The San Francisco call., 1904-09-04
Trusts
Problem Revi eve q

@OPIOUS is the literature upon
the trusts Upon this new and
~ untoward development in mod
ern industrialism there has been writ
ten volume upon volume. pamphlet
after pamphlet. each with its own Pc
culiar try al solution Of the prob
lem. OF this growing bibIiotheca no
better types Of the extremes of value
reached by its several component pub
locations could be chosen than those
represented by Trusts OF To-Day" by
Gilbert Holland Montague. and
Trusts vs. the Public Welfare" from
the pen OF Il. c. Richie. The one is a
scientific survey OF the economics Of
great corporate organiza tons, calmly
and 5udiciously set forth. the other 4
1ervently partisan screed. wherein as
seruon = made the only prop Of argu-
ment and reassertion the only substi-
tute for logic Both are interesting.
but from widely different standpoints.
Montague sets forth in his book
both the theoretical and the actual
Viewing the subject from the vantage
ground Of q trained economist, he Is
enabled 10 draw the deductions that
must come or q strictly scientific
analysis; calling 10 his aid the statis-
tics OF trust promotion and trust man
agement, he is prepared 10 demon
strste the present status Of the trust
problem On lis strictly practical side
The theory Of the trust as an out
growth OF present day trade condi-
tons, its effect upon production and
labor-this occupies the first attention
OF the author. The evils arising out of
combination. which are not inherent
in its nature, but are the result of
improper conduct Of business. are
finally reviewed with a summary OF
the legislative acts that have been d.
rected against that form OF organiza-
ton.
That the tendency 70 onbination
for the restraint Of competition is q
natural outgrowth Of highly organized
trade the author recognizes at the out
set This tendency first manifested it.
self in this country with the forma-
ton Of the pools in the whisky and
oil interests Then came the original
trust agreement OF 1882 by which the
Standard Oil first attempted 10 give
enforcible agreements Of the pool.
With the declaration OF the courts
against the legality OF the earliest
form OF trust came the combination
through holding corporations, al
present the seemingly unassailable
tenure Of trust existence.
NOW. therefore. we have combination
through this holding corporation" a
giant entity whose financial power is
such that a purchase OF the voting ma
1ority OF the stock Of the several con-
Germs combined brings complete control
over the respective boards Of directors
and permits Of direction over the gen
eral policy Of al so rigid as TO be prac-
ticaily dictatorial. This is the modern
trust and this is the problem Of the
trust as Montague states 81:
II the trust deserves TO live the saw
ings OF combination must be found real
and legitimate: the first class OF evils
flowing from the mere fact Of rnonon-
oily must be proved either self-correc-
tive or able 10 be corrected by statute.
the second class OF evils. resulting from
the particular form assumed in the or
ganization OF existing combinations
must be shown 10 be self-correctiye or
capable OF correction by statute
This first class Of evils. inherent in
nonopolistic organization Der sc, and
which must be capable OF correction if
the trust deserves q true economic
place in modern industrialism. includes
the temptation 70 raise prices. 10 obtain
secret discrimination from railroads, TO
fix destructive prices for the crushing
Of smaller rivals. TO corrupt legislation
and 70 stultify individual Initiative To
the evils arising out OF the organiza-