The Barre daily times. (Barre, Vt.) 1897-1959, 1914-02-21
MAMMOTH TRUSTS
SPOIL OWN PURPOSE
Beyond Certain Point, They Are Fail
ures, Economically, Says Commits
sioner Davis of Bureau of
Corporations.

Corporations.
Washington, ID. c., Feb. 2l.-Does the
monopolistic system contain in itself
the seeds of its own decay?
That question Commissioner Joseph e.
Davies, of the bureau of corporation, de-
clared, in his annual report made public
o-day, federal investigation now I'M
der way hopes to answer.
In review of working program for
the bureau Commissioner Davies points
out that aside from an economic study
of the trust question, retail price main
tenance is one 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 pur-
pose OF investigation and publicity in
trust affairs, whether it be the bureau
| of corporations as now organized, or a
commission as proposed in the pending
administration bills in Congress, Com
missioner Davies emphasized.
In his report he discussed the rnonop-
oily question at length, saying in part:
"The question is whether the trust
form of organization is really efficient.
If it be found that smaller competitive
units in industry can produce conditions
more cheaply, or even as cheaply as
monopolistic units, and that they have
other and greater advantages than those
claimed for the monopolistic or trust
system, then the problem is finally set
tied in favor of the competitive system,
and the chief argument for the regula-
ton of monopoly is destroyed. This is
a scientific question of fact, and it is the
plan of the bureau to investigate the
question.
while from q government point of
view there are various aspects of the
trust question which are OF great inn
portanee, such as the relation of trusts
to popular government and 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 con-
snmer.
1T is conteaded by some that with
bAf tlititabC bilt nlLt vi ilituSlIidl tH-
terprises there goes reduction in the
cost of extraction, manufacture, and dis
tribution, and that such reduction in
cost is accompanied by lower prices to
the consumer and does not involve re-
duetion in wages or an impairment of
the conditions of labor.
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-
duction and distribution. 1t is con
tended, ON the other hand, that the
source and origin of monopoly is found
chiefly in the desire to exploit the gen
eral public by stock jobbing schemes for
the immediate control OF the market and
exaeting unduly high prices from the
consumer.
"Many large combinations have failed
and demonstrated their economic ineffi-
cheney. Combinations which have OBJ
tanned control of the market and it is
admitted, have prospered, but this is al
legged to be due to their monopolistic
position, and not to superior efficiency.
Combinations which have obtained con-
troll of the market, IL is admitted,
have prospered, but this is alleged to be
due to their monopolistic position, and
not to superior efficiency According TO
those who hold this view, there is
point beyond which the increase in size
Of operations does not result in an in
crease in economy and efficiency, but
rather in loss and waste, so that the
maximum efficiency is not attained by
large combinations, but instead by con-
Germs of moderate size. If this latter |
contention be true, then, as has been I
said, the monopolistic system contains |
in itself the seeds of its own decay.
again, some of those who dispute /
the efficiency of large combinations con,
tend that this claim is made merely as
a blind for the purpose of selling wat /
cred stock. They say that such or
CARNATIONS are established for the pur
pose either of getting control of the mar.
lIet and exaeting excessive prices from
or of issuing large amounts
Of watered stock for the purpose of sell
ing such stock to the public. In the
FIRST class, it is argued s-ich eombina
tons are not concerned with the promo
tion of greater efficiency but merely
with obtaining monopoly; in the sec
0nd case they are chiefly concerned with
selling the stock, and rs they can not
claim to the general public that it has
great value due TO monopoly, they are
obliged to find another selling argument,
namely, superior efficiency.
"Of almost equal Importance with the
of this question of com
petitive efficiency is that of the price
policy of such large industrial combina
lions have achieved substantial con-
troll of the market. Those who allege
that such industrial enterprises result in
greater economy and efficiency in produc
lion often overlook the equally inn
Dortant question whether or not they
,bsorb all the benefits of such econo-
mics in increased profits without con-
,eding any share thereof to labor in
higher wages. or to consumers in rela-
lively lower prices or improved quality
If goods, etc. The determination of the
'acts in respect to this question also
night not be such as to establish broad
or conclusions, but the
Importance of having the facts is none
he less obvious"