The Pensacola journal., 1907-04-28
DISSOLUTION G. PREVENTION.
BY VIM. J. Bryan.

The first step to be taken in the in
yeStigation of the trust question is TO
define trust, says Mr.. Bryan in the
May Reader.
The trust appears in four forms. The
Northern Securities Company present
ed the trust idea in it's most advanced
form. A corporation was formed TO
purchase controlling interest in three
railroads-the Great Northern, the
Northern Pacific and the Burlington.
The main advantage of the Securities
Company was that is decreased the
amount of money necessary to enable
"A group of men 10 control the three
roads. The Northern Securities Com
pany, with capital OF a hundred and
ffty-one millions, could, assuming the
capital of the three roads to aggregate
three hundred millions, purchase a
controlling interest, and the syndicate,
by controlling seventy-siX millions of
the stock of the Securities Company,
could control one hundred and fifty-one
millions of railroad stock and thus con-
troll the three roads. If, instead of cap
italizing the Securities Company at a
hundred and fifty-one millions, the SYM
dicate fixed the capital at seventy-fiYe
millions and then issued seventy-five
millions in bonds. it could control the
railroads by holding a little more than
thirty-eight millions of the Securities
Company stock. The Supreme Court,
fortunately for the country, held the
Securities Company an unlawful COM
binatiOn, although the decision rests
upon rather an unsubstantial founda-
tion, since the court stood five to four
Mr.. Bryan, in the May Reader. argues
that it would be safer 90 proceed at
once with the passage of a law that
would make It unlawful for any cor
poration to hold the stock of another
corporation. While congress has no
power to interfere with state corpora
tions so long as they confine their
operations TO the state of their origin,
1t is within the scope of the powers
of congress to prescribe the term upon
which a corporation organized in any
state shall engage in interstate com
mercea
This second form of trust, that of
the duplication Of directorates, is not
new evil, although il is growing one.
Our insurance companies and railroads
have given many illustrations of the
Viciousness of this system. Construc-
tion companies, formed from the direc-
tors of the railroad companies, have
looted the treasures that they were
supposed to guard, and equipment conf
panies. formed from railroad directors.
have grown rich at the expense of the
railroad. The remedy for this form
OF the trust is to prohibit the election
of any person as a director or other
official of two or more corporations
which are either competitive or en-
gagged in transacting business with
each other.
The following plan is suggested by
Mr.. Bryan in the Reader for May: If
it were not lawful for one corporation
to have business dealings with any
other corporation iii which any of its
directors were also directors, the m
ducement to form these interlocking
combinations would be removed. Such
legislation would be in the interest Of
innocent stockholders.
The third form in which the trust
appears is found in the combinations
of a number of separate corporatio lions
uLder contract which controls the
various parties tC the contract and
prevents them from entering into COM
petition with each other. This is the
trust at which the provisions of the
antitrust law were aimed, and il 6e-
serves less attention now than in the
years past, because, being the most IA
miliar form of the trust, it is most
likely to be exterminated. 1t is use
less 70 attempt to prevent combina-
tiOns by fines levied against corpora
tions when the fines are small com
pared with the sums made by cOmbina-
uon. Imprisonment, however, is q real
punishment, and the trust magnates
will become scarce as soon as the pen.
ftentiary doors close upon a few of
the large offenders.