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There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924030067387 "The 'Trust Problem' is not the problem of abolishing industrial combinations^ but of properly applying the principles which they represent." TRUSTS : THEIR USES AND ABUSES." Abstracts from the Address OF James B. Dill, Esq., of New York City, B.O.. y The MERCHANTS' Club OF CHICAGO, ILLINOIS, . November Ninth, 1901, WITH VARIOUS RESULTING EDITORIAL COMMENTS AND DISCUSSION RELATIVE TO COMBINATIONS, THEIR ADVANTAGES, DISAD- VANTAGES, DANGEROUS TENDENCIES, REMEDIES, ETC. Published and Distributed BY THE Registration and Trust Company, New York City. >s 'i^ i&^ NOTE. Corporate utilization and regfolation leading up to national legislation seems to be a topic of present moment. The views of the President of the United States expressed in i8'-)o when Go\'ernor of the State of New York in his message to the Legislature of the_ State, is to-day of more than passing interest. (See page 8.) While the abstract of the address delivered at Chicago is not without interest, neveriheless, the chief reason for its publica- tion here is as the basis of the editorial discussion following. This editorial comment and discussion of the leading journals from all parts of the United States, irrespective of party, is of forceful significance as showing, not only the timeliness of the topic, but the practical concurrence of the views of both cor- porate and anti-trust authorities to the effect that trusts should be utilized as well as controlled, leading to the conclusion, that " the trust problem is, after all, not the problem of abolishing trust combinations, but of properly applying the principles which they represent." REGISTRATION AND TRUST COMPANY. New York, November is, igoi. INDEX. PAGE Address i Editorial Discussion. Evening Post, New York, November 1 1, 1901 11 Times, New York, November 1 1, 1901 12 Journal of Commerce, New York, November 13, 1901 16 Journal of Commerce, New York, November 15, 1901 30 Herald, New York, November 12, 1901 20 Commercial, New York, November 12, 190 1 20 Commercial Advertiser, New York, November 11, 1901 19 Insurance Press, New York, November 13, 1901 22 Daily Eagle, Brooklyn, November 1 1, 1901 17 Daily Eagle, Brooklyn, November 12, 190 1 23 Journal, Chicago, November 1 1, 1901 25 Tribune, Chicago, November 11, 1901 27 Transcript, Boston, November 1 1, 1901 12 Republican, Springfield, November 13, r90i 14 Daily Advertiser, Newark, N. J., November 13, 1901 28 Times, Richmond, Va., November 12, 1901 29 Journal, Indianapolis, Ind., November 11, 1901 21 Commercial Tribune, Cincinnati, O., November 12, 1901.. . 33 Sun, Baltimore, Md., November 13, 1901 33 Insurance Chronicle, New York, November 14, 1901 41 Express, Buffalo, N. Y., November 13, 1901 36 News, Newark, N. J., November 12, 1901 39 Times, Trenton, N. J., November 12, 1 901 38 True American, Trenton, N. J., November 14, 19CI 35 Star, Rockland, Me., November 12, 1901 43 Times, Pittsburg, Pa., November 1 1, 1901 43 Palladium, Oswego, N. Y., November 1 1, 1901 44 Post, Louisville, Ky., November 13, 1901 42 Republican, Scranton, Pa., November 12, 190 1 45 Abstract of the Address of JAMES B. DILL, Esq., of New York, before the Merchants' Club of Chicago, November 9, 1901, as reported FOR THE Associated Press. "Trusts: Their Uses and Abuses." Mr. Dill described A Trust as a " dominant combination of money, property, business or commercial power or energy.'' He said: " If the charter of every prominent combination of capital or dominant company expressed the real intent of the organization instead of reading, ' To manufacture, trans- port and market' the particular product in question, it would state as the purpose of the Company ' To Dominate in the manufacturing, to Dominate in the transportation, and, what is quite as important, to Dominate in the market ' of the product. "The same tendency and intent to dominate is signified by the names of the organizations — 'United States,' 'Ameri- can,' 'Federal,' and finally 'National,' and even 'Interna- tional.' " All of this, both of structure and of name, indicates a purpose on the part of the organization to dominate in the markets of the country and of the world. " It is not the combination in itself which is vicious, but it is the methods employed by some corporations in the attempt to dominate which create the tendencies which are dan- gerous." Analyzing the Situation To=Day, the speaker said: " Recognizing that the combination and the consolidation of capital is a force, we spend no tiijie in asking why it is here further than to say it is an uplifting force, a part of the best growth and sound expansion of the American nation. It is essentially a part of the aggressive American policy of commercial supremacy. " The tendency towards centralization is strikingly apparent in the financial field. The great banks are becoming greater and are establishing branches in all directions through a stock control of smaller banks. " One might be charged with lack of conservatism should he suggest the possibility of the establishment of a great bank, perhaps under governmental influence, which shall act as a governor and regulator of the financial machinery of this country. But the anticipating of the redemption of bonds or of the payment of interest by the Secretary of the Treasury must be regarded as an expedient on the part of the Govern- ment to steady the finances of this country to the end that panics may be prevented. " Carrying this proposition to its logical extent, and, having in mind the history of the Bank of England, it has been sug- gested that when this country becomes the great finance and credit power of the world, the trend of sentiment will be towards the establishment of one great controlling financial institution, certainly under the United States law, and perhaps dominated by the United States Government. " The History of the Trust flovement is Not Unlike that of the Development of Electricity. " Half a century ago every habitation bristled with light- ning-rods in an endeavor to avert electricty, a force then, but not at the present time, known best from its dangerous ten- dencies. " But the house of to-day is not equipped with instruments to divert the electricity, but is wired to receive and utilize the electric current. The difference is not only that the force is better understood, but also that it is under control. " The generation of yesterday paid money to the lightning- rod man to keep electricity out of the house. They feared the flash and the crash, but to-day we pay the electric com- pany to create, store and deliver electricity through wires into the house for the purposes of light, heat, power and communication. "While we convey electricity into our homes, offices and manufactories, yet that current is never so conveyed mitil the conductor is insulated, so that the whole force is utilized while the danger is minimized. " The great question to-day is not, how combinations may be averted, but rather how they may be utilized and con- trolled for the best good of the company." Mr. Dill divided the dangers of the trust movement into dangers to the combinations, and dangers from the combina- tions to the public, subjective and objective dangers. Speaking of specific dangers he said : " The tendency of the great corporations is to become in a measure callous to public opinion, a mistake on the part of the corporation, unfortunate so far as the public are con- cerned, and a peril, both subjective and objective, and in which the corporation is by no means blameless. " This indifference to public opinion and legislation is due in part to the fact that from the corporate point of view many of the criticisms passed upon corporations and much of the anti-corporation legislation is based upon a lack of understanding of the situation. "Many of the attacks upon combinations have had as their aim the suppression of the movement rather than the elucidation of the subject and the utilization of the force. Such attacks, legislative or otherwise, while dangerous to the combinations, react strongly against the public. "The Tendency of Industrial Corporations to Enter the Field of Legislation and Thence into Politics is Dangerous. " Unwise legislation against industrial combinations, legis- lation in many instances enacted in response to ill-advised popular clamor, invites and sometimes forces the industrial corporation to enter into the field of legislative competition, and when once in that field the corporation learns by experi- ence that it cannot only defeat anti-corporate measures in the usual way, but can even procure pro-corporate legis- lation. "Any attempt on the part of industrial organizations to enter, voluntarily or defensively, into the field of legislation is a tendency which is to be regarded with grave apprehen- sion." As to Speculation by Officers, Mr. Dill said : "Conceding, if you please, that a daily and public market for industrial securities is a necessity for their success as a popular investment, yet if it be true that in the private offices of any official of a great combination one finds not only the business desk, but also a stock exchange ticker separated from the desk by only a wheel chair, desk and ticker being equally accessible and, perhaps, equally used by the official, one must view this situation with apprehension. "That combination which is controlled through its man- agement for the purpose of advancing or depressing the price of its securities on the market, and is run on a principle other than that of a strictly commercial enterprise must ultimately laad where it belongs — in the gutter.'' Referring to " Financial and Commercial Panics," he said : " So much of the capital of this country has already found its way into industrial securities that any panic in these securities extends beyond the mere industrial investment, and may mean a financial panic affecting the business of the whole countr)-. " The point that electrical energy advanced as a public utility only as the public learned by experience how to regu- late, control and insulate, will bear repetition and renewed application to the industrial movement to-day. " Utilization and restraint of trusts are the essential ele- ments of the industrial success, but this regulation and con- trol can be had only by wise legislation preceded by an enlightened public opinion. "Such public opinion and such legislation must be founded on a knowledge of the facts." Publicity as applied to corporations the speaker charac- terized as public publicity and private publicity. "Public publicity,'' he said, "is not yet universally prac- tised by industrial combinations, and legislation has not yet been able to fully procure it. " Public publicity, expressed in the form of legislation, will not, I take it, be to its fullest extent what certain students of economics have denominated public publicity. " It is an open question as to whether it will be either necessary or advisable to open wide to the public all of the private details and accounts of corporations, large or small. " It is asserted that private publicity, or information to the stockholders, is not always carried out to its fullest extent. "It has even been publicly charged that knowledge of im- mediate facts is sometimes conveyed only to an inside circle said to be less in circumference in many cases than the Board of Directors, and not including all the officers of the corpo- ration. " But the time is coming when public publicity properly defined and limited will be an essential element of the suc- cess of every industrial combination which seeks its support from the public. "As between combinations themselves, the sound corpo- ration will avail itself of the opportunity to demonstrate its soundness by public statements, and in such demonstration, force to a lower position its competitor who is unwilling and inferentially unable to raake the same public showing. " Public confidence is and must be the essential element of the success of any industrial. Public confidence cannot be based upon anything but knowledge of the facts, and this knowledge of the facts must come from the corporation by way of statements to the public, for the accuracy of which statement some one is responsible. " ' Let not thy right hand know what thy left hand doeth,' is a principle which can be applied to charitable organ- izations only. Applied, either as a theory or a fact, to indus- trial combinations, it is fatal to their success. " This leads to the conclusion that while to-day the better corporations are voluntarily practising publicity, they would favor a statute which secured public publicity from all corpo- rations alike. " This would not only benefit the public, steady industrial finances, tend to make industrial securities a permanent in- vestment for holders, large and small, but would also prevent the formation of blind pools, industrial swindles and avert financial panics. " Publicity is to industrial combinations what street light- ing is to municipalities. It promotes legitimate business and prevents crime. " Publicity must be secured by legislation, either National or State, and the latter, to be effectual, must be practically- uniform among the States. "/// tlie field of State legislation ivc find one of the gravest dangers surrounding the corporate questions. " A danger both subjective and objective. •' A menace both to the combination and to the people is found in the competitive strife among States for revenue from corparations. " Legislative inducements by way of private and public statutes to corporate organizations are the order of the day. ' Protection for domestic corporations, war upon foreign cor- porations,' is the legislative theory of some States. " Just so long as it is possible for a corporate organization in one State to do that business in other States which is for- bidden to its own corporations, just so long we will find dif- ferent States offering inducements to capital to incorporate under their particular laws. "To-day we find States giving express permission to their own corporations to do in other States what such corporations are expressly prohibited from doing at home. " The corporation laws of New Jersey provide that ' it shall be lawful to form a company for the purpose of constructing, maintaining and operating railroads, telephone or telegraph lines outside of this State, but prohibits the formation under the general act of such organizations to do business in New Jersey. In her new legislation of this year. New York offered a premium to " tramp organizations " by providing that cor- porations organized under New York's law, for the purpose of transacting their entire business without the State of New York, and none of it in the State of New York, should be free from State tax. " The present tendency of sonic States in State legislation respecting industrial corporations is to encourage and increase State revenue rather than towards soundness and integrity of legislation. " For years the State of New Jersey stood pre-eminent among the charter-granting States until, from the revenue 6 derived from corporations, she practically abolished the neces- sity for State taxes, contributed large sums for schools, for good roads and for matters of public use and utility. "At the beginning of this month, the State of New Jersey had in its treasury over $2,000,000 as a surplus. "In 1901, the State of New York, although it had for years waged war upon New Jersey's system of incorporation, gave way to the contrast between the state of its treasury and that of New Jersey. " New York sought to out-Jersey New Jersey in so-called paper liberality to corporations. It amended its corporation act upon the theory that the greatest paper liberality and free- dom from restrictions and even private publicity would pro- duce the greatest revenue. It made the initial organization easy, less expensive, but without lessening the burden of the local tax, the most important element of the fixed charges against corporations and the great revenue-producing factor to New York. The staid old State of Connecticut followed suit and opened its doors, offering its inducements to cor- porations; and Maine and North Carolina followed the exam- ple of New York and Connecticut. Delaware and West Virginia had already adopted every provision to increase their revenue as charter-granting states, and finally South Dakota comes forward with a proposition that it will grant to a corporation everything that it will ask, and for a con- sideration so minute as to be scarcely worth mentioning. " This tendency is not to wisdom of legislation, but to absence of restriction, to the granting of powers rather than to the maintenance of proper control. " On the other hand, influenced by the cry against monopo- lies, making no distinction between the combination of to-day and the monopolistic trust of yesterday, other common- wealths have filled their statute books with discriminations against business combinations until it is almost impracticable to do business within such States. " State legislation is each year growing more divergent, and we can look in that direction with no assurance of any uniformity of procedure and regulation of corporations. " The question is national in extent and breadth. It can be dealt with only by legislation equally broad— that is, national legislation. " It is suggested that national legislation would be uncon- stitutional. " The Supreme Court of the United States, however, found its way out of the difficulty, when suggested, in the case of the National Banking Act. " It might be said in the present case that the public wel- fare at present more urgently requires a National Corpora- tion Act than years ago it required a National Banking Act." Mr. Dill suggested that the Roosevelt Act of 1900 in New York was now a matter of interest as indicative of some of the features of a National Corporation Act which might be acceptable in Washington. He added that the President, then Governor Roosevelt, favored the proposed New York Act of 1900; that it was prepared by a commission selected under his direction; and that, although it did not pass the Legislature of New York, it contained many elements which are approved both by students of economics and by practical corporation managers. He called attention to the message of the then (1900) Governor Roosevelt to the Legislature of New York. He emphasized it as presenting the views of a man who pro- gressed rather than retrograded mentally as well as politi- cally, and asserted that President Roosevelt outlined a plan for corporate legislation which should be acceptable, both to trust and anti-trust men. He quoted from Presi- dent (then Governor) Roosevelt's message : " Our laws should be so drawn as to protect and encourage corporations which do their honest duty by the public. " Nothing needs closer attention, nothing de- serves to be treated with more courage, caution and sanity, than the relations of the State to corporate wealth. " Much of the legislation not only propo ed, but enacted, against trusts is not one whit more intelligent than the mediasval bull against the comet, and has not been one particle more effective." " To say that the present system of haphazard license and lack of supervision and regulation is the best possible is absurd." " Supervision and publicity are needed quite as much for the sake of the honest corporations as for the sake of the public. The corporation that manages its affairs honestly has a right to demand protection against the dishonest corporation. " We do not wish to put any burden on honest cor- porations. " Neither do we wish to put an unnecessary burden of responsibility on enterprising men for acts which are immaterial; they should be relieved from such burdens, but held up to a rigid financial accountability for acts that mislead the upright investor or stock- holder, or defraud the public. " The first essential is knowledge of the facts, pub- licity. Much can be done at once by amendment of the corporation laws so as to provide for 'such publicity as will not work injustice as between business rivals.' " In conclusion the speaker said : " I do not wish to be misunderstood as to the character of the industrial movement of to-day. It is of the highest order and is progressing in the right direction. It has been productive of great good to this country. It is a direct con- tributing factor to the commercial supremacy of the United States. " The form of a strictly monopolistic trust, aiming to sup- press competition, so often described by the theorist and the scholar, dees not to-day exist to any extent. " Theorists, social reformers, and some students of eco- nomics have argued against the character of the industrial movement of to-day. "They fail to recognize the fact that the ' octopus,' the 'monopolistic trust,' the organization 'destroying compe- tition, "annihilating individualism,' existed largely as a mental spectre. To the minds of some such, the suppression of competition in America seems to be the chief aim of the combinations, while in truth and in fact the destruction of competition in America is impossible. " They do not publicly recognize and admit what is the fact, that the majority of the so-called trust evils which they have portrayed have been largely in the nature of apprehen- sions, and that the objections, practical and theoretical, subjective and objective, to and of the industrial movement have largely settled and cured themselves before legislation was necessary. " There are dangerous tendencies, as has been frankly admitted, but they are ills which are natural to human kind and to human organization, not to be cured by hasty legisla- tion and in the twinkling of an eye, not to be overcome by vituperation and abuse, but rather to be minimized, and per- haps ultimately eliminated, by wise, conservative examination and decision upon the question as a whole derived from the practical experience of the Anierican people. EDITORIAL COMMENT. \^The Evening Post, New York, Monday, November ii, igoi.] ';Some aspects of the Trust problem were very acutely analyzed by Mr. James B. Dill in his address on Saturday evenmg before the Chicago Merchants' Club. It is undoubt- edly true, as Islv. Dill points out, that the system of produc- tion on a large scale has now become a permanent feature of our industrial life. The "Trust problem" is, after all, not the problem of abolishing industrial combinations, but of prop- erly applying the principles which they represent. Mr. Dill is perhaps a trifle extreme in. saying that the chief evils suffered by the public in the course of the Trust movement have been produced by the action of legislatures, but the statement contains an essential truth. In the effort to resist unjust legislation, hostile to their interests, corporations have often found it unexpectedly easy to buy special privileges, and have permitted themselves to be blackmailed by dishonest legislators. Beyond question, the true remedy for the evils of the combinations is to be found chiefly in purer politics rather than in "anti-Trust" acts. The most imminent dan- ger in the whole situation is the tendency of the corporations to settle all political questions affecting themselves by draw- ing checks on some solvent bank. It is interesting, however, to find so eminent an authority as Mr. Dill admitting the necessity of some control of cor- porations, and pointing out definite methods for its applica- tion. Naturally, the lawyer's mind sees the problem first from the standpoint of the stockholder, and aims to solve it first in his favor. The primary end to be sought, therefore, is the business-like conduct of large enterprises, the abolition of stock-jobbing by corporation officers, and the furnishing of accurate reports to stockholders. Whether this beginning will soon develop into the much talked-of "publicity," when the books of industrial corporations will be inspected, and their condition be made known as freely as in the case of banks now, may be an open question. Such publicity cannot be attained so long as different States vie with each other in holding out inducements to corpora ions that wish to organ- ize with extraordinary powers. The beginning of a reform, therefore, must be found in a national act which would sub- ject all corporations to substantially the same requirements regarding the publication of accounts and the conduct of business. It is encouraging to find that this solution of the proble.n, long accepted by experts, is considered practicable hj Mr. Dill. The verdict of so practical and thorough a stu- dent of the subject should do much to destroy the notion that the whole discussion is futile and academic. [T/ic Xc-w York Tiiiics, New York, Monday, November ii, igoi.] TRUSTS AND PUBLICITY. The discussion of trusts b}^ Mr. James B. Dill of this city at Chicago on Saturday evening has a special interest from the well-known ability of that gentleman in the line of prac- tice connected with this class of corporations and his wide experience. It is fair to assume that there is very little to be learned from the outside or the inside that Mr. Dill does not know on this subject. It is, therefore, particularly encouraging that Mr. Dill should regard publicity as the only serious safeguard against the abuse of the great powers which trusts may exercise, whether it be what he calls "public publicity," or "private publicity," that is, information for the public or information for shareholders. Still more encouraging is it that Mr. Dill should express the opinion that in time trusts, like banks, will accept publicity with a willingness proportioned to the real soundness of their condition and conduct. Indeed, it would not be surprising if publicity were gradually brought about by the action of the trusts themselves, the stronger and better ones setting the example for the express purpose of forcing others to follow it. There is another safeguard or correction to the abuse of powers enjoyed by trusts, to which Mr. Dill does not allude, but which in the long run may be found to be very effective. This is the tendency of such abuses, especially the arbitrary advance of prices through the relative monopoly of supply, to stimulate competition and destroy the monopoly. It is a fact recognized, both in theory and practice, by many of the most able and successful of those engaged in the combinations of capital and energy usually called trusts. But it would cer- tainly be an error of legislative discretion to leave the correc- tion of abuses entirely to the action of the forces here referred to. The enforcement of a rational and effective publicity through governmental agencies is the end to which legisla- tion should be directed. [^Boston Transcript, Monday, November ii, igoi.] USE AND ABUSE OF TRUSTS. The address of James B. Dill, of New York, before the Merchants' Club of Chicago, Saturda}', on the subject of " Trusts: Their Uses and Abuses," let in more light upon this great national problem than has been shed upon it from any other source that has come within the scope of our ob- servation. The source is one also to which weight of author- ity must be conceded. Mr. Dill has been referred to in some quarters as " the father of trusts." He is a noted corporation BOSTON -IRANSCRIPr, MASS. lawyer, and organized the Carnegie steel combination. He is well known to business and professional men in Boston, and last year was a speaker before the Reform Club in this city. In his treatment of this great question at Chicago he dealt in no academic subtleties, but stood on solid ground all the time, with no clouds abotit him. "It is not the combination in itself which is vicious," said Mr. Dill, " but it is the methods employed by some corpora- tions in the attempt to dominate which create the tenden- cies that are dangerous." Combination is " essentially a part of the American policy of commercial supremacy." He then made use of a striking figure to the effect that the history of the trust movement is not unlike that of the development of electricity "Half a century ago every habitation bristled with lightning-rods in an endeavor to avert electricty, a force then, but not at the present time, known best from its dan- gerous tendencies." Now the house is wired to receive the current because the force is better understood and controlled^ So "the great question to-day is not how combinations may be averted, but rather how they may be utilized and con- trolled for the best good of the compan}'." The dangers of the great corporations are their tendency to become callous to public opinion, to enter the field of legis- lation and thence go into politics and to speculate in their own securities. Utilization and restraint of trusts are the essential elements of industrial success, but " regulation and control can be had only by wise legislation preceded by an enlightened public opinion." This involves a knowledge of the facts, or, in a word, publicity. "Public confidence can- not be based upon anything but knowledge of the facts, and this must come from the corporation by way of statements to the public for the accuracy of which someone is responsible. ' Let not thy right hand know that what thy left hand doeth ' is a principle which can be applied to charitable organizations only." The better corporations are to-day voluntarily practicing publicity, and would favor a statute which secured it from all corporations. " Publicity is to industrial combinations what street lighting is to municipalities. It promotes legitimate business and prevents crime." Mr. Dill placed special and warning emphasis on the fact that " the present tendency of some States in legislation respecting industrial corporations is to encourage and increase State revenue rather than towards soundness and integrity." The recent financial his- tory of New Jersey is an illustration of this. By her liberality towards corporations she has abolished the necessity for State taxes, and at the beginning of this month had a surplus of over $2,000,000 in her treasur}'. 