Waterbury evening Democrat., 1905-12-01
THE PASSING OF TRUSTS
Samuel Untermyer Tells Why
 Combines Are Doomed.
WILL KILL THEMSELVES, HE SAYS


 Meves BAg Industrial Corporations
 win Gradually Grow Weaker and
 Become senile-safetyLineR Reached,
 He Claims - Federal Control sus-
 gested as Remedy.
 Discussing industrial combinations, Samuel Untermyer, New York law yer who earns in legal fees $500,000 yearly and has been one of the most powerful factors in the great move ment toward centralized industry and finance in America, said in recent in- terview with James Creelman in the New York World:
 "We have reached the line of safety in corporate combination. In my judg ment, the world will never again see an industrial corporation attempted on the scale of the United States Steel corporation. It is unwieldy.
 "The working out of these great in- dustrial combinations in the United States has clearly shown the profes- sional financier what the extreme from tiers of his powers are in that direc-. tion. Corporations have become too vast, too clumsy, too remote from the original guiding hands and controlling brains, for continued success in the competition with individual effort.
 "In my judgment the9 y big indus trial corporations will gradually grow weaker, will fall into what might be called state of senility. They con tain the clements of their own destruc- ton. That much at least is plain.
 T refer to those in which the element of individuality is disappearing, which applies to most of them. There are some where the element of individual interest is retained. In those cases their power will increase, but they are few in number. I know of only three such cases in which combination has been a great benefit and has served merely to accentuate the great ability and resourcefulness of the guiding spirits.
 'This movement toward centraliza- ton was not inspired by Wall street. It did not originate in the mind of the banker -financier. On the contrary, the bankers were loath to support the idea at first and fought against it. It was a thought of the manufacturer pressed by cruel and ruinous competition and of the lawyer-financier." "And are the lawyers who reared this corporate fabric agreed that it is un- wieldly and perishablew
 q find a great diversity of opinion among the lawyer-fnanciers. As for myself, I am convinced that these tremendous alliances of corporate pow CT are merely temporary phase of our life and that they will disappear except in rare cases"
 He then explained in detail how the manufacturer, pressed by competition, effected combination with his rtval First came a pool of business. This was succeeded by 'gentlemen's agree ment'' regulating prices. Then came the consolidation of competing firms in single corporation. The financial op- erations involved Mir. Untermyer de- scribed thus:
 ''So long as the men who created and shaped these original establishments the men responsible for their success and familiar with their working-so long as these men retained the owner ship by reason of their stock holdings, this centralization of business was on a sound and permanent basis.
 But matters did not stop there. The bankers gradually began to be interest ed. They offered some of the new se- curities for sale and found them to be profitable. Presently the public began to take the securities in immense quan- tides. Then a fatal tendency deyel- oped. Manufacturers could not resist the temptation to sell their securities at handsome prices. They sold their holdings to the public. The public be- came the owners of the corporations. The men who had created the business withdrew.
 With the original personal force, personal incentive and personal expert ence eliminated from their various es- tablishments they cannot compete with individual enterprise based upon real and not fictitious capitalization.
 But the stockholders want their div idends. The stockholders want to see the market values of their securities held up. If the president dares to fol- low what he knows to be a prudent. necessary course, if the dividends are cut or passed-even for the purpose of securing greater returns in the future movement of the stockholders may presently overthrow him from his place. This one of the unfortunate conditions .rrOunding and often con. trolling the management of our over grown industrial systems.
 "The individual manufacturer and the small corporation whose controlling stock Is not drifting about in the mar ket are in . different position. They have to earn profits on actual capital, not on secondary or fictitious values. They can cease 10 pay dividends with out losing prestige or credit if the eIi- gencies of their business require the employment of their earnings in some other way. Their business is under the direct personal control and guidance of the men who built It up.
 You will see by this that the great combinations or trusts cannot perms-