Pierre weekly free press. (Pierre, S.D.) 1889-19??, 1914-03-12
EFFICIENCY OF BIG
TRUSTS QUESTIONED;
SOLUTION IS NEAR
Inquiry May Show that the Monopo.
lies Contain Within Themselves
tho Seeds of Their
Own Decay.

Washington, D. c., Special-Does the
m~onopolistic system contain in itslef
the seeds of its own decay?
That question Commissioner Joseph
E. Davis, of the bureau of corporations,
declared, in his annual report made
public today. a federal investigation
now under way hopes to answer.
In a review of a working program for
the bureau Commissioner Davis points
out that aside from an economic study
of the trust question, retail price
maintenance is n Of the questions to
be taken up. Trusts, their efficiency
and reforms, however, are to comprise
the principal work for the coming year.
The need Of some federal body for the
purpose Of investigation and publicity
IN trust affairs, whether it be the
bureau of corporations as now or
canned, or a commission as proposed
IN the pending administration bills in
congress, Commissioner Davis en-
phasized.
In his report he. discussed the
monopoly question at length, saying in
part:
1.-THE question is whether the trust
form of organization" is really efficient.
Ii 1T be found that smaller competitive
units in industry can produce com
modities more cheaply, or even as
cheaply as monopolistic units, n that
they have other and greater ad-
vantages than those claimed for the
problem is finally settled in favor of
the competitive system, and the chief
argument for the regulation OF
monopoly is destroyed. This is a
scientific question Of fact, and it is the
plan of the bureau to investigate this
question.
while from a governmental point of
view there are various aspects Of the
trust question which are of great i'm
p~ortance, such as the relation Of trusts
10 popular government n their effect
on the social and economic conditions
OF labor, there are two aspects of it
which are peculiarly within the domain
OF the bureau, namely, the effect upon
the cost OF production and distribution
and the effect upon the price to the
consumer.
ut is commended by some tina with
the Increase in the size Of Industrial
enterprises there goes a reduction in
the cost Of extraction, manufacture,
and distribution, M hat such re-
lower prices to the consumer and does
not involve a reduction in wages or an
impairment of the conditions Of
abor.
Even if these claims were true the
question would still remain, of course,
whether the evil resulting from large
combinations would not be greater than
the alleged advantages of cheaper pro-
iuction and distribution. 1t is contend
ed, on h other hand, that the source
and origin of monopoly is found chiefly
N the desire to exploit the general pub
ic by stock jobbing schemes for the
Immediate profit. of the promoters, or
or the plJYroNCn of nbtljr,i,,n ar,},.I 90
the market and ~eXacting unduly high
rices from the consumer.
MANY large combinations have failed
and demonstrated their economic inef-
iciency. Combinations which have OBJ
lined control of the market and, it is
admitted, have p~rospered. but this is
alleged to be due to their monopolistic
position, and not to superior efficiency.
4ccordins to those who hold this view,
here is a point beyond which the in
Gease in size of operations does not
eSult in an increase in economy and
Efficiency. but rather in loss and waste.
o that the maximum efficiency is not
ttained by large combinations, but in
,tead by concerns of moderate size. If
his latter contention be true. then, as
has been said, the monopoiistic system
contains in itself the seeds of it's own
ieCay.
Again. some of those who dispute
the superior efficiency of large com
binations contend that this lain is
made merely as a blind for the purpose
Of selling watered stock. They say
that such organizations are established
for the purpose either of getting con-
troll of the market and eSacting excess
sive prices from consumers, or of is
suing large amounts of watered stock
for the purpose of selling such stock to
the public. In the first case, it is
argued such combinations are not con-
cerned with h promotion of greater
efficiency but merely with obtaining a
monopoly; in the second case they are
chiefly concerned with selling the stock,
and as they can not claim to the gen
eral public that it has a great value
due to monopoly, they are obliged to
IND another selling argument, namely,
superior efficiency.
determination Of this question of COM
parative efficiency is that of the price
policy of such large Industrial combin-
atoms as have achieved a substantial
control of the market. Those who al
lege that such Industrial enterprises
result in greater economy and eff
cheney in production often overlook the
equally important question whether or
not they absorb all the benefits of such
economies in increased profits without
conceding any share thereof to labor in
higher wages. or to consumers in rela-
lively lower prices or improved quality
Of goods, etc. The determination Of
the facts in respect to this question also
might not be such as to establish broad
congratulations or conclusions, but the
Importance Of having the facts Is none
the less obvious"
H .H