13 REPUBLICAN, Sl'KINGFIF.LD, MASS. After waging war for years on the New Jersey method, the State of New York, by her last Legislature, yielded to temptation, and " out-Jerseyed New Jersey in so-called liberality. It amended its corporation act upon the theory that the greatest paper liberality would produce the greatest revenue. The staid old State of Connecticut followed suit and opened its doors, offering its inducements to corpora- tions. * * * This tendency is not to wisdom of legislation, but to the absence of restriction— to the granting of powers rather than to the exercise of proper control." On the other hand, there are States that have erred in the opposite direc- tion. They have passed laws, not only restrictive, but con- strictive. Hence, there is no longer any assurance of uniformitv of procedure and regulation of corporations through State legislation. What, then, is the remedy? "The question," says Mr. Dill, " is national in extent and breadth. It can be dealt with only by legislation equally broad ; that is, national legisla- tion." Touching the objection that such legislation would be unconstitutional, he says : " The Supreme Court of the United States, however, found its way out of the same difficulty, when suggested, in the national banking act," and " the public wel- fare at present more urgently requires a national corporation act than years ago it required a national banking act." This sugg-estion has also been advanced and favored by Mr. Arch- bold, manager of the Standard Oil Company, the greatest trust in the country. Mr. Dill's argument is not against the present industrial movement. He says : " It is of the highest order and is pro- ceeding in the right direction." But the very magnitude of the movement involves the greater disaster when trusts are on a false basis and dishonestly conducted. A national cor- poration law seems to be the best solvent yet proposed. yTIu- Springfield Republican, Monday, November ii, igoi.] NATIONAL LEGISLATION FOR TRUSTS. James B. Dill, who has a close practical and legal acquaint- ance with trusts, spoke on this subject before the Merchants' Club of Chicago Saturday. He believes that industrial com- bination is on the whole working for the good of the country. But that it is attended with grave abuses as matters stand he does not pretend to deny. The great question, he says, is not how combinations may be averted, but how they may be utilized and controlled for the public good. Quite so, and first we should test their economic legiti- macy to the utmost by depriving them of all artificial support 14 REPUBLICAN, SPRINGFIELD, MASS. as through protective tariffs and discriminating railroad rates. Then, for such as survive, we come to the question of public control, and so far as it extends to the requirement of pub- licity in the affairs of these concerns Mv. Dill is very fairly disposed. We do not know that he would extend control to the matter of limiting capitalization. But publicitv, he says, is to industrials what street lighting is to municipalities. It promotes legitimate business and prevents crime. How is this adequate publicitv to be obtained ? Evidently not by State legislation ; and while the trusts will learn in time that public confidence is essential to their financial suc- cess and that publicity is essential to the gaining of public confidence, there can be no sure reliance upon the voluntary method. As for the State action, JMr. Dill makes some perti- nent observations : " A menace, both to the combination and to the people, is found in the competitive strife among States for revenue from corporations. Legislative inducements by wav of pri- vate and public statutes to corporate organizations are the order of the day. ' Protection for domestic corporations, war upon foreign corporations," is the legislative theory of very many States. Just so long as it is possible for a corporate organization in one State to do business in many other States, which is forbidden to its own corporations, just so long will we find different States offering inducements to capital to incorporate under their particular laws. State legislation is each year growing more divergent, and we can look in that direction with no assurance of any uniformity' of procedure and regulation of corporations." New Jersey has a surplus in its treasury of $2,000,000 won from the licensing of inflated trusts to prey upon other States. Other States are thus being excited to join in the business of compounding corporate felony for the sake of public revenue. New York, after denouncing the Jersey practice for some years, has now attempted to get into the game by out-Jersey- ing New Jerse)^, as ^Ir. Dill saj^s. Connecticut is just as bad and willing to stand with Delaware, ]\Iaine and West Virginia in debasing its corporate legislation for the profit to be got- ten out of it. Plainly there is little hope of effective, uniform legislative control of combinations through the States. Mr. Dill's conclu- sion seems to be unavoidable. " The question is national in extent and breadth," and legislation on national lines must take the matter in hand if adequate public control is to be resorted to at all. This involves a very great extension of the functions of the Federal Government — something to be avoided as far as possible. But no other alternative appears to be within reach in this case. ^5 [Xew York 'Journal of Comnwrcc ami Coiinncrcial Bulletin, Wednesday, November 13, igoi.] MR. DILL TO THE TRUSTS. Mr. Dill's address on trusts, made before the Merchants' Club of Chicag-o, is \vorth the serious attention of the trusts as well as of the public. We should have been glad had he given some information regarding the financing of trusts, but as he has some of the most iinposing combinations among his clients it is not singular that he disclosed little information not alread)^ accessible. Such opinions as he expressed, however, are valuable. We are particularly gratified to see that he recognizes the dubious conduct of States in competing with each other for the profits to be derived from creating combinations, and especially their violation of interstate comity in creating cor- porations to operate everywhere outside of their own jurisdic- tion, and to do things that are unlawful in the States that created them. jNlr. Dill is a good friend of the corporations in warning them that their participation in politics is dangerous. The temptation is, of course, very strong. They are subject to attack, and they defend themselves by the most convenient means. They wish legislative favors and they get them through the same agencies. But it is a dangerous policy. An appeal to the public would not yield so immediate results, but it would be safer. Whenever public sentiment is suffi- ciently aroused, it makes short work of political and financial rings, and it is undoubtedly irritated by the thought, which is not without some foundation, that large aggregations of capital have a great influence in politics, and that influence is not exerted for the public welfare. Mr. Dill's advice to the combinations to retain public confidence is sound. His insistence upon publicity is in accord with the views early expressed and always maintained by this paper. His intimation that some combinations are managed with a view to the stock market, rather than the market for their products, and that the operations of the managers are not always' known even to all the directors, sustains most of the worst charges that have been brought against the combinations. The relations of these great aggregations to the public are such that they must be conducted in the interest of the whole body of the shareholders, and they must disclose a consider- able amount of information regarding their operations to the public. The two considerations which, above all others, have tended to bring manufacturers into these combinations are the chance of retaining the value of their property and }'et getting a large bonus from the community from the sale of 16 BROOKLYN DAILY EAC.LE, NEW YORK. Stock, and the hope of preventing competition. The former involves a hugh overcapitalization which excites little atten- tion and does little harm in the midst of prosperity. But with a sluggish market and declining prices large losses must fall upon the holders of shares, and this is a serious menace to the whole business community. The overcapitalization is a speculation which must ultim'ately collapse. In the sup- pression of competition the combinations have notably failed. Their creation has stimulated the creation of new establish- ments and the producing capacity has been increased till the output can be absorbed only in a period of the highest prosperity. {Brooklyn Daily Eagli\ Monday Evenirg, November ii, 1901.] LET IN THE LIGHT. The big corporations must take the public more fully into their confidence. And if they do not do it voluntaril_y, they must be forced to open their business to public inspec- tion. That demand is making in various parts of the country and by various thinking men. Last August the Eagle de- clared that unless there were some governmental control and regulation of big industrial corporations the rights and the privileges of the great mass of the people would suffer. Theodore Roosevelt, rhen Vice-President, said in a public address in Minneapolis, on September 2d, that " More aud more it is evident that the State, and, if necessary the nation, has got to possess the right of supervision and control as re- gards the great corporations, which are its creatures ; par- ticularly as regards the great business combinations, which derive a portion of their importance from the existence ot some monopolistic tendency." And now comes James B. Dill, a lawyer, who has framed charters for more successful corporations than any other lawyer in the country, joining with j\Ir. Roosevelt. He said, in an address in Chicago on Saturday, that there must be more publicity in the management of corporations. He would have more "public publicity " and more "private publicity." By the latter he means the diffusion of information about the business of the corporations among the stockholders. At present, he declared, knowledge of important facts con- cerning the business never get beyond the Board of Direct- ors, and sometimes did not got beyond a small group in the board. The stockholders themselves can cure this evil, if they set about it. The people at large are more interested in the " public publicity." !Mr. Dill held that the time was com- ing when this sort of publicity would be essential to the suc- 17 BRiiUKLVN I'AILY FACIJ-,, NEW YORK. C cess of anv big' corporate business. People would trust th corporation which demonstrates its soundness b}' disclosing the facts. And he declared that the corporations themselves would better favor a statute which should force publicit>' from all of them. Such a statute would not only steady in- dustrial finances by making industrial securities a permanent investment for the people, but it would prevent the forma- tion of blind pools and industrial swindles generally. A corporation which did not take the public into its confidences, showing what its assets were and what its liabilities and what its expectations of success, would find no better market for its securities than a bank which withheld the same kind of infonnation. The men engaged in honest business enterprises are already realizing the importance of publicity. For instance, the United States Steel Corporation made a report of its business for the first six months of its existence a few weeks ago. That report did not contain as much information as might have been desired but it was full enough to show that the company was doing a paying business. It had met the interest on its stock and bonds, had made necessary repairs, and had put a considerable amount in a sinking fund, and had a good surplus left. This corporation was formed for the manufacture of steel and not for the sale of stocks and bonds. If the law were passed which Mr. Dill suggests, there would be few stock speculation companies formed, and the companies whose officers paid more heed to market Cjuota- tions (if stock than to the price of iron, or cotton, or tobacco, or sugar, or whatever else they ma)' nominallj' be engaged in selling or manufacturing, would grow beautifully less. The next step to be taken in the industrial revolution now in progress is in the direction of publicity. We cannot prevent the growth of the big corporations, but we can cure the evils which appear in their management. The purpose of the law should not be the prevention of monopoly, but it should be the protection of every individual in his rights. If inventive genius is able to devise a way of supplying a demand better than any now existing, that genius will enjoy a monopoly in that particular field till his inven- tion is improved upon, and no statute law can successfully take it away from him. But the law can keep the way clear for the other man who wants to ptit on the market an improve- ment on the invention of the first genius. Monopoly is not to be dreaded if it is the result of fair and free competition. But monopoly which is the result of the purchase of law, or of special privileges, is evil and must be opposed. But it is not monopoly which is offensive here. It is the corrupt sale of privilege. It is the transformation of government into a NKw YORK Commercial ad\'Ertiser, ni< w yijrk. market-place, and the changing of the representatives of the people into barterers and traders. We must let in the light and force existing corporations to appear in their true colors, whether as manufacturing institutions or brokers' offices. [.^V■^^.' Vor/i- Coinmci-Lial Advcrtist-}-, November ii, 1901.] PUBLICITY IN TRUSTS. The present revival of. anti-trust agitation in the press and elsewhere misses the great point that much has been accom- plished during the last year on the part of industrial manage- ments toward meeting the demands which have arisen out of the controversy. So much progress, in fact, has been made toward fulfilling the requirements of greater publicity, through more frequent statements of earnings ancl business policy, that those more directly interested in the problem are coming to see that legislative action will not be necessary even to hasten the end which is being approached by natural means. A natural law is working against the corporations which keep their affairs secret either for fancied reasons of self-security or to facilitate speculative operations by their officers. The process of this law is that inve.stors and the public generally come to mistrust an enterprise which refuses to take the stock- holders into their confidence, and in fixing the relative values of industrial securities discriminate in favor of the companies which issue the fullest and most frequent reports. Conse- quently, the managers of the industrial companies who have an eye' out mainly to stock market gain find that a policy of secretiveness recoils on their own heads, while those at the head of the sound concerns are forced to recognize that pub- licity is essential both to establish their credit and prove their strength . Mr. James B. Dill, in his speech Saturday evening before the Merchants' Club of Chicago, put the case very well when he said : "Public confidence is and must be the essential element of the success of any industrial. Public confidence cannot be based upon anything but knowledge of the facts, and this knowledge of the facts must come from the corporation by way of statements to the public, for the accuracy of which statements some one is responsible." In other words, public sentiment will bring about the result which compulsory legislation aims at, and it will bring it about in a quiet and equally certain manner. The leading finan- ciers of the country interested in one way or another in the United States Steel Corporation recognized the natural forces in the situation when they decided upon the publication of a 19 NEW YORK HERALD, NEW YURK. monthly statement of earnings. This open declaration of pur- pose on the part of the greatest American corporation has already been imitated by a number of the lesser companies, and more will be following their lead as time goes on. In the meantime, the process of discrimination has been aided by the extremely bad showing recently made by many concerns which confine their reports to a meager detail of earnings once a year. The problem, therefore, has already been taken out of the hands of legislators. There is no need of congressional inter- ference, and none is likely to be made. The President in his message will, no doubt, make the same sort of perfunctory declarations as are made ever)' year in favor of restricting and universalizing the laws governing corporations and com- pelling fuller reports to the public. But it can be pretty safely predicted that no practical results will come of them. [AVa' York Herald, New York, Tuesday, November 12, 1901.] THE TRU5T QUESTION AS IT WILL GO BEFORE CONQRES5. As to the operation of combinations that are in the nature of "blind pools," that derive their existence from the State, obtain millions from investors for their shares and then, keeping all information within a little circle of directors, proceed to juggle the shares in Wall street, swindling their own stockholders and deranging the money markets of the country, if not of the world — as to the operations of these " financiers " the unanimous demand is to let in the light. The corporation lawyer, Mr. J. B. Dill, who has drafted the char- ters of many of the combinations, in an address to the IMer- chants' Club of Chicago on Saturday evening put the situa- tion very happily when he said: " Publicity is to industrials what street lighting is to municipalities. It promotes legiti- mate business and prevents crime." \Xe-is) York Commercial, Tuesday, November 12. J OFFICERS WHO SPECULATE. James B. Dill made a telling point in his address on trusts before the Merchants' Club of Chicago, when he said: "Conceding, if you please, that a daily and public market for industrial securities is a necessity for their success as a INDIANAPOLIS JOURNAL, INDIANA. popular investment, vet if it be true that in the private offices of any official of a great combination one finds not only the business desk, but also a Stock Exchange ticker, separated from the desk by only a wheel chair, desk and ticker being equally accessible, and perhaps equall}' used by the official, one must view this situation with apprehension." One such case has occurred recently, and the company was saved only by its enormous capital, which, however, was depleted almost one-half before the gambling officials were removed and business methods restored. It would be well if stockholders knew a little more about the officials of large companies whose stocks offer such tempting opportunities to make a quick turn in the market for those on the inside. An official of a certain "Western railroad sought to get rich in Wall street by operating on information that he possessed. It happened that adverse conditions were telegraphed to New York by a newspaper correspondent on the day the official made his plunge. He lost heavil}', and the exposure later cost him his position. In New York, however, discover}^ of speculative ventures by officials is not easily made, and even if known, such speculation is looked upon with more or less indifference. The bonding companies have detectives who look up the records of clerks and learn their habits before the bond is given, and afterward, from time to time. It may become necessary to take a few notes concerning the officials of the big combines, not only before they are elected, but after- ward. A Sherlock Holmes in Wall street might find some interestincr evidence for stockholders. ^/ozirnal, Indianapolis (Ind.) November ii, igoi.] NEW JERSEY LEGISLATING FOR THE UNITED STATES. An address delivered in Chicago by Mr. James B. Dill, of New York, on the uses and abuses of trusts touched on one point that is worth emphasizing, nainely, the competitive strife among States for revenue from corporations. He re- ferred particularly to the practice in some States of soliciting outside capital to organize under laws that authorized the exercise of powers in other States that would not be permitted in the State granting the charter. He characterized this policy as apparently based on the principle of " protection for domes- tic corporations and war upon foreign corporations," and added : " Just so long as it is possible for a corporate organization in one State to do that business in another State which is IXSUEAXCE PRESS, NEW YORK. forbidden to its own corporations, just so long- v/il] we find different States offering inducements to capital to incorporate under their particular laws. To-day we find States giving- express permission to their own corporations to do in other States what such corporations are express!}' prohibited from doing at home." Although the speaker did not name any State, he doubt- less referred to Xew Jersey, whose les^islation during the last few years has been framed with special reference to creating corporations in that State with extraordinary powers to ope- rate in other States. As the State charges a big fee for every charter granted, it has profited b}^ the business. During the year 1899 there were 1,945 corporations chartered under the laws of the State and authorized to issue capital stock to the amount of $2,500,000,000. The fees collected by the State on these charters amounted to $728,023. Nearly two hundred of the corporations were capitalized at $2,000,000 and upward. Six hundred of them had a capitalization of $t, 000,000 or more. At the present time more than 15,000 corporations in every part of the United States are operating under the laws of New Jersey, thus, in a sense, giving that State power to legislate for e^•ery other State in the Union. By the incor- porating of these 15,000 corporations New Jersey legalized the issuance of stock aggregating nearly $8,000,000,000. Com- paratively few of the corporations operate in New Jersey, and those that do have not neaidy as large powers as those which operate in other States. The abuse should be regulated by Congress if it can be reached under the Constitution, or else other States should unite in defensive legislation against New Jersey corporations. [ TliL Insurance Press, New York, November 13, igoi.] NATIONAL SUPERVISION OF CORPORATIONS. Underwriters have read with an interest peculiarly their own the very able speech of ]Mr. James B. Dill, the eminent corporation lawyer of this city, before the Merchants' Club of Chicago last Saturday evening. No corporations feel more severely than insurance companies the fact that " State legis- lation is each year growing more divergent, and we can look in that direction with no assurance of any uniformity of pro- cedure and regulation of corporations." The problems of management forced upon insurance com- panies by the almost infinite variety of insurance laws in the various States are most harassing to underwriters, and all persons interested in the business of insurance, the insured as well as the insurers, suffer in consequence. (_'SS BROOKLYN EAGLE, NEW YORK. K P'^jlesirability of a regulation of the insurance busincs by the Federal government is admitted by every underYvriter JNo subject has been more generally discussed in the insur- ance business. Although Mr. Dill spoke of corporations generally the tollowmg paragraph from his speech needs no change what- ever as an argument that underwriters Avould put forth f..r their o\vn relief and for the benefit of the people who carry insurance policies : "The question is national in extent and breadth It can be dealt with only by legislation equally broad— that is, national legislation. It is suggested that national legislation would be unconstitutional. The Supreme Court of the United States however, found its way out of the same difficulty, when suo-' gested, m the case of the National Banking Act. It micrht he said, in the present ease that the public welfare at present more urgently requires a national corporation act than years ago It required a National Banking Act." The Roosevelt Acr What Mr. Dill deliberately said on so important an occa- sion as that in Chicago, respecting restrictions and publicity, and a national corporation law, should be considered with serious attention. He was one of the gentlemen selected by President Roose- velt, then Governor of New York, in 1900, to formulate the corporation act known as the Roosevelt Corporation Act of New York, which presented new features. It is to be assumed that Mr. Dill, while speaking in Chicago, was at that time not unmindful of Mr. Roosevelt's views, when Governor, upon these subjects, although it is to be borne in mind that no suggestion of that kind was con- tained in Mr. Dill's address. ^Brooklyn Daily EagU\ November 12, igoi.] BOTH SIDES OF THE TRUST CASES. The Dill definition of a trust is sufficiently descriptive, but not necessarily accurate. He calls it a dominant combination of money, property, business or commercial power or emer- gency. Of course, it may not dominate. On the contrary, it may come into the world with scant warrant for existence and leave behind it a record of uninterrupted failure. That is to say, it resembles other business ventures to the extent that capacity must characterize its birth and career — there is no royal road to riches, even for a trust. However, Mr. Dill 23 BROOKLYN EAGLE, NEW YORK. has placed a notable contribution to his credit. He has made a sincere effort to look at both sides of the case. He sees the infirmities as clearly as the attributes. It is apparent to him that but for trusts, so-called, the United States could scarcely have obtained their present commanding