The times., 1901-06-22
The Trusts and Prices.

bad economy from all points of view.
The Trusts and Prices.
1t is a hard matter logically to up
mold a contention that is radically and
intrinsicalIy wrong This truism is
well exemplifed in the weak sophistry
by which the trust champions are en-
deavoring to prevent any action that
will curb the growth and abuses OF
their pet system. What. for example,
could be more absurd than the claim
that the trusts lower the prices of COM
modities and thus benefit the consum-
er? In support of this claim the prices
of trust controlled articles are COM
pared with the prices which prevailed
twenty or thirty years ago; a heavy
decline is shown, and then il is claimed
that the trusts produced the decline. A
fiimsier plea could scarcely be imagined.
1t is a matter of economic history that
about the year 1873 prices, which since
1850 had been rising steadily, suddenly
took a downward turn, and fell almost
continuously until about the beginning
of 1897, the total decline being, upon an
average. something like forty-hve per
cent. OF this about thirty per cent was
prior to 1890. and the fact is well known
that the. tremendous growth of the
trusts has mainly taken place since
that date. Obviously, the trusts were
not the cause Of the decline prior TO
1890. for the double reason that the
trusts were then comparatively incon-
seauential, and that the decline OF
prices was Notwithstanding the ar
ticles entirely Independent of trust con-
troll as well as those that were in lhe
hands of monopolies. Moreover, the
decline was also general in a geograpb-
ical sense. extending throughout both
Europe and America. and into countries
where the trusts scarcely had loot
hold. The great shrinkage of prices
referred TO was undoubtedly in the
main the result of the monetary revo-
luton which began in 1873 and result
ed in the substitution of the gold stand
ard for bimetallism in the leading COM
mercial nations This fact is recognized
bv the best economic thought every
where.
But it is undeniable that since the
first inaugural ton of President McKin-
lev the trusts have grown and multi
piled as they never did before. If their
effect is to reduce prices, there should
have been a continuous decline. But
was there? Far from it. Prices rose
steadily all through the latter part OF
1897 and the two following years, only
reaching their maximum in February,
1860, when they suddenly broke again.
and have been going down almost con-
stantly ever since. Thus we see that
during the greatest trust era in the
worlds history prices have risen about
two-thirds of the time and fallen the
remaining one-t third. This in itself eX-
Modes the claim that the fall of prices
is due TO the "beneficent" action of the
trusts.
The rise of prices during the earlier
portion of the period mentioned was
mais,y owing TO the tremendous in
crease of the worlds gold output; the
decline since February, 1900, has been
due. not entirely, but chiefly, to the sud
den stoppage of the gold supply from
South Africa. Except with reference to
few leading staples the trusts have
not really figured in the matter; but so
far as they have exerted an influence it
has oeen in the direction Of higher
prices, save where they have lowered
them temporarily in order to crush out
competition.
The openly avowed purpose Of the
trusts is to so control the production Of
certain articles as to prevent them from
falling in price, as they would under
free competition. To say that prices
will be lower without competition than
with it is not only to dispute the best
established rule of political economy,
but it is an insult to common sense.
The argument of the trust magnates is
that by controlling the output lacy can
prevent overproduction, and thus guard
against a break in the market. The
idea that millions and billions of dol
| lars are being massed in great combines
in order to make things cheaper for the
consumer is too ridiculous for serious
| consideration. The trusts are formed
for the purpose Of making all the
money they can, and this carries with
it the necessity of keeping the prices of
the things which they produce At the
highest possible point.