The times. [volume] (Washington [D.C.]) 1897-1901, 1901-04-09
THE FORMATION OF TRUSTS
Charles K. Flint Before the Indus
trial Commission.
The Veteran Promoter Tells How
The Vast Combines Are Organized
What the Individual Concerns
Receive-Danger in High Tnrin.


The Vast Combines Are Organized
What the Individual Concerns
Receive-Danger i'm High Thrift
Charles r. Flint or fxeM York. organ
izer and promoter of the National Starch
Company. the American Caramel Com
pany. the Rubber Goods Manufacturing
Company, the United-States Rubber Com
pany, and the United States Bobbin and
Shuttle Company. President of the Ameri-
can Ordnance Company, Chairman of
the executive board of the Rubber Goods
Manufacturing Company, member of
the executive board of the American
Chickle Company (called :he Chewing
Gum TRUST, and Treasurer of the Ma
tional Starch Company. testified before
the Industrial Commission yesterday on
the subject of trusts.
In speaking of the reasons which led to
the formation of the industrial combina-
tions in which he was interested, Mr..
Flint said that Capitalization in manage
ment was necessary to cope with various
problems which could not be dealt with
as successfully by the individual manu-
facturers; that it was responsible for the
doing away to a great extent of the rate
wars which crippled competing concerns.
and that it greatly reduced the aggregate
of expenses for advertising and for trav-
cling statesmen.
Mr.. Flint went at some length into the
process of forming \ trust, taking as ex-
ample the Rubber trust, formed in 1882,
under the name of the United States Rub
Der Company. and one of the pioneers in
the field of industrial combinations, be-
Nd
Trusts.
In this instance syndicate was formed,
each member of which contributed a
specified amount to a general fund at the
disposal of the promoters. who used this
capital in purchasing Independent rubber
manufactures which were thus brought
under a centralized management. The in
dividual manufacturers whose plants were
thus absorbed were paid partly in cash
the cash figure being as low as the pro-
moters could make it-and the remainder
in preferred stock of the company.
Thus, if a concern were purchased, the
actual assessed value of the plant being
S50000. the owners were paid cash
amount, say S10.000 and for every 800 diff
ference between the actual cash paid and
the price agreed upon, were given 800 in
preferred stock and $50 in common stock,
the promoter thus realizing a commission
of $40 on each share of the common stock.
Mr.. Flint said that at this stage the COM
mon stock represented practically nothing
but good WILL" and that Its productive
ness depended entirely upon the success
full management of the combination. The
balance of the cash remaining after the
several manufacturing plants were pur-
chased was put into the treasury of tn.
company.
Mr.. Flint spoke of the absorbing of an
independent competing concern by pow
erful combination. as the process of 'har-
monizing." He exemplified by citing the
case of concern included in the Rubber
Goods Manufacturing Company. engaged
in the manufacture of rubber tires, which
found that forty of its customers had
united and formed the American Bicycle
Company. The latter company had ac-
quired three rubber manufactures and
was making all the tires needed for its
own use. The situation required a COM
promis, and the '.harmonizing' influence
of the promoter was introduced, with the
result that the American Bicycle Com
pany sold it's rubber manufactures to the
Rubber Goods Company, the latter pay
ing partly in cash, and partly in the stock
of the company.
Mr.. Flint admitted that Capitalization of
could be carried too far, un-
less the fate OF the trust was under the
guidance of an 'intellectuar' giant. Es-
pecially was this so. unless the manu-
factories, as well. as the management,
were centralized. Steel was far easier to
than rubber, as in the case of
steel, the raw material was at hand in
NJ hE 1rttN of
and demand had alone to be considered
In speaking of the relations cf trusts
and labor unions, Mr. Flint said that no
company in which he was interested had
ever had any trouble with its employees.
There had never been a strike threatened
and he thought this was the best evidence
that the trusts and the labor unions were
working in harmony. Wages had never
great Industrial combinations. He gave
it as his opinion that trusts helped and
stimulated labor by guarding against an
and were less likely to
be under a money pressure so that in
times of depression 1t was not necessary
to shut down the manufactures and
throw thousands out of employment. In
the trade depression which lasted from
1894 to 1897 the Rubber Manufacturing
Company had not been obliged to shut
down. and. in fact, there had been no |
ployes during that time. This. he thought |
could not have been done by individual |
concerns
Mr.. Flint said he did not think that |
rust made goods were habitually sold |
cheaper in foreign markets than in the |
United States. Manufacturers sought for |
ign markets at n concession when their |
surplus was large. There was more dis |
position to make concessions before trusts |
we're in the field as overproduction Ia |
low guarded against, and there is not the |
to sell at low prices abroad. /
He held that as there was now a bal |
lnce of trade in favor of the United |
States of $3.50 900, coo any tinkering with |
he tariff which might be done should |
~ In the direction OF free trade The wall |
# protection was high enough he said |
n fact. too highland he considered that |
t would be against the best interests of |
he country to add any more bricks to It, |
The greatest danger the United States |
lad to fear was "a tariff war. Our ex- |
,ort trade was becoming more and more |
and We could afford to allow |
ourselves to trend gradually toward free |
radc without fear of iniuring the busi- |
less interests of the country
In speaking of the advantages of trusts
dr. Flint contended that a hundred times |
IS many people We're directly Interested
n Industries as before their formation. |
While there had been centra liZation in
there had also been a de-
in ownership.