position in the com- mercial world. This almost goes without saying. There have been individuals who controlled millions, but it is another matter when it comes to owning and controlling bill- ions. Concert of action on a colossal scale has enabled this country to grapple with forces hitherto supreme in their own sphere. It has enabled it, even with the added cost of trans- portation, to underbid the Birmingham cutler and the Swiss watchmaker. There is much the matter with the politician or the economist who overlooks exploits of this description. The trouble with the peerless leader of a lost cause was that he could see nothing but the shortcomings, that all trusts were alike to him. He has lived long enough to find most of his associates identified with big corporations. Towne and Hogg and Jones and Bailey have plunged into the commer- cial swim. They have stopped howling about monopolies lest they be accused of abusing themselves. It makes all the difference in the world whose ox is gored. Few will now have the hardihoood to take issue with Mr. Dill when he says that it is not the combination which in itself is vicious. It is the methods employed by some corporations attempting to dominate that create the tendencies which are dangerous. This is the real hint to the leg'islator. It is the hint to the politician and the publicist. Blind hostility will make matters worse. The trust problem is assuming a dis- tinctly reassuring phase. Men who are prominently identified with gigantic concerns are taking a hand in the discussion. They are calling attention not only to the benefits but to the perils. This is meeting the opposition at least half way. It would be as absurd for them to say that all trusts are in all things good as it would be for the opposition to renew the contention that all trusts are in all things bad. vSweeping contentions can be truthfully made by neither side. There is a middle ground upon which there is standing room for all who are neither sightless nor prejudiced. Nor could there be a better time for provoking the discussion. The disposition to debate the question fairly will have its influence on public judgment. It will have an influence at Washington where an annual message is now understood to be in course of prepara- tion. Indeed, it is possible that even the Commoner will pass from abuse to debate, so obvious is it that the trusts have not only come to stay, but that, to quote Mr. Dill, they are "part of the best growth and sound expansion of the Ameri- 24 CHICAGO JOURNAL, ILLINOIS. can nation — essentially a part of the aggressive American policy of commercial supremacy." There is no reason why the debate should be deferred. On the contrary, there are the best of reasons for stimulating interest in it. As soon as possible it should result in legisla- tive action. It now looks as though prosperity would con- tinue indefinitely, but trouble has an ugly habit of coming when least expected. Commercial disaster would probably be attributed to the great combinations — scapegoats are always discoverable. In foul weather the trusts would probably be held accountable for every crime in the calendar — for crimes they could not commit if they would, and would not if they could. In fair weather they can be passed upon judicially. There are tremendous temptations in the way of many of those who are in actual control. A little juggling of figures will send stock quotations up or down, as the case may be. Those who control can juggle with them almost at will. That is to say, immense fortunes are at their disposal. A mere rumor as to the increase of a dividend judiciously set afloat will serve the pnrpose. Mr. Dill has spoken strongly on this point. He says: ''That combination which is controlled through its management for the purpose of advancing or depressing the price of its securities on the market, and is run on a principle other than that of a strictly commercial enterprise, must ulti- mateh' land where it belongs — in the gutter." There are other dangers almost as menacing. The one that seems to be most imminent is that, fearing adverse legislation, the trust millionaires will subsidize legislators. Freedom of commerce between the States is guaranteed by the Federal Constitution. Almost anything Congress may do may be negatived as un- constitutional, while, on the other hand. State Legislatures are notoriously accessible. There are plenty of difficulties in the way, but the encouraging sign is that the trusts them- selves are not thrusting the topic aside. They are wise in their day and generation. They are realizing that favorable public sentiment is among the most valuable of their assets, and, so long as there is a disposition on one side to impose salutary restrictions, and on the other to accept them, the out- look is promising enough. [Chicago Journal, November ii, igoi.] THE CONTROL OF TRUSTS. Mr. Justice Brewer, in a recent address at the Yale bicen- tennial anniversary, said that " trusts have come to stay." He pointed out how they were the outgrowth of modern business 25 CHIC-\i:i> TRIBUNE, ILLINOIS. conditions and that they were, when honestly and wisely managed, advantageous for the public. On Saturday evening Mr. James B. Dill, who has had more to do, perhaps, with the organizing of great trusts than any other lawyer in the United States, spoke before the Merchants' Club of this city on the subject of " Trusts : Their Uses and Abuses." He defined a trust to be " a dominant combination of money, property, business or commercial power or energy," and that the domination of the market was the primary pur- pose of a trust's organization. The great trusts of the land, like the oil, sugar, steel and others, control their respective markets, destroy competition, establish prices, and by means of more economical manufacture sell more cheaply to the public and at the same time make larger profits for the stock- holders. The dangers to the public from trusts are of several kinds and grow out of the privacy with which they are man- aged. The public is not let into their affairs save as the officers and Directors may choose to make statements from time to tiine, and, as these have no legal sanction, they may be true or false, and can only be depended on to the extent of the character and reputation of the men who make them. Mr. Dill holds that there ought to be a law. State or national, compelling companies to publish regular and sworn statements of their business. Mr. Dill thought that State legislation would not suffice to accomplish the purpose, and that a comprehensive national act controlling all trusts should be passed by Congress. In respect to the constitutionality of such an act, which has always been strongly doubted, Mr. Dill said: "The Supreme Court of the United States had found its way out of the same difficulty when suggested in the case of the National Banking Act. It might be said in the present case that the public welfare more urgently required a National Corporation Act than years ago it required a National Banking Act." A well-ordered national law, providing for the control of all trusts and a stated examination of the business, something after the model of the National Banking Law, would be oi untold value to the people. Another danger from trusts pointed out by Mr. Dill was their tendency to enter the field of politics and control legis- lation in their own interest. Such activity is to be regarded with grave apprehension, though it is often caused by threats of hostile legislation. Mr.' Dill said many wise and suggestive things upon this great and all-important subject. "^It is the question of the coming years, one to be settled not by rancorous demagogues, but by broad-minded and conservative statesmen. 26 [Chicat^'o Trihiiiit\ Monday, November ii, 1901.] A BROAD VIEW OF "TRUSTS." Mr. James B, Dill, who spoke to tlie jMcrchants' Club night before last on the trust question, is a corporation lawyer. He has been called "the father of trusts," 3'et his opinions con- cerning his reputed children and the methods which should be adopted to make them behave themselves concur to a not- able degree with those of President Roosevelt as expressed in his Minneapolis speech. This agreement is sufficient evi- dence that the lawyer, in spite of his trust affiliations, can dis- cuss the subject intelligently and conservatively. President Roosevelt said at Alinneapolis "more and more it is evident that the State and, if necessary, the nation, has got to possess the right of supervision and control as regards the great corporations, which are its creatures, particnlarlv as regards the great business combinations which derive a por- tion of their importance from the exi.'^tenee of some monopo- listic tendency." !Mr. Dill says "utilization and restraint of trusts are the essential element of industrial success. This regulation and control can be had onh' by an enlightened pulDlic opinion followed by wise legislation." Apparently Mr. Dill does not look to the States for such legislation. He mentions the tendency of some of them to hold out special inducements to corporations so as to get State revenue, while other States ha\'e filled their statute books with discrimina- tions against business combinations. Mr. Dill does not overlook the evils of tru.sts. He regrets their tendency to become callous to public opinion. He de- plores also "the tendency of industrial corporations to enter the field of legislation and thence enter politics, which is perhaps the most imminent danger from the combination to the public." The public is aware of that danger, which is not remote, but is within the gates. The fields of legislation and of politics were long ago entered by sume corporations. It may be that in some instances, as Mr. Dill remarks, half apologetically, legislation which was unwise, though honestly meant, or which lacked both wisdom and honesty, has led cor- porations to believe that self-preservation required them to go into politics and to control legislation. After having made this new departure they have learned, as ^Ir. Dill says, that they " can not only defeat anti-corporate measures in the usual way, but can even procure pro-corporate legislation." They secured the temporary enactment of an Allen law, for instance. But under any circumstances their entrance " vol- untarily or otherwise into the field of legislation and poli- tics," is, as Mr. Dill says, "to be regarded with grave appre- hension." Mr. Dill dwells on the desirability of publicity for the sake 27 NEWARK DAILY ADVERTISER, NEW JERSEY. of the piiWic and of the corporation itself. Public confidence, he says, is the enduring element of the success of any indus- trial.' To secure that confidence the public must know the facts. Hence the belter corporations are voluntarily practic- ing publicity, and would favcr a statute securing it from all corporations'. :\Ir. Dill says this publicity must be enforced by legislation, either national or State, but the latter, to be really effective, must be uniform. 1 his is precisely in a line with President Roosevelt's argument at Minneapolis. The men at the head of the great industrial combinations of the coun- tr\-, who have often acted on j\Ir. Dill's advice, should heed the suggestions he makes now. They should welcome the publicity and the " regulation and control" which Mr. Dill looks on as not merely expedient but necessary. [Xi-n'ari Daily Aili'L-rtiscr, Wednesday, November 13, 1901.J HR. DILL ON TRUSTS. James B. Dill, of East Orange, who has won celebrity as an organizer of great industrial combinations, made an ad- dress before the Merchants' Club at Chicago which has com- manded wide attention throughout the land. Mr. Dill cannot be quoted as a critic of the trust system, for he is too closely identified with it, but he said things in his address that legis- lators cannot pass unheeded. Mr. Dill wants the trust system to stand, and he realizes that to make it permanent the abuses that characterize it must be done away with. Accordingly he favors publicity, which, he says, is to industrial trusts what street lighting is to municipalities. What he says about State action is of peculiar interest in New Jersey. These are his remarks on that point : " A menace, both to the combination and to the people, is found in the competitive strife among States for revenue from corporations. Legislative inducements by way of pri- vate and public statutes to corporate organizations are the order of the day. 'Protection for domestic corporations, war upon foreign corporations,' is the legislative theory of very many States. Just so long as it is possible for a corporate organization in one vState to do business in many other States, which is forbidden t(j its own corporations, just so long will we find different States offering inducements to capital to incor- porate under their particular laws." New Jersey set the example in this scramble for the spoils and its G(jvernor has proudly exhibited the spoils as a great achievement in State finance, and as an evidence 28 RICHMOND TIMES, VIRGINIA. of State prosperity that would not exist btit for the industrial trusts and the exceptional advantages offered to them under our laws. Mr. Dill dismisses the idea of uniform control of industrial combinations through State action. Greed and corporate influences stand too much in the way. He looks to legislation on national lines. "The question,"' he sa5's, '' is national in extent and breadth." It is expected that President Roosevelt will deal with the question in his message to Congress next month, and what he says will certainly' be to the point and carry great weight with the country and with Congress. [Richmond, Va., 'Times, November 12, 1901.] A SCIENTIFIC VIEW OF TRUSTS. Mr. James B. Dill, of New York City, delivered an address on Saturday evening before the Merchants' Club of Chicago, in which he discussed the uses and abuses of trusts. Air. Dill did not deal much in theories. He confined his remarks to existing conditions. He recognizes that the combination of capital is a force, and so he said he would spend no time in asking why it was here further than to say that it was a part of the best growth and sound expansion of the American Nation, essentially a part of the aggressive American policy of commercial supremacy. He compared the trust movement to the development of electricity. Half a century ago, said he, every habitation bristled with lightning rods in an endeavor to avert electricity; whereas, the house of to-day is not equipped with instruments to avert this force, but is wired to receive and utilize the elec- tric current. The great object of science in this day is not to suppress electricit}', but to control and utilize it as a working force. He thinks that that principle should be applied to trusts, "Many of the attacks upon combinations," said he, "have had as their aim the suppression of the movement rather than the elucidation of the subject and the utilization of the force. Such attacks, legislative or otherwise, while dangerous to the combination, react against the public. The tendency of industrial operations to enter the field of legislation and thence to go into politics is a most imminent danger. Unwise legislation against industrial combinations, legislation in many instances enacted in response to ill- advised popular clamor, invites and sometimes forces the industrial corporation to enter the field of legislative com- petition, and when once in that field the corporation learns 29 JOURNAL OF COMMKRCE AND CUMMERCIAI, BULI.KTIN, NEW YORK. by experience that it can not only defeat anti-corporate measures in the usual \va}-, but can e^-cn procure pro- corporate leg-islation. Any attempt on the part of industrial organizations to enter, voluntarih' or defensively, into the field of legislation is a tendency which is to be regarded with graA'e apprehension. This seems to us to be one of the most sensible presenta- tions of the subject that we have seen. Combination is undoubtedly a great factor in our modern economy and is recognized as such. It is absurd to talk about abolishing cor- porations. In this day of great enterprises the}' are absolutely necessar}-. If we should abolish them we should go back a hundred years and should be unable to compete with the nations of the earth with which wc are now in sharp com- petition. Corporations are here and here to stay, just as surely as electricity is a working force in the industrial world. It is wisdom, therefore, for the people of the land who rule to use the corporations for their good, just as they employ electricity for lighting and heating and moving machinery. We have for years had an abiding faith that this problem would finally solve itself. We have more faith to-day than ever before. [New \ox\ Journal of Coinnn-rcc and CoinintTcia/ BuUctin, Friday, November 15, igoi.] PRESIDENT ROOSEVELT AND THE TRUSTS. Some more or less authoritative statements have been made as to the attitude which will be taken by President Roosevelt, in his first message to Congress, in regard to the necessity for legislation for the correction of the abuses of the trust system. The somewhat advanced and aggressive views on the subject enunciated by jMr. Roosevelt while Gov- ernor of New York, and, later, as Vice-President, were accepted as ground for the belief that as President he would regard among the necessities of the hour some positive legis- lation for the restraint or regulation of the operations of the great combinations loosely described as "trusts." The Presi- dent has, during the last few weeks, been in daily conference with representative men from all' parts of the' country in regard to this and other subjects which might properly be discussed in his message. Judging from the published reports of the impression which various participants in these conferences have brought away with them, there has been a perceptible weakening of the Presidential resolve to recom- mend some vigorous mode of dealing with the trust question. About the end of last month it was reported as the opinion of 30 JOURNAL OF COMMERCE AND COMMERCIAL BULLETIN, NKW YORK. some of the influential Senators and Representatives with whom President Roosevelt had consulted, that the most radi- cal, or, at least, the most outspoken, part of his message would be the paragraph on trusts. It was explained that this did not mean that the President intended to recommend drastic legislation against industrial combinations, but rather that he regarded the trust question generally as one fore- shadowing trouble in the future if not wiseh' handled. While he might have no specific recommendations to make with regard to the kind of trust regulating law that should be passed, if any, it was declared that the President would make clear and strong convictions which he has often expressed on the general subject of the necessity of finding some legal way to restrain the growing power of industrial combinations. A fortnight later the same authority reports that nearly all of "the able, influential and conservative Senators and Representatives " who have talked with the President lately declare that the President will not, as has been so often stated, recommend drastic legislation for the regulation and curtailment of the powers of trade combinations, the so-called trusts, but will content himself with calling the attention of Congress plainly and emphatically to the facts as they exist, leaving it to deal with the subject as it thinks best. While in that way probably lies the path of wisdom, there does not seem to be any good reason why Mr. RooscA'elt, as President of the United States, should not go as far as !Mr. Roosevelt did when Governor of the State of New York. There is this very sufficient reason for his taking a position at least as ad- vanced as that which he occupied two years ago, in the fact that State legislation in regard to business combinations is becoming every year more divergent, and that as Mr. James B. Dill has remarked, " we can look in that direction with no assurance of any uniformity of procedure and regulation of corporations." The question is national in its extent and can be adequately dealt with only by national legislation. To the objection that national legislation would be imconstitutional, the same excellent authority replies that the Supreme Courr O"^ the United States found its way out of this difficulty when suggested in the case of the national banking act, and that the public welfare at present more urgently requires a national corporation act than it required a national banking act years ago. The bill known as the Roosevelt Act of 1900, in New York, was prepared by a commission selected under the Governor's direction, and Mr. Dill makes for him the very significant statement that, although it did not pass the Legis- lature, it contains many elements which are approved, both 31 JOURNAL OF COMMERCE AND COMMERCIAL BULLETIN, NEW YORK. by students of economics and by practical corporation man- agers. Perhaps the less the attempt is made to cure by legislation the economic evils to be apprehended from trusts, the better it will be for the public interest. As Professor Sumner has remarked, one of the greatest of these evils is the tendency of the trust system to suppress improvement. It is character- istic of competition to produce in advance, and of monopoly to fall into easy routine. Professor Sumner discerned two safe- guards against this danger, the first being that an enlight- ened regard for their own interest would prompt the trust managers to see that there was no relaxation on the line of improvement; and the second was that, after big units are formed, competition recommences between them. It might be added, as experience has shown, that after the big units are formed, a mass of smaller concerns spring up to dispute with them the sole occupation of the field of production. These are very frequently organized bv some of the most capable of the managers of individual concerns whose services have been rendered unnecessary in the process of consolidation, or by some of the owners of individual plants which have been brought out by a trust. In any case, the principle holds good that the whole history of human industry consists in the alter- nation of combination and competition, and it is this which has " driven the industrial organization along the line of develop- ment toward higher and higher power." The main question turns upon the kind of law which it is necessary to build up around trusts for the protection of the public, both against finan- cial disaster of far-reaching consequences and economic tyranny calculated to arrest industrial and commercial progress. The most essential element of such legislation is unquestionably that of publicity, which, in the language of Mr. Dill, " would redound, not only to the benefit of the public, to the steady- ing of industrial finances, to the making of industrial securi- ties a permanent investment for holders, large and small, but would also prevent the formation of blind pools, industrial swindles, and tend to avert financial panics." It is evident that to secure the same standard of publicity in the reports of all the great corporations State legislation is inadequate, since it is entirely hopeless to expect it to be practically uni- form. Publicity must therefore be secured by national legis- lation, and President Roosevelt can do no more timely service than to impress on Congress the necessitv of securing a law with this end primarih' in view. Congress has already done all that lies in its power to prevent the creation of a monopoly through the instrumentality of interstate commerce. As it cannot constitutionally interfere with attempts to create a monopoly in manufacture, the scope for amendments to the Sherman Act is obviously somewhat limited. 32 \Baltimore, Md , Sun, November 13, 1901.] TOPICS OF THE TIMES. Mr. Jajies B. Dill's Chicago Speech Alout Controlling Trusts. In a speech before the Merchants' Club of Chicago, Mr. James B. Dill advocated the control of trusts by Congress. Commenting on this speech, the Springfield Republican says: " New Jersey has a surplus in its treasury of $2,000,000 won from the licensing of inflated trusts to prey upon other vStates. Other States are thus being excited to join in the business of compounding corporate felony for the sake of public revenue. New York, after denouncing the Jersey practice for some years, has now attempted to get into the game by out Jersey- ing New Jersey, as Mr. Dill says. Connecticut is just as bad, and willing to stand with Delaware, Maine and West Virginia in debasing its corporate legislation for the profit to be got out of it. Plainly there is little hope of effective, uniform legislative control of combinations through the States. Mr. Dill's conclusion seems to be unavoidable. 