF Bonds.
The custom of issuing preferred stock In
lieu of bonds has become prevalent OF late
years. It Is probable that the bonds Whicn
have been issued in connection with pre-
ferred stock were issued either to supply
some ready cash or to take the place or
bonds of constituent companies which had
already been issued. The preferred stock
has, of course, ordinarily, the same prece-
dence over common stock as regards the
claim upon the profits as have bonds, while
where preferred stock is issued in lieu Of
bonds, failure to earn the fixed amount re-
Quired to meet the annual obligations does
not throw the company into the hands OF
a receiver but leaves it in the hands OF its
stockholders and directors One OF these
combinations pays per cent on its pre-
ferred stock, seven, u per cent; nineteen.
per cent; four, per cent, and one, IL per
cent. In one case, a combination pays
per cent one-nait of its preferred stock
issued and on the other half
Out of thirty-nine combinations which
reported on the subject of bonds, but ten
had issued any, two were authorized to
issue bonds, but had not done SO. while
twenty-Seven reported that they were not
authorized to issue them. The amount of
bonds authorized for the twelve combina-
tions was $56, ,161, 900. whereas the actual
amount issued and assumed was S44, 5000
this latter amount including in one case
over $4,000 900 in bonds assumed with the
plants included In the combination in
excess of the amount of bonds reported as
authorized. 1t is common in the case OF
many of the combinations that have Is
sued preferred stock to forbid the issuance
of bonds excepting by special vote OF the
stockholders In many cases the debts or
constituent companies are all paid before
they enter the combination. This change
Of policy, which resulted in the paying off
Of large amounts of Indebtedness on the
part of the constituent members before
the combinations were formed, made nat
urally a very material difference in the
methods of doing business and in the re-
lations of these business establishments to
the banks. Many banks that for long
period of time had been substantially
rying business enterprises were. at the
time of the reorganzations. paid off
tirely. and throughout many sections OF
the country the banking business was put
on a much more stable basis than had been
the case for many years, though in other
cases they lost good customers On the
other hand, in the disposition of securi-
ties, many Of the larger banks, especially
In the larger cities, became stockholders In
the combinations, and thereby some in
vested considerable of their capital in the
shares of the combinations or received
them as collateral.
View Commonly Accepted.
1t is commonly believed that one of the
chief evils of large corporations is the lack
of responsibility of the directors to the
stockholders. In many cases the directors
hold their positions for series of years,
and practically never make reports that are
calculated to give to the individual stock
holders much light on the actual methods
of management. The returns from this in
vestigation would seem, on the whole to
lt