The Intermountain Catholic. (Salt Lake City [Utah] ;) 1899-1920, 1902-05-17
Trusts.

A GREAT deal is said these days
| II about trusts, and in fact they
form the chief problem in the
! business and political world at this
time. The way they are organized is
this: An enterprising promoter will ar
range with all of the factories en-
gagged in making a certain article (for
instance, steeD, to sell their plants for
! a specified sum each-usually about
double what they are worth. The pro-
moter then forms company capital
lied for about ten times the total cost
of all of the individual factories, and
gets people to buy the stock The
money so paid for stock very soon pays
for the individual factories, large
slice goes into the pocket of the pro-
moter, and then the trust" is ready
for business. In order to reduce ex-
penses, some of the factories are closed
down, the Office forces are reduced and
prices are put up a notch or two The
stock of the trust pays handsome divi-
dends, and as a result the price of
the stock goes up. The holders of this
stock increase their incomes and fig
ure that they have doubled their prin-
cipal, they increase their living ex-
penses, and live in accordance with
what they think they are worth. All
this time, as matter of fact, the as
sets of the trust would not sell for
one-twentieth of what the stock is
selling at. The price of the stock
keeps UP because individuals buy it in
order to get the dividends, never in
curing what actual value is repre-
scented. As an instance of the profit to
promoters, it is a well known fact that
j. Pierpont Morgan pocketed $50, 600 900
as his commission for organizing the
steel trust. Who paid this fifty mil
lions? Surely not the owners of the
factories; it was paid by the people
who bought the stock of the trust
what is known as ''watered" stock.
Some idea may be formed of what $780,
0OO,0O0 is by recollecting that that sum
would pay the salary of the president
of the United States for 1000 years.
It is no wonder that farseeing states
men and business men look forward
with apprehension to the results of this
imitation of values. The history of the
business world shows that there al
ways comes a time when everything
must be adjusted on actual values,
when air bubbles are punctured and !
each man can get only dollar for a !
dollars worth. What will be the re-
suit to the stockholders in these trusts |
when that day of reckoning comes? !
The stock will shrink in value to al !
most nothing, people who have con- /
tracted debts and expensive habits will 7.
see what little is left to them disap-
pear, the trusts will disintegrate, the |
owners of the Individual factories will
find their business gone, and there will /
be widespread ruin and disaster. His
tory also shows that the collapse comes
sooner than later and it would seem
as if the time was about ripe for such
1 catastrophe now.
1t would seem, therefore, to be the
part of wisdom for people to look to
heir investments, and see if their
stocks are actually worth the selling
price. If not, then the wise man will
invest his money in such form that
t will not shrink when the pinch
ZONES. He should look back to the
oerid between 1893 and 1898, and see
What investment it was that paid reg
liar dividends, without shrinkage of
.apital. That is the investment which
!,
,eing content with a reasonable rate
If earning, and absolute safety of
apital.