'The question is national in extent and breadth,' and legislation on national lines must take the matter in hand, if adequate public control is to be resorted to at all.'' {^Commercial Tribune, Cincinnati, O., November 12, 1901.] A TRUST LAWYER ON TRUST REGULATION. The Merchants' Club, of Chicago, banqueted at the Auditorium last Saturday, the oratorical portion of the menu being furnished by James B. Dill, corporation trust lawyer, and Carroll D. Wright, statistician. Mr. Wright took for his theme the necessity for incorporation of labor unions, with all resultant responsibilities, while Mr, Dill insisted on publicity, with all its restraining influences, for trusts. Neither speaker stuck too closely to his text, for Mr. Wright expressed the opinion that the days of strikes were fast com- ing to an end, and Mr. Dill expressed regret over possible damage to Chicago because of the recent decision of the Supreme Court of Illinois, upholding the right of the city to assess corporate franchises and collect taxes on them. Heralded, by the Chicago press, as the gentleman whose fees, in the adjustment of the affairs of the Carnegie Com- pany, when Mr. Carnegie retired, footed up into the hundreds of thousands of dollars, and who once received a fee of $75,°°° for a ten minutes' talk in a trust case, Mr. Dill fears that the 12, COMMERCIAL TRIBUNE, CINCINNATI, O. Illinois corporations will surrender their charters, reorganize •under the benevolent statutes of New Jersey, become citizens ot that State to the detriment and the damage of Chicago — but that contingency is but incidental. Nothing Mr. Dill said more forcefully illustrates the absolute necessity for prompt and drastic measures of legis- lation in restraint of organizations which defiantly refuse to bear their proportionate share of public burdens, but, when compelled to do so by the courts, impudently threaten to withdraw in form to friendlier climes while remaining, in fact, in the State whose authorities have had the temerity to insist that protection of the law to the citizen necessarily involved the duty, on the part of the ciiizen, to contribute in the way of taxes to the payment of the means of protection. The humorous definition of a trust, by Mr. Dill, as a "Chi- cago enterprise, clothed with legal garments in New Jersey and given to the public in New York," might well have caused the laugh with which it was met; but there can be no laughing when this distinguished counsel for trusts defined a trust, in all seriousness, as "« doiiimant combination of iiioncy, property, business or coinuicrcial energy or pozver, its primary purpose being the domination of the market." Considering the dangers to the trusts themselves, Mr. Dill was equally plain. To enter the field of legislation and then the field of politics, Mr. Dill regards as pregnant with danger to the trusts, " for, when once in the field of legislative com- petition, the industrial combination sometimes learns that it cannot only defeat anti-corporate measures in the usual way. States, however, found its way out of the same difficulty, but can even procure pro-corporate legislation." That is to say, Mr. Dill merely fears corruption to the morals of the industrial combinations, and dreads it. It is difficult to understand whether Mr. Dill is serious or otherwise as to what he consid- ers the dangers to the trusts, but there can be no question what- ever that in organizing for the purpose of dominating the mar- kets !Mr. Dill sees absolutely no danger to the general public. His was not a special plea for trusts, but a direct, straight- forward declaration in their behalf, with a forewarning of his belief of the speedy coming of the day when there would be established " one great controlling financial institution," with a probability that it would Le controlled by the Govern- ment of the United States, but not necessarily so. The speech of Mr. Dill, an accredited representative of trusts and industrial combinations, ought to cause a final awak- ening of the public to the dangers which menace not only the individual, but the very body politic itself, and cut down the giant growth of the evil before it is too late. For of what 34 TRUE AMERICAN, TRENTON, N. J. avail would legislation be— wherein would it be honest and sincere — when the trust has attained that growth and strength and vigor which its representative so plainly sees for it? The duty of the Republican party is grave, but plain. President Roosevelt has declared himself in no uncertain terms, and the party must line up with him on the trust issue if it would maintain its supremacy. \_Trzce American, Trenton (N. J.), November 14, 1901.J In his speech on the subject of Trusts, Mr. James B. Dill, the leading trust lawyear of this country, was candid enough to say that the great danger to the public is the tendency of the trusts to enter the field of legislation and of politics, and by the force of their money and influence fortify their position. It needs the mental perversion of a maker of trusts to convert this present evil into a future' danger. In Congress and in legislatures the trusts appeared, before they were recognized by the outer world, and secured legislation and created defenders under which and whom they have grown into a giant of corruptive power. In Congress they forced the President of the United States to retract his own advice as to what our colonial policy should be, and held Porto Rico at the point of insurrection rather than forego the privileges which accrued to them through a separation of the island from the central government. In New Jersey they have held the legislative power in thraldom until the whole burden of our song is : " How much can we get out of the trusts by the sale of legislation and the perversion of our franchises," while the Governor of the S.ate is taken here and there, like a dog under a wagon, to applaud the trusts and the benefi- cence of their creation. At Washington and in ths New Jersey Legislature the attack of the trusts upon official integrity long since ceased to be a menace, and became an actual and deplorable evil. And to-day we find the creation of a corporation with four hundred millions of capital, whose object is to blend in one corporation the great railroads of the West in whose com- petition there was all that remained of public safety against corporate aggression. The coal combine, which was fought so severely as a destructive monopoly, has become an actual- ity under New Jersey laws and New Jersey decisions, and holds by the throat every consumer of coal in the State. The steel trust, also of New Jersey creation, not only controls the 35 BUFFALO EXPRESS, NEW YORK. prices of all sorts of steel and iron productions, but could come to Trenton and dictate to the State of New Jersey upon what terms it would do us the honor of receiving its com- mission from our hands. It was but a few days ago that every trust in New Jersey was banded together in the purchase of the election of a Governor and Legislature that would be pliant to their will. And it will be but a few days when that Governor and legis- lature will be shaping the laws and the appointments and the influences of government in defense of the trusts. The threat" of Mr. Dill that this attitude of the trusts is likely to follow an opposition to their purposes is empty, in that it has already been called into action in New Jersey. \Biiffalo {X. ]'.) Express, November 13, 1901.] AN EXPERT ON TRU5T5. The soundness of the attitude of President Roosevelt in regard to publicity as one method for correcting the trust evil is given especial emphasis by the recent remarks on the subject by James B. Dill, the well-known New York lawyer. Probably no man in the country is better informed on the manner in which trusts are organized and conducted than is Mr. Dill. The great United States Steel Corporation is only one of a number of combinations the legal features of which were looked after by him. In his Chicago speech, Mr. Dill called attention to the fact that the trust is essentially a de- velopment of the aggressive spirit of American industry, and that it cannot be destroyed. In his opinion, it can only be controlled. Such were the views advanced by Justice Brewer in his address at the Yale bicentennial celebration last month. Both men regard public opinion very highly, and believe that this will serve in the end to regulate the evils of the great industrial combines. In fact, both believe that anti-trust legislation is unwise, at least in the manner in which it has been carried on heretofore. " Unwise legislation against industrial combinations," says Mr. Dill, "legislation in many instances enacted in response to ill-advised popular clamor, invites and sometimes forces the industrial corporations to enter the field of legislative competition, and when once in that field, the corporation learns by experience that it can not only defeat anti-corporate mea- sures in the usual way, but can even procure pro-corporate legislation. Any attempt on the part of industrial organiza- 36 BUFFALO (N. Y.) EXPRESS. tions to enter, voluntarily or defensively, into the field of leg- islation, is a tendency which is to be regarded with grave apprehension." The same spur of indiscreet attack which may drive a corporation into the legislative field, tends to make it callous to public opinion, as does also the success it has in procuring legislation favorable to itself or in defeating antag- onistic measures. Mr. Dill regards it as unfortunate that corporations care so little for public opinion. The only rem- edy in this direction is to refrain from the absurd efforts to break down these industrial combinations. The problem must be attacked in a careful, studious manner, as President Roose- velt, Justice Brewer and ^Ir. Dill have pointed out. Under those conditions, the legislative bodies will undoubtedly have the hearty co-operation of the leading organizers and man- agers of the combines Mr. Dill even went so far as to assert that the better cor- porations would favor a statute securing publicity for all. He divides publicity into two classes — public and private, the distinction being obvious — and then says: "The time is coming when public publicity will be an essential element of the success of every industrial combination which seeks its support from the public. As between combinations them- selves, the sound corporation will avail itself of the oppor- tunity to demonstrate its soundness by public statements, and in such demonstration force to a lower position its competitor who is unwilling and, inferentially, unable to make the same public showing. Public confidence is and must be the essen- tial element of the success of any industrial. Public confi- dence cannot be based upon anything by knowledge of the facts." The importance of publicity has long been recognized by the railroad companies and it is now being recognized by the leading industrial organizations. The United States Steel Corporation, possibly upon the advice of Mr. Dill, has set a notable example in this respect. A somewhat limited state- ment of its financial affairs was issued after the quarterly meeting of the directors, while last Saturday the Investor printed what purported to be an official balance sheet of the corporation's business, dated June 30th. The example set by this organization has been followed by the Republic Iron and Steel Company. When an end shall come to the blind-pool form of management, such as that of the Amalgamated Copper Company, for instance, the great industrial enter- prises will be on a much sounder basis and the so-called trust evil will have largely, if not entirely, disappeared. 37 [Tiiiu-s, Trenton, N. T., November 12, 1901.] AN EXPERT ON TRUSTS. John B. Dill, one of the best informed men in the country on the subject of corporations and corporation laws, deliv- ered an address last week before the Merchants' Club, of Chicago, on "Trusts: Their Uses and Abuses." As Mr. Dill is an expert in trust organization, his opinions are entitled to serious consideration. The following is a brief summary of Mr. Dill's views: The real intent of combinations of capital is to dominate in manufacturing, in transportation and in the market. It is not the combination, which has come to stay, which is dangerous; it is the methods employed by some corporations in the attempt to dominate. The great question of the hour is how can the combina- tion be utilized and controlled ? The tendency of industrial corporations to enter the field of legislation and thence to go into politics must be regarded with grave apprehension. Another serious danger arises from the combination of the business desk with the stock exchange ticker. A trust that is run for the purpose of advancing or depressing the price of its securities on the market deserves to land in the gutter. Two remedies for the evils mentioned may be found in wise legislation and enforced publicity of the trust's affairs. The time is coming when "public publicity," not private publicity " for a few interested investors, will be an essential element of the success of every industrial combination which seeks its support from the public. "Publicity is to industrial combinations what street light- ing is to municipalities. It promotes legitimate business and prevents crime." To secure publicity there must be uniform legislation. The public welfare to-day more urgently requires a national corporation act than years ago it required a national bank- ing act. Mr. Dill's criticisms of the tendency of State Legislatures to grab for revenue by offering inducements to trusts to organize under their respective State laws is a note of alarm which this State should heed. He says : "At the beginning of this month the State of New Jersey had in its treasury over $2,000,000 as a surplus. " In 1901 the State of New York, although it had for years waged war upon New Jersey's .system of incorporation, gave way to the contrast between the state of its treasury and that of New Jersey. " New York out-Jerseyed New Jersey in so-called liberality 38 KEWARK (n. J.) NEWS. to corporations. It amended its corporation act upon the theory that the greatest paper liberality would produce the greatest revenue. The staid old State of Connecticut followed suit and opened its doors, ofifering its inducements to corpora- tions, and Maine and North Carolina followed the example of New York and Connecticut. Delaware and West Virginia had already adopted ever}' provision which could be suggested to make those States successful charter-granting States and to increase their revenue, and, finally. South Dakota comes forward with a proposition that it will grant to a corporation everything that it will ask, and for a consideration so minute as to be scarcely worth mentioning. "This tendency is not to wisdom of legislation, but to ab- sence of restriction, to the granting of powers rather than to the maintenance of proper control." The temptation to let corporations do as they please for the sake of revenue is too strong for some States to resist. Unless the present tendency is overcome we may expect to witness a most dangerous scramble among the States, in which all restrictions of trusts will be abolished. Mr. Dill is undoubtedly correct in the view that relief can only be had by national legislation. \^Newark News. November 12, 1901.] JAMES B. DILL ON THE USE AND ABUSE OF TRUSTS. No one can speak on the subject of trusts with more expert knowledge than Mr. James B. Dill, if lawyer experi- ence in organizing them is admitted to be evidence of insight into their economic working. It is, therefore, refreshing to note the statements of this authority made at the banquet of the Merchants' Club of Chicago. While Mr. Dill contends that the organization of trusts as a business method is indis- pensable to the most wholesome mechanism of modern trade, he admits that it is a very important question how they can be be utilized and controlled, how ther evils can be minim- ized and their advantages to the sum total of national pros- perity be augmented. "Our financial strength," he said, "is so closely connected with our commercial and industrial life that any dangerous tendency in our industrial situation is productive of like danger in the finances of the country." The dangers of the trust movement are considered under the heads of perils to the corporations, and perils to the public from the corporations. But, after all, Mr. Dill's categories are found to merge practically into one, for the principal subject- ive peril defined is callousness to public opinion, a cynical dis 39 NEWARK (N. J.) NEWS. regard of the interests of anything but the direct corporate end in view. His ingenious explanation of this tendency is that it is the natural reaction against ill-advised, short-sighted and unintelligent criticism of the trust method and operation. In other words, the or 'anizers and beneficiaries of trusts are scornful of public opinion because that opinion does not believe in the economics of trusts, and revolts from the notion of the principal direction of the business affairs of the country being swallowed up in a few hands. It is that, with the clearly noted consequences running parallel with it, which inspires the broad objection to trusts on the part of those who do not pretend to be social philosophers or economic experts. The evil, then, to the trust is that it inevitably becomes arbitrary and indifferent to every consid- eration but its own palpable advantage. Most of us would stamp that as quite as great a peril to the general interest, for it creates' the attitude of the ruthlessly money-making machine, pure and simple. Turning to what he considers the greatest specific danger to the public, Mr. Dill describes it as the tendency to enter the field of legislation, and thence to take an active part in politics. This is a pretty serious admission. It emphasizes the power of enormous combinations of capital to control and shape the laws of the nation and to become a political force. It implies their disposition to do this rather than to endure the attacks made on them and to risk the danger of anti-trust legislation. Briefly, then, the trusts are ready — or will speedily reach that pass, according to Mr. Dill's frank ad- mission — to put Courts, Legislature and Congress in their breeches-pocket, if money can achieve the end, rather than sub- mit to restriction on their operations, which, in their opinion, is ill-timed or injudicious. The great monopolists being the jury, it provokes inquiry. Just what kind of restriction would not be injudicious. Mr. Dill, in admitting these speci- fied dangers, has framed a very serious indictment against the tendencies of the trusts, which the most urgent anti- monopolist could scarcely phrase more forcibly. Nor do the qualifications which he urges to modify the weight of these admissions in the least lessen their gravity. In the way of safeguards Mr. Dill proposes what he calls public publicity. That is to say, the fullest exposition of the affairs and methods of a corporation should be made public property at periodic times. He admits that at present even private publicity or knowledge of the business affairs of a company is not always attainable by the stockholders, who have their money invested in what is practically a blind pool. " The time is coming," he says, "when public pubHcity will 40 INSURANCE CHRONICLE, NEW YORK. be an essential element of the success of every industrial com- bination which seeks its support from the public. As between combinations themselves, the sound corporation will avail itself of the opportunity to demonstrate its soundness by pub- lic statements, and in such demonstration force to a lower position its competitor who is unwilling and, inferentially, unable to make the same public showing. Public confidence is and must be the essential element of success of any indus- trial. Public confidence cannot be based upon anything but knowledge of the facts, and this knowledge of the facts must come from the corporation by way of statements to the public, for the accuracy of which statements some one is responsible. Publicity is to industrials what street lighting is to municipalities. It promotes legitimate business and prevents crime." Legislation looking to this end, Mr. Dill thinks, should be national and not State in its origin, as indeed should be all restrictive legislation directed against trusts. All this is very well, excellent even, but it cannot lessen the value of the deductions as to the inherent dangers of trusts, in themselves. \The Insurance Chronicle, New York, Thursday, November 14, 1901.] At a meeting of the Merchants' Club of Chicago last week James B. Dill, one of the most able corporation lawyers and a man presumed to be close to President Roosevelt, made an address in which, among other things, he said : ''State legis- lation is each year growing more divergent, and we can look in that direction with no assurance of any uniformity of pro- cedure and regulation of corporations." He was discussing the question ot supervision of corporations generally. In this connection he said : '• The question is national in extent and breadth. It can be dealt with only by legislation equally broad — that is national legislation. It is suggested that national legislation would be unconstitutional. The Supreme Court of the United States, however, found its way out of the same difficulty when suggested in the case of the national banking act. It might be said in the present case that the public welfare at present more urgently requires a national corporation act than years ago it required a national banking act." Mr. Dill's idea is, evidently, that a law similar in its scope to the National banking act, is not only possible but neces- sary. And right here is' the great stumbling block in the way of national supervision. Insurance companies under a law such as we have in mind would have to be organized under the federal law and the States would have to be deprived of their power to extort taxes and fees. It is possible that Con- 41 LOUISVILLE (kY.) POST. gress is large enough and patriotic enough to be brought to see that fire insurance at least is being surely crushed through hostile State laws and local prejudices, that something must be done to relieve the burdens which the companies are now staggering under and for which the policyholders interested in life, fire and marine insurance are compelled to pay. The time was, a year or so ago, that the individual Congressman would have been compelled to face a very irate constituency if he had advocated seriously a law tending to relieve that bogie, the " insurance trust," of taxes which the State legis- - lator and local politician had been wont to declare lightened the taxes to the voting real estate owner. There is much of such prejudice yet. Still there seems to be a spirit of enlight- ment regarding corporations abroad in the land, and the anti- trust prophet is at present without honor or emolument. This spirit manifested its power at the recent elections and, as we said before, it now looks as if the time had arrived for the advocates of national supervision to strike for an act which will deprive the various State departments of their power and centralize that power in one department. [Louisville (Ky.) Post, November 13, 1901.] PUBLICITY IN TRUSTS. A number of sanguine persons believe that publicity in trusts— that is, an announcement dealing with the transac- tions of great industrial concerns — is the panacea for the evil which has been agitating the public for some years. Mr. James B. Dill, a noted corporation lawyer, has seen fit to announce that big combinations of capital exhibit decid- edly dangerous leanings. He says that the tendency of indus- trial corporations to enter the field of legislation and thence into politics " is perhaps the most imminent danger from the combination to the public." Mr. Dill believes that trusts can be utilized if they are placed under proper restraint; and he declares that this control and regulation " can only be had by an enlighlened public opinion followed by wise legisla- tion." If the people would send men to Congress who would not be controlled by corporations or by the influences which cor- porations too often wield in legislative transactions, there would be more publicity in trusts than the greedy capitalists now dream of. The law must have something to say about the transactions of combinations, otherwise publicity through monthly statements of earnings would be of little benefit to the people. The public desires protection as well as pub- licity. 42 [Rockland {Me.) Star, November 12, 1901.] James B. Dill, of New York in a recent address at Chicago before the Merchants' Club, speaking of a remedy for the evils of trusts, said that the qtiestion is national in extent and breadth, that " it can be dealt with by legislation equally broad; that is, national legislation." Touching the objection that such legislation would be unconstitutional, he says : " The Supreme Court of the United States, however, found its way out of the same difficulty, when suggested, in the national banking act," and " the public welfare at present more urgently requires a national corporation act than years ago it required a national banking act." This suggestion has also been advanced and favored by Mr. Archbold, manager of the Standard Oil Company, the greatest trust in the country. [Piitsburgh {Pa.) Times, Xovember ii, 1901.] CORPORATIONS AND TAXES. At the banquet of the Merchants' Club in Chicago, Satur- day evening, James B. Dill, of New York, spoke on the grow- ing importance of corporations, and incidentally alluded to the methods of the different States in dealing with the big concerns. New Jersey was shown to have recently received so much money from corporation charters as to have a sur- plus in the State Treasury, and be able to suspend some other forms of State taxation. This favorable showing had induced other States to adopt new corporation laws, until there is something of a competition between a number of the States for the fees that come from issuing charters, and a danger arises through the possibility that from a rigid extreme in dealing with corporations the other will follow, and anything be chartered that will pay the price. The big corporation came somewhat suddenly into prom- inence. Before lawmakers or the people were fully awake to the need of proper legislation, the vast combmations of capi- tal commenced, and some of the laws that have followed are as grotesque as they are varied. Some of the States, like Tt'xas, looked upon the corporation as a natural enemy to be suppressed at all points. New Jersey took the other course, and gave the utmost latitude in exchange for cash. Other States took intermediate grounds, and the result is that the corporation law in the United States is a hodge-podge of curious restrictions and privileges. In dealing with corpora- tions, as with anything else, a little common sense is of more use than either prejudice or cupidity. 