The times., 1901-04-09
THE FORMATION OF TRUSTS
Charles Il. Flint Before the Indus
trial Commission.
The Veteran Promoter Tells How
The vast Combines Are Organized
What the ndividusI Concerns
Receiye-Danger in High Tariff.

! The VAST Combines Are Organized
What the Individual Concerns
Receiye-Danger in High Tariff.
Charles r. Flint, or sew 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, a member OF
| the executive board of the American
Chic<le Company (called the 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 traY-
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
ber Company and one of the pioneers IN
the field of industrial combinations, be-
ing ppreceded only by the Oil and Sugar
| Trusts.
In this instance a syndicate was formed,
each member of which contributed
specified amount to 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 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
$50 900, the owners were paid cash
amount say $4,000, and for every 800 diff
ference between the actual cash paid and
the price agreed upon, were given 800 III
preferred stock and $50 in common stock,
the promoter thus realizing commission
of so 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 the
company.
Al Ifnf af uhcnrkinO nj a
independent competing concern by a pow
erful combination, as the process of ''har-
monizing" He exempiified by citing the
case of a concern included in the Rubber
Goods Manufacturing Company, engaged
in the manufacture of rubber tires, which
found that forty of it's 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 it's
own use. The situation required a COM
promise, and the '.harmonizing" influence
of the promoter was introduced, with the
result that the American Bicycle Com
pany sold its rubber manufacto 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
management could be carried too far un-
less the fate of the trust was under the
guidance of an intellectual giant. Es-
pecially was this so, unless the manu-
factories, as well. as the management,
were centralized. Steel was far easier to
centralize than rubber as in the case of
steel, the raw material was at hand in
our own country, and the law of supply
and demand had alone to be considered
In speaking of the relations Of trusts
and labor unions, Mr.. Flint said that no
company in which he was interested had
ever had any trouble with it's 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
been so high as since the formation of
great industrial combinations. He gave
IL as his opinion that trusts helped and
stimulated labor by guarding against an
overprOduction, and were less likely to
be under a money pressure so that in
times of depression it was not necessary
10 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 |
appreciable decrease in the wages of en-
pioyeS during that time This. he thought. |
could not have been done by individual |
concerns.
Mr. Flint said he did not think that |
trust made goods were habitualIy sold |
cheaper in foreign markets than in the |
United States. Manufacturers sought for |
cign markets at a concession when their |
surplus was large. There was more dis
position to make concessions before trusts |
were in the field. overproduction is |
now guarded against, and there is not the |
inducement to sell at low prices abroad. /
He held that as there was now a bal !
ance of trade in favor Of the United |
States of $3.50, 000.G coo any tinkering with
the tariff which might be done should |
be in the direction Of free trade. The wall |
Of protection was high enough he said
in fact. too Highland he considered that |
1t would be against the best interests of |
the country to add any more bricks to H. /
The greatest danger the United States |
had to fear was a tariff war Our ex- |
port trade was becoming more and more
important, and We could afford to allow |
to trend gradually toward free
trade without fear of injuring the busi-
ness interests of the country
In speaking of the advantages of trusts
Mr. Flint contended that a hundred times
as many people were directly interested
in Industries as before their formation
While there had been Capitalization i'm
management there had also been a de-
i'll ownership.
Failed tn Reach Contract Speed
Secretary Long has been advised by the