The Hartford herald. [volume] (Hartford, Ky.) 1875-1926, 1912-08-14
HOW THE GREAT
TRUSTS FATTEN
Under Continued System
of Protection
and DESPITE SHERMAN LAW
1t Is False TO Say They Lower
Prices, Says Editor of
MO0dy'S Magazine.
TARIFF THE CAUSE OF 1T ALL

NOtWl nstdnulnS tne 5O-CaIieu
trust prosecutions and the enforce
ment of the Sherman law, the in
dustrial combinations have kept on
increasing in size and number until
their total capitalization is more
than $S,000,OO0,000, so it is an
nounced by John Moody, editor of
Moody's Magazine, financial
monthly.
Moreover" adds he, this as
tonishing aggregate does not in
clude Industrial concerns which
are not trusts. There are thous-
ands OF manufacturing concerns en-
joying the benefits of the tariff
which cannot be included, strictly
speaking, in any list of trusts. The
Governments Federal Corporation
Tax report for 1911 shows that the
total capitalization represented by
industrial concerns was about $780,
600, 900, 900. This includes the
many close corporations, concerns
Of small capital which while in
dustriaT are not trusts in the ordi-
nary understanding of the term"
Mr.. Moody says the evidence is
clear that there is no truth in the
idea that trusts lower prices.
Industrial combinations, in the
great majority of cases. he goes
on, have been found primarily for
the purpose of controlling or adj
vancing prices to the consumer.
While the theory has been persist
emily urged for many years that the
main purpose of combination was
to reduce producing and operating
costs, and thus increase profits
without the advancement OF prices,
the records shown during the en-
tire trust era go to prove that such
has not been the case. The great
enlargement in profits has for the
most part been accomplished by
price advances and not by cost cur
tailment."
Mr.. Moody's idea is that a pro-
tective tariff, particularly the Ding
ley tariff, and not any natural or
evolutionary tendency toward bust
ness Capitalization, is to blame for
the growth of the trusts.
AT the end Of 1902" he says,
there was a widely held theory
that the trend toward industrial
consolidation had reached its limit.
Subsequent events, however, have
proved the unsoundness of this
idea. For steadily, throughout ev-
cry year of the past decade, trust
capitalization has continued to in
crease. BY the end of 1905, the
year in which Theodore Roosevelt
began his second administration,
the figure had risen to $6,843,S91,-
76O, and in the year when Mr.. Taft
entered the White House, further
expansion to 1880, 900 was
shown. And now, with Mr.. Taft
closing his term, we note that, not
withstanding the so-called trust
prosecutions and the enforcement
of the Sherman law, the total in
dustrial trust capitalization has
reached the astounding total of S.
O66,290,s61.
1T will be noted that the growth
of trusts during Mr.. Taft's admins
tration has practically all been ac-
complished since the enactment of
the present Payne Tariff law.
ut is a noteworthy fact that the
capital represented by industrial
trusts in this county does not re-
feet, except to partial extent, the
investment of money or property.
While no exact figures on the sub
ject are obtainable, 1t is reliably es-
timated that not more than 25 per
cent. Of the eight billions of cap
italization represents original in
vestment. The remaining rs per
cent. is what is commonly called
water but which is more definite
ly described as the capitalization
of earning power For Industrial
trusts, like franchise trusts, rail-
road trusts. &C., have all adopted
the method during the past genera
ton of capitalizing not only the
original and current investment in
the plants and property, but also
the net profits which can be shown.
Thus It is apparent that in the
case of those trusts which have
been built up chiefly on tariff bene- |
fits, large part Of the net profits |
shown, and in some cases two
thirds or three-fourths of the prof
its, are the direct result of the pro-
tective legislation which they have
received. a. 49,.
The Steel Trusts dividends on
its water" Mr.. Moody asserts,
have been altogether taken out OF