43 [Oswe^^o (N. y.) Palladium, November ii, igoi.] DILL ON TRUSTS. James B. Dill, the eminent corporation lawyer, read a paper on trusts before the Merchants' Club of Chicago, Satur- day night, which is destined for an important place m the literature of that subject. Mr. Dill has a larger experience and profounder knowledge of trusts than any other man living. He is said to have drafted the trust law of New Jer- sey. He drew up the agreement upon which the Standard Oil Trust, the United States Steel Corporation, and probably a score of other important trusts, were organized. He is director in numbers of these creatures of his skill, and, finally, he is the law partner of John W. Griggs, who left the Cabinet, to be succeeded by another eminent trust lawyer, Mr. Knox. jNIr. Dill's definition of a trust is of the greatest interest — '■'■ A dominant coinbinatio)! of money, property, business or com- mercial poiver or energy. The essential element of the com- bination is the power to dominate." This differs from any previous definition in form, but in meaning it is a virtual admission of all that has been charged against the so-called criminal trusts or monopolies. Indeed, Mr. Dill himself says, "This domination is the tendency which has created the most apprehension." The "purpose to dominate," if it means anything at all, means the purpose or intent to control produ.ction, prices, distribution ; to rule the market ; to destroy or restrict competition. In this connec- tion read the Sherman Anti-Trust Law of 1890: " Every contract, combination in the form of a trust, or otherwise, or conspiracy in restraint of trade or commerce among the several States or with foreign nations, is hereby declared illegal. * * * And every person who shall monopolize, or combine, or conspire with any other person of persons to monopolize any part of the trade or commerce between the States or with foreign nations, shall be deemed guilty of a misdemeanor." Each of the laws passed by the twenty-seven States and Territories on the subject, contain similar declarations and provide similar penalties, more or less severe against com- iDinations intended to "dominate," that is, control, restrain or monopolize trade. Every trust in the United States is thus pronounced by the leading trust lawyer to be of illegal intent, and most of them in fact. The essence of the trusts is monopoly. While none of them has been able to establish an actual monopoly, in the sense of making, buying or selling the entire product, the most successful ones have so large a share of the market as to control the rest, and this has been held by a Justice of 44 SCRANTON (pa.) REPUBLICAN. the Supreme Court to be a monopoly within the meaning of the law. Mr. Dill justly considers the gravest peril of the trust movement to be the tendency of these combinations "to enter into the field of legislation and thence into politics." How far this tendency has already gone one hesitates to say, but it is no secret that the hand of the trust man is apparent in every law affecting industrial, financial and commercial interests. At Washington and at every State capital in the Union, a compact, well-organized lobby, equipped with every instrument of corruption, cajoler)-, 'coercion, with money, influence, social power, keeps unceasing watch and ward. Worse still, this power increases as the industrial organiza- tion grows wider and more powerful. So closely are these great interests related that to touch one is to arouse them all and bring all their combined power to bear for the promo- tion or defeat of any law. No party is proof against this in- fluence, but while the Republicans have in effect surrendered at discretion, the Democrats have led in every serious move- ment to restrain the trusts as a power in both politics and industry. Some effective restraint must be set up if the Republic is to endure. Mr. Dill admits that much. He believes that national legislation offers a more practicable remedy than the divergent statutes of many States, but that enlightened public opinion must precede any wise and effective laws. One impediment to such legislation is the ignoble strife among- States for the revenue from corporations. New Jersey led in this, to be followed by Delaware, West Virginia, Maine and finally New York, which State, this lawyer truh' says, " out-Jerseyed New Jersey in so-called liberality to corpora- tions. " [Scrantofi (Pa.) Republican, November 12, igoi.] TRUSTS. Last Saturday Mr. James B. Dill discussed "trusts," the "trust-power" and the "trust-danger" in its many phases at Chicago. Mr. Dill is undoubtedly better able to discuss the innumerable phases of trust problems far better than any other living man. It is not too much to say that there is probably very little to be learned of the inside or outside of trusts that Mr. Dill does not know. It is, therefore, particularly encouraging that Mr. Dill should regard publicity as the only serious safeguard against the abuse of the great powers which trusts may exercise, 45 SCR ANTON (pa.) republican. whether it be what he calls "public publicity" or "private publicity" — that is, information for the public or information for shareholders. Still more encouraging is it that Mr. Dill should express the opinion that in time trusts, like banks, will accept publicity with a willingness proportioned to the real soundness of their condition and conduct. Indeed, it would not be surprising if publicity were gradually brought about by the action of the trusts themselves, the stronger and better ones setting the example for the express purpose of forcing others to follow it. There is another safeguard of correction to the abuse of powers enjoyed by trusts, to which Mr. Dill does not allude, but which, in the long run, may be found to be very effec- tive. This is the tendency of such abuses, especially the arbitrary advance of prices through the relative monopoly of supply, to stimulate competition and destroy the monopoly. It is a fact recognized both in theory and practice by many of the most able and successful of those engaged in the com- binations of capital and energy usually called trusts. But it would certainly be an error of legislative discretion to leave the correction of abuses entirely to the action of the forces here referred to. The enforcement of a rational and effective publicity through governmental agencies is the end to which legislation should be directed. (FlOSQ) 46 " The • Trust Problem ' is not the problem of abolishing industrial combinations, but of properly applying the principles which they represent." TRUSTS : THEIR USES AND ABUSES.' EDITORIAL COMMENT AND DISCUSSION Relative to Combinations, their Advantages, Disadvantages, Dangerous Tendencies, Remedies, etc., based upon THE ADDRESS OF James B. Dill, Esq., of New York City, BEFORE The Merchants' Club OF CHICAGO, ILLINOIS, November Ninth, looi. Published and Distributed BY THE Registration and Trust Company, New York City. INDEX. PAGE Address i-io Editorial Discussion. Evening Post, New York, November 1 1, 1901 11 Times, New York, November 11, 1901 , 12 Journal of Commerce, New York, November 13, 1901 16 Journal of Commerce, New York, November 15, 1901 30 ^'"~'' ■'^^-^'""'"l^er T,^ TOOI 20 With tlie Compliments of the REGISTRATION AND TRUST COMPANY, 29 Pine Street, New York City. News, Newark, N. J., November 12, 1901 39 Times, Trenton, N. J., November 12, 1901 - 38 True American, Trenton, N. J., November 14, 1901 35 Star, Rockland, Me., November 12, 1901 43 Times, Pittsburg, Pa., November 1 1, 1901 43 Palladium, Oswego, N. Y., November 11, 1901 44 Post, Louisville, Ky., November 13, 1901 42 Republican, Scranton, Pa., November 12, 1901 45 Music Trades, New York, November 16, 1901 51 Dry Goods Economist, New York, November 16, 1901 53 Press, Philadelphia, Pa., November 16, 1901 46 Union Advertiser, Rochester, N. Y., November 14, 1901 48 Bradstreet's, New York, November 16, 1901 49 Post-Dispatch, St. Louis, Mo., November 13, 1901 51 Tribune, Minneapolis, Minn., November 14, 1901 54 Dispatch, Pittsburg, Pa., November 13, 1901 55 NOTE. Corporate utilization and regulation leading up to national legislation seems to be a topic of present moment. The views of the President of the United States expressed in 1890 when Governor of the State of New York in his message to the Legislature of the State, is to-day of more than passing interest. (See page 8.) While the abstract of the address delivered at Chicago is not without interest, nevertheless, the chief reason for its publica- tion here is as the basis of the editorial discussion following. If complete elimination of personal allusions had been possible without destroying the continuity of the thought, the editorial matter would have been presented without the personal element. As it is, such references have, to a considerable extent, been omitted. This editorial comment and discussion coming so promptly, and almost concurrently in point of time, from the leading journals in various parts of the United States, irrespective of party, is of forceful significance as showing, not only the time- liness of the topic, but the practical concurrence of the views of both pro-corporate and anti-trust authorities to the effect that trusts should be utilized as well as controlled, leading to the conclusion, that " the trust problem is, after all, not the problem of abolishing trust combinations, but of properly applying the principles which they represent." New Jersey Corporation, Guarantee and Trust Company. New York, November 15, 1901. Abstract of the Address of JAMES B. DILL, Esq., of New York, before the Merchants' Club of Chicago, November 9, 1 901, as reported for the Associated Press. "Trusts: Their Uses and Abuses." Mr. Dill described A Trust as a " dominant combination of money, property, business or commercial power or energy." He said: " If the charter of every prominent combination of capital or dominant company expressed the real intent of the organization instead of reading, ' To manufacture, trans- port and market' the particular product in question, it would state as the purpose of the Company ' To DoJttinate in the manufacturing, to Dominate in the transportation, and, what is quite as important, to Dominate in the market ' of the product. " The same tendency and intent to dominate is signified by the names of the organizations — ' United States,' 'Ameri- can,' ' Federal,' and finally ' National,' and even ' Interna- tional.' " All of this, both of structure and of name, indicates a purpose on the part of the organization to dominate in the markets of the country and of the world. " It is not the combination in itself which is vicious, but it is the methods employed by some corporations in the attempt to dominate which create the tendencies which are criticised as dangerous." Analyzing the Situation To-Day, the speaker said: " Recognizing that the combination and the consolidation of capital is a force, we spend no time in asking why it is here further than to say it is an uplifting force, a part of the best growth and sound expansion of the American nation. It is essentially a part of the aggressive American policy of commercial supremacy. " The tendency towards centralization is strikingly apparent in the financial field. The great banks are becoming greater and are establishing branches in all directions through a stock control of smaller banks. " One might be charged with lack of conservatism should he suggest the possibility of the establishment of a great bank, perhaps under governmental influence, which shall act as a governor and regulator of the financial machinery of this country. But the anticipating of the redemption of bonds or of the payment of interest by the Secretary of the Treasury must be regarded as an expedient on the part of the Govern- ment to steady the finances of this country to the end that panics may be prevented. " Carrying this proposition to its logical extent, and, having in mind the history of the Bank of England, it has been sug- gested that if and when this country becomes the great finance and credit power of the world, the trend of sentiment will be towards the establishment of one great controlling financial institution, certainly under the United States law, and perhaps dominated by the United States Government. '• The History of the Trust riovement is Not Unlike that of the Development of Electricity. " Half a century ago every habitation bristled with light- ning-rods in an endeavor to avert electricty, a force then, but not at the present time, known best from its dangerous ten- dencies. " But the house of to-day is not equipped with instruments to divert the electricity, but is wired to receive and utilize the electric current. The difference is not only that the force is better understood, but also that it is under control. " The generation of yesterday paid money to the lightning- rod man to keep electricity out of the house. They feared the flash and the crash, but to-day we pay the electric com- pany to create, store and deliver electricity through wires into the house for the purposes of light, heat, power and communication. " While we convey electricity into our homes, offices and manufactories, yet that current is never so conveyed until the conductor is insulated, so that the whole force is utiUzed while the danger is minimized. " The great question to-day is not, how combinations may be averted, but rather how they may be utilized and con- trolled for the best good of the company." Mr. Dill divided the dangers of the trust movement into dangers to the combinations, and dangers from the combina- tions to the public, subjective and objective dangers. Speaking of specific dangers he said : " The tendency of the great corporations is to become in a measure callous to public opinion, a mistake on the part of the corporation, unfortunate so far as the public are con- cerned, and a peril, both subjective and objective, and in which the corporation is by no means blameless. " This indifference to public opinion and legislation is due in part to the fact that from the corporate point of view many of the criticisms passed upon corporations and much of the anti-corporation legislation is based upon a lack of understanding of the situation. "Many of the attacks upon combinations have had as their aim the suppression of the movement rather than the elucidation of the subject and the utilization of the force. Such attacks, legislative or otherwise, while dangerous to the combinations, react strongly against the public. "The Tendency of Industrial Corporations to Enter the Field of Legislation and Thence into Politics is Dangerous. " Unwise legislation against industrial combinations, legis- lation in many instances enacted in response to ill-advised popular clamor, invites and sometimes forces the industrial corporation to enter into the field of legislative competition, and when once in that field the corporation learns by experi- ence that it cannot only defeat anti-corporate measures in the usual way, but can even procure pro-corporate legis- lation. " Any attempt on the part of industrial organizations to enter, voluntarily or defensively, into the field of legislation is a tendency which is to be regarded with grave apprehen- sion." As to Speculation by Officers, Mr. Dill said : " Conceding, if you please, that a daily and public market for industrial securities is a necessity for their success as a popular investment, yet if it be true that in the private offices of any official of a great combination one finds not only the business desk, but also a fstock exchange ticker separated from the desk by only a wheel chair, desk and ticker being equally accessible and, perhaps, equally used by the official, one must view this situation with apprehension. "That combination which is controlled through its man- agement for the purpose of advancing or depressing the price of its securities on the market, and is run on a principle other than that of a strictly commercial enterprise must ultimately laad where it belongs — in the gutter." Referring to " Financial and Commercial Panics," he said : " So much of the capital of this country has already found its way into industrial securities that any panic in these securities extends beyond the mere industrial investment, and may mean a financial panic affecting the business of the whole country. " The point that electrical energy advanced as a public utility only as the public learned by experience how to regu- late, control and insulate, will bear repetition and renewed application to the industrial movement to-day. " Utilization and restraint of trusts are the essential ele- ments of the industrial success, but this regulation and con- trol can be had only by wise legislation preceded by an enlightened public opinion. "Such public opinion and such legislation must be founded on a knowledge of the facts." Publicity as applied to corporations the speaker charac- terized as public publicity and private publicity. " Public publicity," he said, " is not yet universally prac tised by industrial combinations, and legislation has not yet been able to fully procure it. " Public publicity, expressed in the form of legislation, will not, I take it, be to its fullest extent what certain students of economics have denominated public publicity. " It is an open question as to whether it will be either necessary or advisable to open wide to the public all of the private details and accounts of corporations, large or small. " It is asserted that private publicity, or information to the stockholders, is not always carried out to its fullest extent. " It has even been publicly charged that knowledge of im- mediate facts is sometimes conveyed only to an inside circle said to be less in circumference in many cases than the Board of Directors, and not including all the officers of the corpo- ration. " But the time is coming when publicity properly defined and limited will be an essential element of the success of every industrial combination which seeks its support from the public. "As between combinations themselves, the sound corpo- ration will avail itself of the opportunity to demonstrate its soundness by public statements, and in such demonstration, force to a lower position its competitor who is unwilling and inferentially unable to make the same public showing. " Public confidence is and must be the essential element of the success of any industrial. Public confidence cannot be based upon anything but knowledge of the facts, and this knowledge of the facts must come from the corporation by way of statements to the public, for the accuracy of which statement some one is responsible. " ' Let not thy right hand know what thy left hand doeth,' is a principle which can be applied to charitable organ- izations only. Applied, either as a theory or a fact, to indus- trial combinations, it is fatal to their success. " This leads to the conclusion that while to-day the better corporations are voluntarily practising publicity, they would favor a statute which secured public publicity from all corpo- rations alike. " This would not only benefit the public, steady industrial finances, tend to make industrial securities a permanent in- vestment for holders, large and small, but would also prevent the formation of blind pools, industrial swindles and avert financial panics. " Publicity is to industrial combinations what street light- ing is to municipalities. It promotes legitimate business and prevents crime. " Publicity must be secured by legislation, either National or State, and the latter, to be effectual, must be practically uniform among the States. "/« the field of State legislation we find one of the gravest dangers surrounding the corporate questions. " A danger both subjective and objective. " A menace both to the combination and to the people is found in the competitive strife among States for revenue from corporations. "Legislative inducements by way of private and public statutes to corporate organizations are the order of the day. ' Protection for domestic corporations, war upon foreign cor- porations,' is the legislative theory of some States. " Just so long as it is possible for a corporate organization in one State to do that business in other States which is for- bidden to its own corporations, just so long we will find dif- ferent States offering inducements to capital to incorporate tinder their particular laws. "To-day we find States giving express permission to their own corporations to do in other States what such corporations are expressly prohibited from doing at home. " The corporation laws of New Jersey provide that ' it shall be lawful to form a company for the purpose of constructing, maintaining and operating railroads, telephone or telegraph lines outside of this State, but prohibits the formation under the general act of such organizations to do business in New Jersey. In her new legislation of this year. New York offered a premium to " tramp organizations " by providing that cor- porations organized under New York's law, for the purpose of transacting their entire business without the State of New York, and employing their entire capital without the State of New York, and none of it in the State of New York, should be free from the State tax on the franchise, commonly known as the tax on the Capital Stock. " 77^1? present tendency of some States in State legislation respecting industrial corporations is to encourage and increase State revenue rather than towards soundness and integrity of legislation. 6 "For years the State of New Jersey stood pre-eminent among the charter-granting States until, from the revenue derived from corporations, she practically abolished the neces- sity for State taxes, contributed large sums for schools, for good roads and for matters of 'public use and utility. " At the beginning of this month, the State of New Jersey had in its treasury over $2,000,000 as a surplus. "In 1901, the State of New York, although it had for years waged war upon New Jersey's system of incorporation, gave way to the contrast between the state of its treasury and that of New Jersey. " New York sought to out-Jersey New Jersey in so-called paper liberality to corporations. It amended its corporation act upon the theory that the greatest paper liberality and free- dom from restrictions and even private publicity would pro- duce the greatest revenue. It made the initial organization easy, less expensive, but without lessening the burden of the local tax, the most important element of the fixed charges against corporations and the great revenue-producing factor to New York. The staid old State of Connecticut followed suit and opened its doors, offering its inducements to cor- porations; and Maine and North Carolina followed the exam- ple of New York and Connecticut. Delaware and West Virginia had already adopted every provision to increase their revenue as charter-granting states, and finally South Dakota comes forward with a proposition that^it will grant to a corporation everything that it will ask, and for a con- sideration so minute as to be scarcely worth mentioning. " This tendency is not to wisdom of legislation, but to absence of restriction, to the granting of powers rather than to the maintenance of proper control. " On the other hand, influenced by the cry against monopo- lies, making no distinction between the combination of to-day and the monopolistic trust of yesterday, other common- wealths have filled their statute books with discriminations against business combinations until it is almost impracticable to do business Within such States. " State legislation is each year growing more divergent, and we can look in that direction with no assurance of any uniformity of procedure and regulation of corporations. " The question is national in extent and breadth. It can be dealt with only by legislation equally broad — that is, national legislation. " It is suggested that national legislation would be uncon- stitutional. " The Supreme Court of the United States, however, found its way out of the difficulty, when suggested, in the case of the National Banking Act. " It might be said in the present case that the public wel- fare at present more urgently requires a National Corpora- tion Act than years ago it required a National Banking Act." Mr. Dill suggested that the Roosevelt Act of 1900 in New York was now a matter of interest as indicative of some of the features of a National Corporation Act which might be acceptable in Washington. He added that the President, then Governor Roosevelt, favored the proposed New York Act of 1900; that it was prepared by a commission selected under his direction; and that, although it did not pass the Legislature of New York, it contained many elements which are approved both by students of economics and by practical corporation managers. He called attention to the message of the then (1900) Governor Roosevelt to the Legislature of New York. He emphasized it as presenting the views of a man who pro- gressed rather than retrograded mentally as well as politi- cally, and asserted that President Roosevelt outlined a plan for corporate legislation which should be acceptable, both to trust and anti-trust men. He quoted from Presi- dent (then Governor) Roosevelt's message : " Our laws should be so drawn as to protect and encourage corporations which do their honest duty by the public. " Nothing needs closer attention, nothing de- serves to be treated with more courage, caution and sanity, than the relations of the State to corporate wealth. " Much of the legislation not only proposed, but enacted, against trusts is not one whit more intelligent than the mediaeval bull against the comet, and has not been one particle more effective." "To say that the present system of haphazard license and lack of supervision and regulation is the best possible is absurd." " Supervision and publicity are needed quite as much for the sake of the honest corporations as foi the sake of the public. The corporation that manages its affairs honestly has a right to demand protection against the dishonest corporation. " We do not wish to put any burden on honest cor porations. "Neither do we wish to put an unnecessary burden of responsibility on enterprising men for acts which are immaterial; they should be relieved from such burdens, but held up to a rigid financial accountability for acts that mislead the upright investor or stock- holder, or defraud the public. " The first essential is knowledge of the facts, pub licity. Much can be done at once by amendment of the corporation laws so as to provide for 'such publicity as will not work injustice as between business rivals.' " In conclusion the speaker said : " I do not wish to be misunderstood as to the character of the industrial movement of to-day. It is of the highest order, is progressing in the right direction, and is an uplift- ing force. It has been productive of great good to this country. It is a direct contributing factor to the commercial supremacy of the United States. " The form of a strictly monopolistic trust, aiming to sup- press competition, so often described by the theorist and the scholar, does not to-day exist to any extent. " Theorists, social reformers, and some students of eco- nomics have argued against the character of the industrial movement of to-day. " They fail to recognize the fact that the ' octopus," the 'monopolistic trust,' the organization 'destroying compe- tition, "annihilating individualism,' existed largely as a mental spectre. To the minds of some such, the suppression of competition in America seems to be the chief aim of the combinations, while in truth and in fact the destruction of competition in America is impossible. " They do not publicly recognize and admit what is the fact, that the majority of the so-called trust evils which they have portrayed have been largely in the nature of apprehen- sions, and that the objections, practical and theoretical, subjective and objective, to and of the industrial movement have largely settled and cured themselves before legislation was necessary. " There are dangerous tendencies, as has been frankly admitted, but they are ills which are natural to human kind and to human organization, not to be cured by hasty legisla- tion and in the twinkling of an eye, not to be overcome by vituperation and abuse, but rather to be minimized, and per- haps ultimately eliminated, by wise, conservative examination and decision upon the question as a whole derived from the practical experience of the American people. EDITORIAL COMMENT. \The Evening Post, New York, November ii, 1901.] Some aspects of the Trust problem were very acutely- analyzed by Mr. James B. Dill in his address on Saturday evening before the Chicago Merchants' Club. It is undoubt- edly true, as Mr. Dill points out, that the system of produc- tion on a large scale has now become a permanent feature of our industrial life. The "Trust problem" is, after all, not the problem of abolishing industrial combinations, but of prop- erly applying the principles which they represent. Mr. Dill is perhaps a trifle extreme in saying that the chief evils suffered by the public in the course of the Trust movement have been produced by the action of legislatures, but the statement contains an essential truth. In the effort to resist unjust legislation, hostile to their interests, corporations have often found it unexpectedly easy to buy special privileges, and have permitted themselves to be blackmailed by dishonest legislators. Beyond question, the true remedy for the evils of the combinations is to be found chiefly in purer politics rather than in "anti-Trust" acts. The most imminent dan- ger in the whole situation is the tendency of the corporations to settle all political questions affecting themselves by draw- ing checks on some solvent bank. It is interesting, however, to find so eminent an authority as Mr. Dill admitting the necessity of some control of cor- porations, and pointing out definite methods for its applica- tion. Naturally, the lawyer's mind sees the problem first from the standpoint of the stockholder, and aims to solve it first in his favor. The primary end to be sought, therefore, is the business-like conduct of large enterprises, the abolition of stock-jobbing by corporation officers, and the furnishing of accurate reports to stockholders. Whether this beginning will soon develop into the much talked-of "publicity," when the books of industrial corporations will be inspected, and their condition be made known as freely as in the case of banks now, may be an open question. Such publicity cannot be attained so long as different States vie with each other in holding out inducements to corpora .ions that wish to organ- ize with extraordinary powers. The beginning of a reform, therefore, must be found in a national act which would sub- ject all corporations to substantially the same requirements regarding the publication of accounts and the conduct of business. It is encouraging to find that this solution of the problem, long accepted by experts, is considered practicable by Mr. Dill. The verdict of so practical and thorough a stu- dent of the subject should do much to destroy the notion that the whole discussion is futile and academic. [The New York Times, New York, November ii, 1901.] TRUSTS AND PUBLICITY. The discussion of trusts by Mr. James B. Dill of this city at Chicago on Saturday evening has a special interest from the well-known ability of that gentleman in the line of prac- tice connected with this class of corporations and his wide experience. It is fair to assume that there is very little to be learned from the outside or the inside that Mr. Dill does not know on this subject. It is, therefore, particularly encouraging that Mr. Dill should regard publicity as the only serious safeguard against the abuse of the great powers which trusts may exercise, whether it be what he calls " public publicity," or " private publicity," that is, information for the public or information for shareholders. Still more encouraging is it that Mr. Dill should express the opinion that in time trusts, like banks, will accept publicity with a willingness proportioned to the real soundness of their condition and conduct. Indeed, it would not be surprising if publicity were gradually brought about by the action of the trusts themselves, the stronger and better ones setting the example for the express purpose of forcing others to follow it. There is another safeguard or correction to the abuse of powers enjoyed by trusts, to which Mr. Dill does not allude, but which in the long run may be found to be very effective. This is the tendency of such abuses, especially the arbitrary advance of prices through the relative monopoly of supply, to stimulate competition and destroy the monopoly. It is a fact recognized, both in theory and practice, by many of the most able and successful of those engaged in the combinations of capital and energy usually called trusts. But it would cer- tainly be an error of legislative discretion to leave the correc- tion of abuses entirely to the action of the forces here referred to. The enforcement of a rational and effective publicity through governmental agencies is the end to which legisla- tion should be directed. [Boston Transcript, November 11, 1901.] USE AND ABUSE OF TRUSTS. The address of James B. Dill, of New York, before the Merchants' Club of Chicago, Saturday, on the subject of " Trusts: Their Uses and Abuses," let in more light upon this great national problem than has been shed upon it from any other source that has come within the scope of our ob- servation. The source is one also to which weight of author- ity must be conceded. Mr. Dill has been referred to in some quarters as " the father of trusts." He is a noted corporation TRANSCRIPT, BOSTON, MASSACHUSEri'S. EDITORIAL, lawyer, and organized the Carnegie steel combination. He is well known to business and professional men in Boston, and last year was a speaker before the Reform Club in this city. In his treatment of this great question at Chicago he dealt in no academic subtleties, but stood on solid ground all the time, with no clouds about him. " It is not the combination in itself which is vicious," said Mr. Dill, " but it is the methods employed by some corpora- tions in the attempt to dominate which create the tenden- cies that are dangerous." Combination is " essentially a part of the American policy of commercial supremacy." He then made use of a striking figure to the effect that the history of the trust movement is not unlike that of the development of electricity "Half a century ago every habitation bristled with lightning-rods in an endeavor to avert electricty, a force then, but not at the present time, known best from its dan- gerous tendencies." Now the house is wired to receive the current because the force is better understood and controlledl So "the great question to-day is not how combinations may be averted, but rather how they may be utilized and con- trolled for the best good of the company." The dangers of the great corporations are their tendency to become callous to public opinion, to enter the field of legis- lation and thence go into politics and to speculate in their own securities. Utilization and restraint of trusts are the essential elements of industrial success, but " regulation and control can be had only by wise legislation preceded by an enlightened public opinion." This involves a knowledge of the facts, or, in a word, publicity. " Public confidence can- not be based upon anything but knowledge of the facts, and this must come from the corporation by way of statements to the public for the accuracy of which someone is responsible. ' Let not thy right hand know that what thy left hand doeth ' is a principle which can be applied to charitable organizations only." The better corporations are to-day voluntarily practicing publicity, and would favor a statute which secured it from all corporations. " Publicity is to industrial combinations what street lighting is to municipalities. It promotes legitimate, business and prevents crime." Mr. Dill placed special and warning emphasis on the fact that " the present tendency of some States in legislation respecting industrial corporations is to encourage and increase State revenue rather than towards soundness and integrity." The recent financial his- tory of New Jersey is an illustration of this. By her liberality towards corporations she has abolished the necessity for State taxes, and at the beginning of this month had a surplus of over $2,000,000 in her treasury. 13 EDITORIAI,. REPUELICAX, SPRINGFIELD, MASSACHUSETTS. After waging war for years on the New Jersey method, the State of New York, by her last Legislature, yielded to temptation, and " out-Jerseyed New Jersey in so-called liberality. It amended its corporation act upon the theory that the greatest paper liberality would produce the greatest revenue. The staid old State of Connecticut followed suit and opened its doors, offering its inducements to corpora- tions. * * * This tendency is not to wisdom of legislation, but to the absence of restriction — to the granting of powers rather than to the exercise of proper control." On the other hand, there are States that have erred in the opposite direc- tion. They have passed laws, not only restrictive, but con- strictive. Hence, there is no longer any assurance of uniformity of procedure and regTilation of corporations through State legislation. What, then, is the remedy? "The question," says Mr. Dill, " is national in extent and breadth. It can be dealt with only by legislation equally broad ; that is, national legisla- tion." Touching the objection that such legislation would be unconstitutional, he says : " The Supreme Court of the United States, however, found its way out of the same difficulty, when suggested, in the national banking act," and " the public wel- fare at present more urgently requires a national corporation act than years ago it required a national banking act." This suggestion has also been advanced and favored by Mr. Arch- bold, manager of the Standard Oil Company, the greatest trust in the country. Mr. Dill's argument is not against the pi-esent industrial movement. He says : " It is of the highest order and is pro- ceeding in the right direction." But the very magnitude of the movement involves the greater disaster when trusts are on a false basis and dishonestly conducted. A national cor- poration law seems to be the best solvent yet proposed. [The SpriDgfield Republican, November ii, igoi.] NATIONAL LEGISLATION FOR TRUSTS. James B. Dill, who has a close practical and legal acquaint- ance with trusts, spoke on this subject before the Merchants' Club of Chicago Saturday. He believes that industrial com- bination is on the whole working for the good of the country. But that it is attended with grave abuses as matters stand he does not pretend to deny. The great question, he says, is not how combinations may be averted, but how they may be utilized and controlled for the public good. Quite so, and first we should test their economic legiti- macy to the utmost by depriving them of all artificial support 14 REPUBLICAN, SPRINGFIELD, MASSACHUSETTS. EDITORIAL. as through protective tariffs and discriminating raih-oad rates. Then, for such as survive, we come to the question of public ■control, and so far as it extends to the requirement of pub- licity in the affairs of these concerns Mr. Dill is very fairly disposed. We do not know that he would extend control to the matter of limiting capitalization. But publicity, he says, is to industrials what street lighting is to municipalities. It promotes legitimate business and prevents crime. How is this adequate publicity to be obtained? Evidently not by State legislation ; and while the trusts will learn in time that public confidence is essential to their financial suc- cess and that publicity is essential to the gaining of public confidence, there can be no sure reliance upon the voluntary method. As for the State action, Mr. Dill makes some perti- nent observations : " A menace, both to the combination and to the people, is found in the competitive strife among States for revenue from corporations. Legislative inducements by way of pri- vate and public statutes to corporate organizations are the order of the day. ' Protection for domestic corporations, war upon foreign corporations,' is the legislative theory of very many States. Just so long as it is possible for a corporate organization in one State to do business in many other States, which is forbidden to its own corporations, just so long will we find different States offering inducements to capital to incorporate under their particular laws. State legislation is each year growing more divergent, and we can look in that direction with no assurance of any uniformity of procedure and regulation of corporations." New Jersey has a surplus in its treasury of $2,000,000 won from the licensing of inflated trusts to prey upon other States. Other States are thus being excited to join in the business of compounding corporate felony for the sake of public revenue. New York, after denouncing the Jersey practice for some years, has now attempted to get into the game by out-Jersey- ing New Jersey, as Mr. Dill says. Connecticut is just as bad and willing to stand with Delaware, Maine and West Virginia in debasing its corporate legislation for the profit to be got- ten out of it. Plainly there is little hope of effective, uniform legislative control of combinations through the States. Mr. Dill's conclu- sion seems to be unavoidable. " The question is national in extent and breadth," and legislation on national lines must take the matter in hand if adequate public control is to be resorted to at all. This involves a very great extension of the functions of the Federal Government — something to be avoided as far as possible. But no other alternative appears to be within reach in this case. IS [New York Journal of Commerce and Commercial Btclletin, November 13, igoi.] MR. DILL TO THE TRUSTS. Mr. Dill's address on trusts, made before the Merchants' Club of Chicago, is worth the serious attention of the trusts as well as of the public. We should have been glad had he given some information regarding the financing of trusts, but as he has some of the most imposing combinations araong his clients it is not singular that he disclosed little information not already accessible. Such opinions as he expressed, however, are valuable.. We are particularly gratified to see that he recognizes the dubious conduct of States in competing with each other for the profits to be derived from creating combinations, and especially their violation of interstate comity in creating cor- porations to operate everywhere outside of their own jurisdic- tion, and to do things that are unlawful in the States that created them. Mr. Dill is a good friend of the corporations in warning, them that their participation in politics is dangerous. The temptation is, of course, very strong. They are subject to attack, and they defend themselves by the most convenient means. They wish legislative favors and they get them through the same agencies. But it is a dangerous policy. An appeal to the public would not yield so immediate results, but it would be safer. Whenever public sentiment is suffi- ciently aroused, it makes short work of political and financial rings, and it is undoubtedly irritated by the thought, which is not without some foundation, that large aggregations of capital have a great influence in politics, and that influence is not exerted for the public welfare. Mr. Dill's advice to the combinations to retain public confidence is sound. His insistence upon publicity is in accord with the views early expressed and always maintained by this paper. His intimation that some combinations are managed with a view to the stock market, rather than the market for their products,, and that the operations of the managers are not always known even to all the directors, sustains most of the worst charges that have been brought against the combinations. The relations of these great aggregations to the public are such that they must be conducted in the interest of the whole body of the shareholders, and they must disclose a consider- able amount of information regarding their operations to the public. The two considerations which, above all others, have tended to bring manufacturers into these combinations are the chance of retaining the value of their property and yet getting a large bonus from the community from the sale of 16 DAILY EAGLE, BROOKLYN, NEW YORK. EDITORIAL, stock, and the hope of preventing competition. The former involves a hugh^ overcapitalization which excites little atten- tion and does little harm in the midst of prosperity. But with a sluggish market and declining prices large losses must fall upon the holders of shares, and this is a serious menace to the whole business community. The overcapitalization is a speculation which must ultimately collapse. In the sup- pression of competition the combinations have notably failed. Their creation has stimulated the creation of new establish- ments and the producing capacity has been increased till the output can be absorbed only in a period of the highest prosperity. [Brooklyn Daily Eagle, November ii, igoi.] LET IN THE LIGHT. The big corporations must take the public more fully into their confidence. And if they do not do it voluntarily, they must be forced to open their business to public inspec- tion. That demand is making in various parts of the country and by various thinking men. Last August the Eagle de- clared that unless there were some governmental control and regulation of big industrial corporations the rights and the privileges of the great mass of the people would suffer. Theodore Roosevelt, then Vice-President, said in a public address in Minneapolis, on September 2d, that " More and more it is evident that the State, and, if necessary the nation, has got to possess the right of supervision and control as re- gards the great corporations, which are its creatures ; par- ticularly as regards the great business combinations, which derive a portion of their importance from the existence of some monopolistic tendency." And now comes James B. Dill, a lawyer, who has framed charters for more successful corporations than any other lawyer in the country, joining with Mr. Roosevelt. He said, in an address in Chicago on Saturday, that there must be more publicity in the management of corporations. He would have more "public publicity " and more "private publicity." By the latter he means the diffusion of information about the business of the corporations among the stockholders. At present, he declared, knowledge of important facts con- cerning the business never get beyond the Board of Direct- ors, and sometimes did not got beyond a small group in the board. The stockholders themselves can cure this evil, if they set about it. The people at large are more interested in the " public publicity." Mr. Dill held that the time was com- ing when this sort of publicity would be essential to the suc- 17 EDITORIAL. DAILY EAGLE, BROOKLYN, NEW YORK. cess of any big corporate business. People would trust the corporation which demonstrates its soundness by disclosing the facts. And he declared that the corporations themselves would better favor a statute which should force publicity from all of them. Such a statute would not only steady in- dustrial finances by making industrial securities a permanent investment for the people, but it would prevent the forma- tion of blind pools and industrial swindles generally. A corporation which did not take the public into its confidences, showing what its assets were and what its liabilities and what its expectations of success, would find no better market for its securities than a bank which withheld the same kind of information. The men engaged in honest business enterprises are already realizing the importance of publicity. For instance, the United States Steel Corporation made a report of its business for the first six months of its existence a few weeks ago. That report did not contain as ranch information as might have been desired, but it was full enough to show that the company was doing a paying business. It had met the interest on its stock and bonds, had made necessary repairs, and had put a considerable amount in a sinking fund, and had a good surplus left. This corporation was formed for the manufacture of steel and not for the sale of stocks and bonds. If the law were passed which Mr. Dill suggests, there would be few stock speculation companies formed, and the companies whose officers paid more heed to market quota- tions of stock than to the price of iron, or cotton, or tobacco, or sugar, or whatever else they may nominally be engaged in selling or manufacturing, would grow beautifully less. The next step to be taken in the industrial revolution now in progress is in the direction of publicity. We cannot prevent the growth of the big corporations, but we can cure the evils which appear in their management. The purpose of the law should not be the prevention of monopoly, but it should be the protection of every individual in his rights. If inventive genius is able to devise a way of supplying a demand better than any now existing, that genius will enjoy a monopoly in that particular field till his inven- tion is improved upon, and no statute law can successfully take it away from him. But the law can keep the way clear for the other man who wants to put on the market an improve- ment on the invention of the first genius. Monopoly is not to be dreaded if it is the result of fair and free competition. But monopoly which is the result of the purchase of law, or of special privileges, is evil and must be opposed. But it is not monopoly which is offensive here. It is the corrupt sale of privilege. It is the transformation of government into a COMMERCIAL ADVERTISER, NEW YORK. EDITORIAL.- market-place, and the changing of the representatives of the people into barterers and traders. We must let in the light and force existing corporations to appear in their true colors, whether as manufacturing institutions or brokers' offices. [New York Commercial Advertiser, November ii, 1901.] PUBLICITY IN TRUSTS. The present revival of anti-trust agitation in the press and elsewhere misses the great point that much has been accom- plished during the last year on the part of industrial manage- ments toward meeting the demands which have arisen out of the controversy. So much progress, in fact, has been made toward fulfilling the requirements of greater publicity, through more frequent statements of earnings and business policy, that those more directly interested in the problem are coming to see that legislative action will not be necessary even to hasten the end which is being approached by natural means. A natural law is working against the corporations which keep their affairs secret either for fancied reasons of self-security or to facilitate speculative operations by their officers. The process of this law is that investors and the public generally come to mistrust an enterprise which refuses to take the stock- holders into their confidence, and in fixing the relative values of industrial securities discriminate in favor of the companies which issue the fullest and most frequent reports. Conse- quently, the managers of the industrial companies who have an eye out mainly to stock market gain find that a policy of secretiveness recoils on their own heads, while those at the head of the sound concerns are forced to recognize that pub- licity is essential both to establish their credit and prove their strength. Mr. James B. Dill, in his speech Saturday evening before the Merchants' Club of Chicago, put the case very well when he said : " Public confidence is and must be the essential element of the success of any industrial. Public confidence cannot be based upon anything but knowledge of the facts, and this knowledge of the facts must come from the corporation by way of statements to the public, for the accuracy of which statements some one is responsible." In other words, public sentiment will bring about the result which compulsory legislation aims at, and it will bring it about in a quiet and equally certain manner. The leading finan- ciers of the country interested in one way or another in the United States Steel Corporation recognized the natural forces in the situation when they decided upon the publication of a 19 EDITORIAL. HERALD, NEW YORK. monthly statement of earnings. This open declaration of pur- pose on the part of the greatest American corporation has already been imitated by a number of the lesser companies, and more will be following their lead as time goes on. In the meantime, the process of discrimination has been aided by the extremely bad showing recently made by many concerns which confine their reports to a meager detail of earnings once a year. The problem, therefore, has already been taken out of the hands of legislators. There is no need of congressional inter- ference, and none is likely to be made. The President in his message will, no doubt, make the same sort of perfunctory declarations as are made every year in favor of restricting and universalizing the laws governing corporations and com- pelling fuller reports to the public. But it can be pretty safely predicted that no practical results will come of them. [New York Herald, New York, November 12, 1901.] THE TRUST QUESTION AS IT WILL GO BEFORE CONGRESS. '^' As to the operation of combinations that are in the nature of "blind pools," that derive their existence from the State, obtain millions from investors for their shares and then, keeping all information within a little circle of directors, proceed to juggle the shares in Wall street, swindling their own stockholders and deranging the money markets of the country, if not of the world — as to the operations of these " financiers " the unanimous demand is to let in the light. The corporation lawyer, Mr. J. B. Dill, who has drafted the char- ters of many of the combinations, in an address to the Mer- chants' Club of Chicago on Saturday evening put the situa- tion very happily when he said : " Publicity is to industrials what street lighting is to municipalities. It promotes legiti- mate business and prevents crime." [New York Ctnimercial, November 12.] OFFICERS WHO SPECULATE. James B. Dill made a telling point in his address on trusts before the Merchants' Club of Chicago, when he said: ■ "Conceding, if 5'ou please, that a daily and public market for industrial securities is a necessity for their success as a JOURNAL, INDIANAPOUS, INDIANA. EDITORIAL. popular investment, yet if it be true that in the private offices of any official of a great combination one finds not only the business desk, but also a Stock Exchange ticker, separated from the desk by only a wheel chair, desk and ticker being equally accessible, and perhaps equally used by the official, one must view this situation with apprehension." One such case has occurred recently, and the company was saved only by its enormous capital, which, however, was depleted almost one-half before the gambling officials were removed and business methods restored. It would be well if stockholders knew a little more about the officials of large companies whose stocks offer such tempting opportunities to make a quick turn in the market for those on the inside. An official of a certain Western railroad sought to get rich in Wall street by operating on information that he possessed. It happened that adverse conditions were telegraphed to New York by a newspaper correspondent on the day the official made his plunge. He lost heavily, and the exposure later cost him his position. In New York, however, discovery of speculative ventures by officials is not easily made, and even if known, such speculation is looked upon with more or less indiflEerence. The bonding companies have detectives who look up the records of clerks and learn their habits before the bond is given, and afterward, from time to time. It may become necessary to take a few notes concerning the officials of the big combines, not only before they are elected, but after- ward. A Sherlock Holmes in Wall street might find some interesting evidence for stockholders. [Indianapolis, IuCl., Journal, November ii, 1901.] NEW JERSEY LEQISLATINQ FOR THE UNITED STATES. An address delivered in Chicago by Mr. James B. Dill, of New York, on the uses and abuses of trusts touched on one point that is worth emphasizing, namely, the competitive strife among States for revenue from corporations. He re- ferred particularly to the practice in some States of soliciting outside capital to organize under laws that authorized the exercise of powers in other States that would not be permitted in the State granting the charter. He characterized this policy af> apparently based on the principle of " protection for domes- tic corporations and war upon foreign corporations," and added : " Just so long as it is possible for a corporate organization in one State to do that business in another State which is EDITORIAL. INSURANCE PRESS, NEW YORK, forbidden to its own corporations, just so long will we find different States offering inducements to capital to incorporate under their particular laws. To-day we find States giving express permission to their own corporations to do in other States what such corporations are expressly prohibited from doing at home." Although the speaker did not name any State, he doubt- less referred to New Jersey, whose legislation during the last few years has been framed with special reference to creating, corporations in that State with extraordinary powers to ope- rate in other States. As the State charges a big fee for every charter granted, it has profited by the business. During the year 1899 there were 1,945 corporations chartered under the laws of the State and authorized to issue capital stock to the amount of $2,500,000,000. The fees collected by the State on these charters amounted to $728,023. Nearly two hundred of the corporations were capitalized at $2,000,000 and upward. Six hundred of them had a capitalization of $1,000,000 or more. At the present time more than 15,000 corporations in every part of the United States are operating under the laws of New Jersey, thus, in a sense, giving that State power to legislate for every other State in the Union. By the incor- porating of these 15,000 corporations New Jersey legalized the issuance of stock aggregating nearly $8,000,000,000. Com- paratively few of the corporations operate in New Jersey, and those that do have not nearly as large powers as those which operate in other States. The abuse should be regulated by Congress if it can be reached under the Constitution, or else other States should unite in defensive legislation against New Jersey corporations. [New York, The Insurance Press, November 13, igoi.] NATIONAL SUPERVISION OF CORPORATIONS. Underwriters have read with an interest peculiarly their own the very able speech of Mr. James B. Dill, the eminent corporation lawyer of this city, before the Merchants' Club of Chicago last Saturday evening. No corporations feel more severely than insurance companies the fact that " State legis- lation is each year growing more divergent, and we can look in that direction with no assurance of any uniformity of pro- cedure and regulation of corporations." The problems of management forced upon insurance com- panies by the almost infinite variety of insurance laws in the various States are most harassing to underwriters, and all persons interested in the business of insurance, the insured as well as the insurers, suffer in consequence. DAILY EAGLE, BROOKLYN, NEW YORK. EDITORIAL. The desirability of a regulation of the insurance business by the Federal government is admitted by every underwriter. No subject has been more generally discussed in the insur- ance business. Although Mr. Dill spoke of corporations generally, the following paragraph from his speech needs no change what- ever as an argument that underwriters would put forth for their own relief and for the benefit of the people who carry insurance policies : " The question is national in extent and breadth. It can be dealt with only by legislation equally broad— that is, national legislation. It is suggested that national legislation would be unconstitutional. The Supreme Court of the United States, however, found its way out of the same difficulty, when sug- gested, in the case of the National Banking Act. It might, he said, in the present case that the public welfare at present more urgently requires a national corporation act than years ago it reqiiired a National Banking Act." The Roosevelt Act What Mr. Dill deliberately said on so important an occa- sion as that in Chicago, respecting restrictions and publicity, and a national corporation law, should be considered with serious attention. He was one of the gentlemen selected by President Roose- velt, then Governor of New York, in 1900, to formulate the corporation act known as the Roosevelt Corporation Act of New York, which presented new features. It is to be assumed that Mr. Dill, while speaking in Chicago, was at that time not unmindful of Mr. Roosevelt's views, when Governor, upon these subjects, although it is to be borne in mind that no suggestion of that kind was con- tained in Mr. Dill's address. [Brooklyn Daily Eagle, November 12, igoi.] BOTH SIDES OF THE TRUST CASES. The Dill definition of a trust is sufficiently descriptive, but not necessarily accurate. He calls it a dominant combination of money, property, business or commercial power or emer- gency. Of course, it may not dominate. On the contrary, it may come into the world with scant warrant for existence and leave behind it a record of uninterrupted failure. That is to say, it resembles other business ventures to the extent that capacity must characterize its birth and career — there is no royal road to riches, even for a trust. However, Mr. Dill 23 ■DITORIAI. DAILY EAGLE, BROOKLYN, NEW YORK. has placed a notable contribution to his credit. He has made a sincere effort to look at both sides of the case. He sees the infirmities as clearly as the attributes. It is apparent to him that but for trusts, so-called, the United States could scarcely have obtained their present commanding position in the com- mercial world. This almost goes without saying. There have been individuals who controlled millions, but it is another matter when it comes to owning and controlling bill- ions. Concert of action on a colossal scale has enabled this country to grapple with forces hitherto supreme in their own sphere. It has enabled it, even with the added cost of trans- portation, to underbid the Birmingham cutler and the Swiss watchmaker. There is much the matter with the politician or the economist who overlooks exploits of this description. The trouble with the peerless leader of a lost cause was that he could see nothing but the shortcomings, that all trusts were alike to him. He has lived long enough to find most of his associates identified with big corporations. Towne and Hogg and Jones and Bailey have plunged into the commer- cial swim. They have stopped howling about monopolies lest they be accused of abusing themselves. It makes all the difference in the world whose ox is gored. Few will now have the hardihoood to take issue with Mr. Dill when he says that it is not the combination which in itself is vicious. It is the methods employed by some corporations attempting to dominate that create the tendencies which are dangerous. This is the real hint to the legislator. It is the hint to the politician and the publicist. Blind hostility will make matters worse. The trust problem is assuming a dis- tinctly reassuring phase. Men who are prominently identified with gigantic concerns are taking a hand in the discussion. They are calling attention not only to the benefits but to the perils. This is meeting the opposition at least half way. It would be as absurd for them to say that all trusts are in all things good as it would be for the opposition to renew the contention that all trusts are in all things bad. Sweeping contentions can be truthfully made by neither side. There is a middle ground upon which there is standing room for all who are neither sightless nor prejudiced. Nor could there be a better time for provoking the discussion. The disposition to debate the question fairly will have its influence on public judgment. It will have an influence at Washington where an annual message is now understood to be in course of prepara- tion. Indeed, it is possible that even the Commoner will pass from abuse to debate, so obvious is it that the trusts have not only come to stay, but that, to quote Mr. Dill, they are " part of the best growth and sound expansion of the Ameri- 24 JOURNAL, CHICAGO, ILLINOIS. KDITORIALr can nation — essentially a part of the aggressive American policy of commercial supremacy." There is no reason why the debate should be deferred. On the contrary, there are the best of reasons for stimulating interest in it. As soon as possible it should result in legisla- tive action. It now looks as though prosperity would con- tinue indefinitely, but trouble has an ugly habit of coming when least expected. Commercial disaster would probably be attributed to the great combinations — scapegoats are always discoverable. In foul weather the trusts would probably be held accountable for every crime in the calendar — for crimes they could not commit if they would, and would not if they could. In fair weather they can be passed upon judicially. There are tremendous temptations in the way of many of those who are in actual control. A little juggling of figures will send stock quotations up or down, as the case may be. Those who control can juggle with them almost at will. That is to say, immense fortunes are at their disposal. A mere rumor as to the increase of a dividend judiciously set afloat will serve the purpose. Mr. Dill has spoken strongly on this point. He says: "That combination which is controlled through its management for the purpose of advancing or depressing the price of its securities on the market, and is run on a principle other than that of a strictly commercial enterprise, must ulti- mately land where it belongs — in the gutter." There are other dangers almost as menacing. The one that seems to be most imminent is that, fearing adverse legislation, the trust millionaires will subsidize legislators. Freedom of commerce between the States is guaranteed by the Federal Constitution. Almost anything Congress may do may be negatived as un- constitutional, while, on the other hand. State Legislatures are notoriously accessible. There are plenty of difficulties in the way, but the encouraging sign is that the trusts them- selves are not thrusting the topic aside. They are wise in their day and generation. They are realizing that favorable public sentiment is among the most valuable of their assets, and, so long as there is a disposition on one side to impose salutary restrictions, and on the other to accept them, the out- look is promising enough. [Chicago /aurna/, November ii, igoi.] THE CONTROL OF TRUSTS. Mr. Justice Brewer, in a recent address at the Yale bicen- tennial anniversary, said that " trusts have come to stay."_ He pointed out how they were the outgrowth of modern business 25 EDITORIAL. JOURNAL, CHICAGO, ILLINOIS. conditions and that they were, when honestly and wisely managed, advantageous for the public. On Saturday evening Mr. James B. Dill, who has had more to do, perhaps, with the organizing of great trusts than any other lawyer in the United States, spoke before the Merchants' Club of this city on the subject of " Trusts : Their Uses and Abuses." He defined a trust to be " a dominant combination of money, property, business or commercial power or energy," and that the domination of the market was the primary pur- pose of a trust's organization. The great trusts of the land, like the oil, sugar, steel and others, control their respective markets, destroy competition, establish prices, and by means of more economical manufacture sell more cheaply to the public and at the same time make larger profits for the stock- holders. The dangers to the public from trusts are of several kinds and grow out of the privacy with which they are man- aged. The public is not let into their affairs save as the officers and Directors may choose to make statements from time to time, and, as these have no legal sanction, they may be true or false, and can only be depended on to the extent of the character and reputation of the men who make them. Mr. Dill holds that there ought to be a law, State or national, compelling companies to publish regular and sworn statements of their business. Mr. Dill thought that State legislation would not suffice to accomplish the purpose, and that a comprehensive national act controlling all trusts should be passed by Congress. In respect to the constitutionality of such an act, which has always been strongly doubted, Mr. Dill said: " The Supreme Court of the United States had found its way out of the same difficulty when suggested in the case of the National Banking Act. It might be said in the present case that the public welfare more urgently required a National Corporation Act than years ago it required a National Banking Act." A well-ordered national law, providing for the control of all trusts and a stated examination of the business, something after the model of the National Banking Law, would be of untold value to the people. Another danger from trusts pointed out by Mr. Dill was their tendency to enter the field of politics and control legis- lation in their own interest. Such activity is to be regarded with grave apprehension, though it is often caused by threats of hostile legislation. Mr. Dill said many wise and suggestive things upon this great and all-important subject. It is the question of the coming years, one to be settled not by rancorous demagogues but by broad-minded and conservative statesmen. 26 [Chicago Tribune, November ii, igoi.] A BROAD VIEW OF "TRUSTS." Mr. James B. Dill, who spoke to the Merchants' Club night before last on the trust question, is a corporation lawyer. He has been called "the father of trusts," yet his opinions con- cerning his reputed children and the methods which should be adopted to make them behave themselves concur to a not- able degree with those of President Roosevelt as expressed in his Minneapolis speech. This agreement is sufficient evi- dence that the lawyer, in spite of his trust affiliations, can dis- cuss the subject intelligently and conservatively. President Roosevelt said at Minneapolis "more and more it is evident that the State and, if necessary, the nation, has got to possess the right of supervision and control as regards the great corporations, which are its creatures, particularly as regards the great business combinations which derive a por- tion of their importance from the existence of some monopo- listic tendency." Mr. Dill says "utilization and restraint of trusts are the essential element of industrial success. This regulation and control can be had only by an enlightened public opinion followed by wise legislation." Apparently Mr. Dill does not look to the States for such legislation. He mentions the tendency of some of them to hold out special inducements to corporations so as to get State revenue, while other States have filled their statute books with discrimina- tions against business combinations. Mr. Dill does not overlook the evils of trusts. He regrets their tendency to become callous to public opinion. He de- plores also "the tendency of industrial corporations to enter the field of legislation and thence enter politics, which is perhaps the most imminent danger from the combination to the public." The public is aware of that danger, which is not remote, but is within the gates. The fields of legislation and of politics were long ago entered by some corporations. It may be that in some instances, as Mr. Dill remarks, half apologetically, legislation which was unwise, though honestly meant, or which lacked both wisdom and honesty, has led cor- porations to believe that self-preservation required them to go into politics and to control legislation. After having made this new departure they have learned, as Mr. Dill says, that they " can not only defeat anti-corporate measures in the usual way, but can even procure pro-corporate legislation." They secured the temporary enactment of an Allen law, for instance. But under any circumstances their entrance " vol- untarily or otherwise into the field of legislation and poli- tics," is, as Mr. Dill says, "to be regarded with grave appre- hension." Mr. Dill dwells on the desirability of publicity for the sake 27 DITORIAL. DAILY ADVERTISER, NEWARK, NEW JERSEY. of the public and of the corporation itself. Public confidence, he says, is the enduring element of the success of any indus- trial. To secure that confidence the public must know the facts. Hence the better corporations are voluntarily practic- ing publicity, and would favor a statute securing it from all corporations. Mr. Dill says this publicity must be enforced by legislation, either national or State, but the latter, to be really effective, must be uniform. This is precisely in a line with President Roosevelt's argument at Minneapolis. The men at the head of the great industrial combinations of the coun- try, who have often acted on Mr. Dill's advice, should heed the suggestions he makes now. They should welcome the publicity and the " regulation and control" which Mr. Dill looks on as not merely expedient but necessary. [Newark, N. J., Daily Advertiser, November 13, 1901.] riR. DILL ON TRUSTS. James B. Dill, of East Orange, who has won celebrity as an organizer of great industrial combinations, made an ad- dress before the Merchants' Club at Chicago which has com- manded wide attention throughout the land. Mr. Dill cannot be quoted as a critic of the trust system, for he is too closely identified with it, but he said things in his address that legis- lators cannot pass unheeded. Mr. Dill wants the trust system to stand, and he realizes that to make it permanent the abuses that characterize it must be done away with. Accordingly he favors publicity, which, he says, is to industrial trusts what street lighting is to municipalities. What he says about State action is of peculiar interest in New Jersey. These are his remarks on that point : " A menace, both to the combination and to the people, is found in the competitive strife among States for revenue from corporations. Legislative inducements by way of pri- vate and public statutes to corporate organizations are the order of the day. 'Protection for domestic corporations, war upon foreign corporations,' is the legislative theory of very many States. Just so long as it is possible for a corporate organization in one State to do business in many other States, which is forbidden to its own corporations, just so long will we find different States offering inducements to capital to incor- porate under their particular laws." New Jersey set the example in this scramble for the spoils and its Governor has proudly exhibited the spoils as a great achievement in State finance, and as an evidence TIMES, RICHMOND, VIRGINIA. EDITORIAL. of State prosperity that would not exist but for the industrial trusts and the exceptional advantages offered to them under our laws. Mr. Dill dismisses the idea of uniform control of industrial combinations through State action. Greed and corporate influences stand too much in the way. He looks to legislation on national lines. " The question," he says, " is national in extent and breadth." It is expected that President Roosevelt will deal with the question in his message to Congress next month, and what he says will certainly be to the point and carry great weight with the country and with Congress. [Richmond, Va., Times, November 12, 1901.] A SCIENTIFIC VIEW OF TRUSTS. Mr. James B. Dill, of New York City, delivered an address on Saturday evening before the Merchants' Club of Chicago, in which he discussed the uses and abuses of trusts. Mr. Dill did not deal much in theories. He confined his remarks to existing conditions. He recognizes that the combination of capital is a force, and so he said he would spend no time in asking why it was here further than to say that it was a part of the best growth and sound expansion of the American Nation, essentially a part of the aggressive American policy of commercial supremacy. He compared the trust movement to the development of electricity. Half a century ago, said he, every habitation bristled with lightning rods in an endeavor to avert electricity; whereas, the house of to-day is not equipped with instruments to avert this force, but is wired to receive and utilize the elec- ,tric current. The great object of science in this day is not to suppress electricity, but to control and utilize it as a working force. He thinks that that principle should be applied to trusts, "Many of the attacks upon combinations," said he, "have had as their aim the suppression of the movement rather than the elucidation of the subject and the utilization of the force. Such attacks, legislative or otherwise, while dangerous to the combination, react against the public. The tendency of industrial operations to enter the field of legislation and thence to go into politics is a most imminent danger. Unwise legislation against industrial combinations, legislation in many instances enacted in response to ill- advised popular clamor, invites and sometimes forces the industrial corporation to enter the field of legislative com- petition, and when once in that field the corporation learns J9 JOURNAL OF COMMERCE AND COMMERCIAL BULLETIN, NEW YORK. by experience that it can not only defeat anti-corporate measures in the usual way, but can even procure pro- corporate legislation. Any attempt on the part of industrial organizations to enter, voluntarily or defensively, into the field of legislation is a tendency which is to be regarded with grave apprehension. This seems to us to be one of the most sensible presenta- tions of the subject that we have seen. Combination is undoubtedly a great factor in our modern economy and is recognized as such. It is absurd to talk about abolishing cor- porations. In this dayoi great enterprises they are absolutely necessary. If we should abolish them we should go back a hundred years and should be unable to compete with the nations of the earth with which we are now in sharp com- petition. Corporations are here and here to stay, just as surely as electricity is a working force in the industrial world. It is wisdom, therefore, for the people of the land who rule to use the corporations for their good, just as they employ electricity for lighting and heating and moving machinery. We have for years had an abiding faith that this problem would finally solve itself. We have more faith to-day than ever before. [Nevf York yourna/ of Commerce and Commercial Bulletin, November 15, 1901.] PRESIDENT ROOSEVELT AND THE TRUSTS. Some more or less authoritative statements have been made as to the attitude which will be taken by President Roosevelt, in his first message to Congress, in regard to the necessity for legislation for the correction of the abuses of the trust system. The somewhat advanced and aggressive views on the subject enunciated by Mr. Roosevelt while Gov- ernor of New York, and, later, as Vice-President, were accepted as ground for the belief that as President he would regard among the necessities of the hour some positive legis- lation for the restraint or regulation of the operations of the great combinations loosely described as "trusts." The Presi- dent has, during the last few weeks, been in daily conference with representative men from all parts of the country in regard to this and other subjects which might properly be discussed in his message. Judging from the published reports of the impression which various participants in these conferences have brought away with them, there has been a perceptible weakening of the Presidential resolve to recom- mend some vigorous mode of dealing with the trust question. About the end of last month it was reported as the opinion of 30 JOURNAL OF COMMERCE AND COMMERCIAL BULLETIN, NEVk YORK. some of the influential Senators and Representatives with whom President Roosevelt had consulted, that the most radi- cal, or, at least, the most outspoken, part of his message would be the paragraph on trusts. It was explained that this did not mean that the President intended to recommend drastic legislation against industrial combinations, but rather that he regarded the trust question generally as one fore- shadowing trouble in the future if not wisely handled. While he might have no specific recommendations to make with regard to the kind of trust regulating law that should be passed, if any, it was declared that the President would make clear and strong convictions which he has often expressed on the general subject of the necessity of finding some legal way to restrain the growing power of industrial combinations. A fortnight later the same authority reports that nearly all of "the able, influential and conservative Senators and Representatives " who have talked with the President lately declare that the President will not, as has been so often stated, recommend drastic legislation for the regulation and curtailment of the powers of trade combinations, the so-called trusts, but will content himself with calling the attention of Congress plainly and emphatically to the facts as they exist, leaving it to deal with the subject as it thinks best. While in that way probably lies the path of wisdom, there does not seem to be any good reason why Mr. Roosevelt, as President of the United States, should not go as far as Mr. Roosevelt did when Governor of the State of New York. There is this very sufficient reason for his taking a position at least as ad- vanced as that which he occupied two years ago, in the fact that State legislation in regard to business combinations is becoming every year more divergent, and that as Mr. James B. Dill has remarked, " we can look in that direction with no assurance of any uniformity of procedure and regulation of corporations." The question is national in its extent and can be adequately dealt with only by national legislation. To the objection that national legislation would be unconstitutional, the same excellent authority replies that the Supreme Court of the United States found its way out of this difficulty when suggested in the case of the national banking act, and that the pubhc welfare at present more urgently requires a national corporation act than it required a national banking act years ago. The bill known as the Roosevelt Act of 1900, in New York, was prepared by a commission selected under the Governor's direction, and Mr. Dill makes for him the very significant statement that, although it did not pass the Legis- lature, it contains many elements which are approved, both 31 JOURNAI, OF COMMERCE AND COMMERCIAL BULLETIN, NEW YORK. by students of economics and by practical corporation man- agers. Perhaps the less the attempt is made to cure by legislation the economic evils to be apprehended from trusts, the better it will be for the public interest. As Professor Sumner has remarked, one of the greatest of these evils is the tendency of the trust system to suppress improvement. It is character- istic of competition to produce in advance, and of monopoly to fall into easy routine. Professor Sumner discerned two safe- guards against this danger, the first being that an enlight- ened regard for their own interest would prompt the trust managers to see that there was no relaxation on the line of improvement; and the second was that, after big units are formed, competition recommences between them. It might be added, as experience has shown, that after the big units are formed, a mass of smaller concerns spring up to dispute with them the sole occupation of the field of production. These are very frequently organized by some of the most capable of the managers of individual concerns whose services have been rendered unnecessary in the process of consolidation, or by some of the owners of individual plants which have been brought out by a trust. In any case, the principle holds good that the whole history of human industry consists in the alter- nation of combination and competition, audit is this which has " driven the industrial organization along the line of develop- ment toward higher and higher power." The main question turns upon the kind of law which it is necessary to build up around trusts for the protection of the public, both against finan- cial disaster of far-reaching consequences and economic tyranny calculated to arrest industrial and commercial progress. The most essential element of such legislation is unquestionably that of publicity, which, in the language of Mr. Dill, " would redound, not only to the benefit of the public, to the steady- ing of industrial finances, to the making of industrial securi- ties a permanent investment for holders, large and small, but would also prevent the formation of blind pools, industrial swindles, and tend to avert financial panics." It is evident that to secure the same standard of publicity in the reports of all the great corporations State legislation is inadequate, since it is entirely hopeless to expect it to be practically uni- form. Publicity must therefore be secured by national legis- lation, and President Roosevelt can do no more timely service than to impress on Congress the necessity of securing a law with this end primarily in view. Congress has already done all that lies in its power to prevent the creation of a monopoly through the instrumentality of interstate commerce. As it cannot constitutionally interfere with attempts to create a monopoly in manufacture, the scope for amendments to the Sherman Act is obviously somewhat limited. 32 COMMBRCIAL TRIBUNE, CINCINNATI, OHIO [Baltimore, Md., Sun, November 13, igoi.] TOPICS OF THE TIMES. In a speech before the Merchants' Club of Chicago, Mr. James B. Dill advocated the control of trusts by Congress. Commenting on this speech, the Springfield Republican says : " New Jersey has a surplus in its treasury of $2,000,000 won from the licensing of inflated trusts to prey upon other States. Other States are thus being excited to join in the business of compounding corporate felony for the sake of public revenue. New York, after denouncing the Jersey practice for some years, has now attempted to get into the game by out-Jersey- ing New Jersey, as Mr. Dill says. Connecticut is just as bad, and willing to stand with Delaware, Maine and West Virginia in debasing its corporate legislation for the profit to be got out of it. Plainly there is little hope of effective, uniform legislative control of combinations through the States. Mr. Dill's conclusion seems to be unavoidable. ' The question is national in extent and breadth,' and legislation on national lines must take the matter in hand, if adequate public control is to be resorted to at all." [Cmcinnati, O., Commercial Tribune, November 12, 1901.] A TRUST LAWYER ON TRUST REGULATION. The Merchants' Club, of Chicago, banqueted at the Auditorium last Saturday, the oratorical portion of the menu being furnished by James B. Dill, corporation trust lawyer, and Carroll D. Wright, statistician. Mr. Wright took for his theme the necessity for incorporation of labor unions, with all resultant responsibilities, while Mr. Dill insisted on publicity, with all its restraining influences, for trusts. Neither speaker stuck too closely to his text, for Mr. Wright expressed the opinion that the days of strikes were fast com- ing to an end, and Mr. Dill expressed regret over possible damage to Chicago because of the recent decision of the Supreme Court of Illinois, upholding the right of the city to assess corporate franchises and collect taxes on them. Heralded, by the Chicago press, as the gentleman whose fees, in the adjustment of the affairs of the Carnegie Com- pany, when Mr. Carnegie retired, footed up into the hundreds of thousands of dollars, and who once received a fee of $75,000 for a ten minutes' talk in a trust case, Mr. Dill fears that the Illinois corporations will surrender their charters, reorganize under the benevolent statutes of New Jersey, become citizens 33 EDITORIAL. COMMERCIAL TRIBUNE, CINCINNATI, OHIO. of that State to the detriment and the damage of Chicago — but that contingency is but incidental. Nothing Mr. Dill said more forcefully illustrates the absolute necessity for prompt and drastic measures of legis- lation in restraint of organizations which defiantly refuse to bear their proportionate share of public burdens, but, when compelled to do so by the courts, impudently threaten to withdraw in form to friendlier climes while remaining, in fact, in the State whose authorities have had the temerity to- insist that protection of the law to the citizen necessarily involved the duty, on the part of the citizen, to contribute in the way of taxes to the payment of the means of protection. The humorous definition of a trust, by Mr. Dill, as a " Chi- cago enterprise, clothed with legal garments in New Jersey and given to the public in New York," might well have caused the laugh with which it was met ; but there can be no laughing when this distinguished counsel for trusts defined a trust, in all seriousness, as "<2 dominant combination of money, property, business or commercial ejiergy or power, its primary purpose being the domination of the markets Considering the dangers to the trusts themselves, Mr. Dill was equally plain. To enter the field of legislation and then the field of politics, Mr. Dill regards as pregnant with danger to the trusts, " for, when once in the field of legislative com- petition, the industrial combination sometimes learns that it cannot only defeat anti-corporate measures in the usual way. States, however, found its way out of the same difficulty, but can even procure pro-corporate legislation." That is to say, Mr. Dill merely fears corruption to the morals of the industrial combinations, and dreads it. It is difficult to understand whether Mr. Dill is serious or otherwise as to what he consid- ers the dangers to the trusts, but there can be no question what- ever that in organizing for the purpose of dominating the mar- kets Mr. Dill sees absolutely no danger to the general public. His was not a special plea for trusts, but a direct, straight- forward declaration in their behalf, with a forewarning of his belief of the speedy coming of the day when there would be established " one great controlling financial institution," with a probability that it would be controlled by the Govern- ment of the United States, but not necessarily so. The speech of Mr. Dill, an accredited representative of trusts and industrial combinations, ought to cause a final awak- ening of the public to the dangers which menace not only the individual, but the very body politic itself, and cut down the giant growth of the evil before it is too late. For of what avail would legislation be — wherein would it be honest and sincere — when the trust has attained that growth and 34 TRUE AMERICAN, TRENTON, NEW JERSEY. EDITORIAL. Strength and vigor which its representative so plainly sees for it ? The duty of the Republican party is grave, but plain. President Roosevelt has declared himself in no uncertain terms, and the party must line up with him on the trust issue if it would maintain its supremacy. [Trenton, N. J., True American, November 14, igoi.] In his speech on the subject of Trusts, Mr. James B. Dill, the leading trust lawyer of this country, was candid enough to say that the great danger to the public is the tendency of the trusts to enter the field of legislation and of politics, and by the force of their money and influence fortify their position. It needs the mental perversion of a maker of trusts to convert this present evil into a future danger. In Congress and in legislatures the trusts appeared, before they were recognized by the outer world, and secured legislation and created defenders under which and whom they have grown into a giant of corruptive power. In Congress they forced the President of the United States to retract his own advice as to what our colonial policy should be, and held Porto Rico at the point of insurrection rather than forego the privileges which accrued to them through a separation of the island from the central government. In New Jersey they have held the legislative power in thraldom until the whole burden of our song is : " How much can we get out of the trusts by the sale of legislation and the perversion of our franchises," while the Governor of the State is taken here and there, like a dog under a wagon, to applaud the trusts and the benefi- cence of their creation. At Washington and in the New Jersey Legislature the attack of the trusts upon official integrity long since ceased to be a menace, and became an actual and deplorable evil. And to-day we find the creation of a corporation with four hundred millions of capital, whose object is to blend in one corporation the great railroads of the West in whose com- petition there was all that remained of public safety against corporate aggression. The coal combine, which was fought so severely as a destructive monopoly, has become an actual- ity under New Jersey laws and New Jersey decisions, and holds by the throat every consumer of coal in the State. The steel trust, also of New Jersey creation, not only controls the prices of all sorts of steel and iron productions, but could come to Trenton and dictate to the State of New Jersey upon 35 EDITORIAL. EXPRESS, BUFFALO, NEW YORK. what terms it would do us the honor of receiving its com- mission from our hands. It was but a few days ago that every trust in New Jersey was banded together in the purchase of the election of a Governor and Legislature that would be pliant to their will. And it will be but a few days when that Governor and legis- lature will be shaping the laws and the appointments and the influences of government in defense of the trusts. The threat of Mr. Dill that this attitude of the trusts is likely to follow an opposition to their purposes is empty, in that it has already been called into action in New Jersey. [Buffalo, N. Y., Express, November 13, 1901.] AN EXPERT ON TRUST5. The soundness of the attitude of President Roosevelt in regard to publicity as one method for correcting the trust evil is given especial emphasis by the recent remarks on the subject by James B. Dill, the well-known New York lawyer. Probably no man in the country is better informed on the manner in which trusts are organized and conducted than is Mr. Dill. In his Chicago speech, Mr. Dill called attention to the fact that the trust is essentially a development of the aggressive spirit of American industry, and that it cannot be destroyed. In his opinion, it can only be controlled. Such were the views advanced by Justice Brewer in his address at the Yale bicentennial celebration last month. Both men regard public opinion very highly, and believe that this will serve in the end to regulate the evils of the great industrial combines. In fact, both believe that anti-trust legislation is unwise, at least in the manner in which it has been carried on heretofore. " Unwise legislation against industrial combinations," says Mr. Dill, "legislation in many instances enacted in response to ill-advised popular clamor, invites and sometimes forces the industrial corporations to enter the field of legislative competition, and when once in that field, the corporation learns by experience that it can not only defeat anti-corporate mea- sures in the usual way, but can even procure pro-corporate legislation. Any attempt on the part of industrial organiza- tions to enter, voluntarily or defensively, into the field of leg- islation, is a tendency which is to be regarded with grave apprehension." The same spur of indiscreet attack which may drive a corporation into the legislative field, tends to make it 36 EXPRESS, BUFFALO, NEW YORK. EDITORIA callous to public opinion, as does also the success it has in procuring legislation favorable to itself or in defeating antag- onistic measures. Mr. Dill regards it as unfortunate that corporations care so little for public opinion. The only rem- edy in this direction is to refrain from the absurd efforts to break down these industrial combinations. The problem must be attacked in a careful, studious manner, as President Roose- velt, Justice Brewer and Mr. Dill have pointed out. Under those conditions, the legislative bodies will undoubtedly have the hearty co-operation of the leading organizers and man- agers of the combines Mr. Dill even went so far as to assert that the better cor- porations would favor a statute securing publicity for all. He divides publicity into two classes — public and private, the distinction being obvious — and then says: "The time is coming when public publicity will be an essential element of the success of every industrial combination which seeks its support from the public. As between combinations them- selves, the sound corporation will avail itself of the oppor- tunity to demonstrate its soundness by public statements, and in such demonstration force to a lower position its competitor who is unwilling and, inferentially, unable to make the same public showing. Public confidence is and must be the essen- tial element of the success of any industrial. Public confi- dence cannot be based upon anything by knowledge of the facts." The importance of publicity has long been recognized by the railroad companies and it is now being recognized by the leading industrial organizations. The United States Steel Corporation, possibly upon the advice of Mr. Dill, has set a notable example in this respect. A somewhat limited state- ment of its financial affairs was issued after the quarterly meeting of the directors, while last Saturday the Investor printed what purported to be an official balance sheet of the corporation's business, dated June 30th. The example set by this organization has been followed by the Republic Iron and Steel Company. When an end shall come to the blind-pool form of management, such as that of the Amalgamated Copper Company, for instance, the great industrial enter- prises will be on a much sounder basis and the so-called trust jevil will have largely, if not entirely, disappeared. 37 [Trenton, N. J., Times, November 12, 1901.] AN EXPERT ON TRUSTS. James B. Dill, one of the best informed men in the country on the subject of corporations and corporation laws, deliv- ered an address last week before the Merchants' Club, of Chicago, on "Trusts: Their Uses and Abuses." As Mr. Dill is an expert in trust organization, his opinions are entitled to serious consideration. The following is a brief summary of Mr. Dill's views: The real intent of combinations of capital is to dominate in manufacturing, in transportation and in the market. It is not the combination, which has come to stay, which is dangerous; it is the methods employed by some corporations in the attempt to dominate. The great question of the hour is how can the combina- tion be utilized and controlled ? The tendency of industrial corporations to enter the field of legislation and thence to go into politics must be regarded with grave apprehension. Another serious danger arises from the combination of the business desk with the stock exchange ticker. A trust that is run for the purpose of advancing or depressing the price of its securities on the market deserves to land in the gutter. Two remedies for the evils mentioned may be found in wise legislation and enforced publicity of the trust's affairs. The time is coming when "public publicity," not private publicity" for a few interested investors, will be an essential element of the success of every industrial combination which seeks its support from the public. "Publicity is to industrial combinations what street light- ing is to municipalities. It promotes legitimate business and prevents crime." To secure publicity there must be uniform legislation. The public welfare to-day more urgently requires a national corporation act than years ago it required a national bank- ing act. Mr. Dill's criticisms of the tendency of State Legislatures to grab for revenue by offering inducements to trusts to organize under their respective State laws is a note of alarm which this State should heed. He says : "At the beginning of this month the State of New Jersey had in its treasury over $2,000,000 as a surplus. " In 1901 the State of New York, although it had for years waged war upon New Jersey's system of incorporation, gave way to the contrast between the state of its treasury and that of New Jersey. "New York out- Jerseyed New Jersey in so-called liberality 38 NEWS, NEWARK, NEW JERSEY. EDITORIAL. to corporations. It amended its corporation act upon the theory that the greatest paper liberality would produce the greatest revenue. The staid old State of Connecticut followed suit and opened its doors, offering its inducements to corpora- tions, and Maine and North Carolina followed the example of New York and Connecticut. Delaware and West Virginia had already adopted every provision which could be suggested to make those States successful charter-granting States and to increase their revenue, and, finally. South Dakota comes forward with a proposition that it will grant to a corporation everything that it will ask, and for a consideration so minute as to be scarcely worth mentioning. "This tendency is not to wisdom of legislation, but to ab- sence of restriction, to the granting of powers rather than to the maintenance of proper control." The temptation to let corporations do as they please for the sake of revenue is too strong for some States to resist. Unless the present tendency is overcome we may expect to witness a most dangerous scramble among the States, in which all restrictions of trusts will be abolished. Mr. Dill is undoubtedly correct in the view that relief can only be had by national legislation. [Newark, N. J., News, November 12, 1901.] JAMES B. DILL ON THE USE AND ABUSE OF TRUSTS. No one can speak on the subject of trusts with more expert knowledge than Mr. James B. Dill, if lawyer experi- ence in organizing them is admitted to be evidence of insight into their economic working. It is, therefore, refreshing to note the statements of this authority made at the banquet of the Merchants' Club of Chicago. While Mr. Dill contends that the organization of trusts as a business method is indis- pensable to the most wholesome mechanism of modern trade, he admits that it is a very important question how they can be be utilized and controlled, how their evils can be minim- ized and their advantages to the sum total of national pros- perity be augmented. "Our financial strength," he said, "is so closely connected with our commercial and industrial life that any dangerous tendency in our industrial situation is productive of like danger in the finances of the country." The dangers of the trust movement are considered under the heads of perils to the corporations, and perils to the public from the corporations. But, after all, Mr. Dill's categories are found to merge practically into one, for the principal subject- ive peril definedis callousness to public opinion, a cynical dis- 39 EDITORIAL. NEWS, NEWARK, NEW JERSEY. regard of the interests of anything but the direct corporate end in view. His ingenious explanation of this tendency is that it is the natural reaction against ill-advised, short-sighted and unintelligent criticism of the trust method and operation. In other words, the orofanizers and beneficiaries of trusts are scornful of public opinion because that opinion does not believe in the economics of trusts, and revolts from the notion of the principal direction of the business affairs of the country being swallowed up in a few hands. It is that, with the clearly noted consequences running parallel with it, which inspires the broad objection to trusts on the part of those who do not pretend to be social philosophers or economic experts. The evil, then, to the trust is that it inevitably becomes arbitrary and indifferent to every consid- eration but its own palpable advantage. Most of us would stamp that as quite as great a peril to the general interest, for it creates the attitude of the ruthlessly money-making machine, pure and simple. Turning to what he considers the greatest specific danger to the public, Mr. Dill describes it as the tendency to enter the field of legislation, and thence to take an active part in politics. This is a pretty serious admission. It emphasizes the power of enormous combinations of capital to control and shape the laws of the nation and to become a political force. It implies their disposition to do this rather than to endure the attacks made on them and to risk the danger of anti-trust legislation. Briefly, then, the trusts are ready — or will speedily reach that pass, according to Mr. Dill's frank ad- mission — to put Courts, Legislature and Congress in their breeches-pocket, if money can achieve the end, rather than sub- mit to restriction on their operations, which, in their opinion, is ill-timed or injudicious. The great monopolists being the jury, it provokes inquiry. Just what kind of restriction would not be injudicious. Mr. Dill, in admitting these speci- fied dangers, has framed a very serious indictment against the tendencies of the trusts, which the most urgent anti- monopolist could scarcely phrase more forcibly. Nor do the qualifications which he urges to modify the weight of these admissions in the least lessen their gravity. In the way of safeguards Mr. Dill proposes what he calls public publicity. That is to say, the fullest exposition of the affairs and methods of a corporation should be made public property at periodic times. He admits that at present even private publicity or knowledge of the business affairs of a company is not always attainable by the stockholders, who have their money invested in what is practically a blind pool. " The time is coming," he says, "when public publicity will 40 INSURANCE CHRONICLE, NEW YORK. EDITORIAL. be an essential element of the success of every industrial com- bination which seeks its support from the public. As between combinations themselves, the sound corporation will avail itself of the opportunity to demonstrate its soundness by pub- lic staternents, and in such demonstration force to a lower position its competitor who is unwilling and, inferentially, unable to make the same public showing. Public confidence is and must be the essential element of success of any indus- trial. Public confidence cannot be based upon anything but knowledge of the facts, and this knowledge of the facts must come from the corporation by way of statements to the public, for the accuracy of which statements some one is responsible. _ Publicity is to industrials what street lighting is to municipalities. It promotes legitimate business and prevents crime." Legislation looking to this end, Mr. Dill thinks, should be national and not State in its origin, as indeed should be all restrictive legislation directed against trusts. All this is very well, excellent even, but it cannot lessen the value of the deductions as to the inherent dangers of trusts, in themselves. [New York, Insurance Chronicle, November 14, iQoi.] At a meeting of the Merchants' Club of Chicago last week James B. Dill, one of the most able corporation lawyers, made an address in which, among other things, he said: ''State legislation is each year growing more divergent, and we can look in that direction with no assurance of any uniformity of procedure and regulation of corporations." He was discuss- ing the question of supervision of corporations generally. In this connection he said : " The question is national in extent and breadth. It can be dealt with only by legislation equally broad — that is national legislation. It is suggested that national legislation would be unconstitutional. The Supreme Court of the United States, however, found its way out of the same difficulty when suggested in the case of the national banking act. It might be said in the present case that the public welfare at present more urgently requires a national corporation act than years ago it required a national banking act." Mr. Dill's idea is, evidently, that a law similar in its scope to the National banking act, is not only possible but neces- sary. And right here is the great stumbling block in the way of national supervision. Insurance companies under a law such as we have in mind would have to be organized under the federal law and the States would have to be deprived of their power to extort taxes and fees. It is possible that Con- gress is large enough and patriotic enough to be brought to. 41 EDITORIAL. POST, LOUISVILLE, KENTUCKY. see that fire insurance at least is being surely crushed through hostile State laws and local prejudices, that something must be done to relieve the burdens which the companies are now staggering under and for which the policyholders interested in life, fire and marine insurance are compelled to pay. The time was, a year or so ago, that the individual Congressman would have been compelled to face a very irate constituency if he had advocated seriously a law tending to relieve that bogie, the "insurance trust," of taxes which the State legis- lator and local politician had been wont to declare lightened the taxes to the voting real estate owner. There is much of such prejudice yet. Still there seems to be a spirit of enlight- ment regarding corporations abroad in the land, and the anti- trust prophet is at present without honor or emolument. This spirit manifested its power at the recent elections and, as we said before, it now looks as if the time had arrived for the advocates of national supervision to strike for an act which, will deprive the various State departments of their power and centralize that power in one department. [Louisville, Ky., Post, November 13, igoi.] PUBLICITY IN TRUSTS. A number of sanguine persons believe that publicity in trusts — that is, an announcement dealing with the transac- tions of great industrial concerns — is the panacea for the evil which has been agitating the public for some years. Mr. James B. Dill, a noted corporation lawyer, has seen fit to announce that big combinations of capital exhibit decid- edly dangerous leanings. He says that the tendency of indus- trial corporations to enter the field of legislation and thence into politics " is perhaps the most imminent danger from the combination to the public." Mr. Dill believes that trusts can be utilized if they are placed under proper restraint; and he declares that this control and regulation " can only be had by an enlighlened public opinion followed by wise legisla- tion." If the people would send men to Congress who would not be controlled by corporations or by the influences which cor- porations too often wield in legislative transactions, there would be more publicity in trusts than the greedy capitalists now dream of. The law must have something to say about the transactions of combinations, otherwise publicity through monthly statements of earnings would be of little benefit to the people. The public desires protection as well as pub- licity. 42 TIMES, PITTSBURG, PENNSYLVANIA. EDITORIAL. [Rockland, Me., S(ar, November 12, 1901.] James B. Dill, of New York in a recent address at Chicago "before the Merchants' Club, speaking of a remedy for the evils of trusts, said that the question is national in extent and breadth, that " it can be dealt with by legislation equally broad; that is, national legislation." Touching the objection that such legislation would be unconstitutional, he says : " The Supreme Court of the United States, however, found its way out of the same difficulty, when suggested, in the national banking act," and " the public welfare at present more urgently requires a national corporation act than years ago it required a national banking act." This suggestion has also been advanced and favored by Mr. Archbold, manager of the Standard Oil Company, the greatest trust in the country. [Pittsburg, Pa., Times, November 11, 1901.] CORPORATIONS AND TAXES. At the banquet of the Merchants' Club in Chicago, Satur- day evening, James B. Dill, of New York, spoke on the grow- ing importance of corporations, and incidentally alluded to the methods of the different States in dealing with the big concerns. New Jersey was shown to have recently received so much money from corporation charters as to have a sur- plus in the State Treasury, and be able to suspend some other forms of State taxation. This favorable showing had induced other States to adopt new corporation laws, until there is something of a competition between a number of the States for the fees that come from issuing charters, and a danger arises through the possibility that from a rigid extreme in dealing with corporations the other will follow, and anything be chartered that will pay the price. The big corporation came somewhat suddenly into prom- inence. Before lawmakers or the people were fully awake to the need of proper legislation, the vast combinations of capi- tal commenced, and some of the laws that have followed are as grotesque as they are varied. Some of the States, like Texas, looked upon the corporation as a natural enemy to be suppressed at all points. New Jersey took the other course, and gave the utmost latitude in exchange for cash. Other States took intermediate grounds, and the result is that the corporation law in the United States is a hodge-podge of curious restrictions and privileges. In dealing with corpora- tions, as with anything else, a little common sense is of more use than either prejudice or cupidity. 43 [Oswego, N. Y., Palladium, November ii, 1901.] DILL ON TRUSTS. James B. Dill, the eminent corporation lawyer, read a paper on trusts before the Merchants' Club of Chicago, Satur- day night, which is destined for an important place m the literature of that subject. Mr. Dill has a larger experience and profounder knowledge of trusts than any other man living. He is said to have drafted the trust law of New Jer- sey. He drew up the agreement upon which probably a score of other important trusts were organized. He is director in numbers of these creatures of his skill, and, finally, he is the law partner of John W. Griggs, who left the Cabinet, to be succeeded by another eminent trust lawyer, Mr. Knox. Mr. Dill's definition of a trust is of the greatest interest — " A dominant combination of money, property, business or com- mercial power or energy. The essential element of the com- bination is the power to dominate." This differs from any previous definition in form, but in meaning it is a Virtual admission of all that has been charged against the so-called criminal trusts or monopolies. Indeed, Mr. Dill himself says, " This domination is the tendency which has created the most apprehension." The " purpose to dominate," if it means anything at all, means the purpose or intent to control production, prices, distribution ; to rule the market ; to destroy or restrict competition. In this connec- tion read the Sherman Anti-Trust Law of 1890: " Every contract, combination in the form of a trust, or otherwise, or conspiracy in restraint of trade or commerce among the several States or with foreign nations, is hereby declared illegal. * * * And every person who shall monopolize, or combine, or conspire with any other person or persons to monopolize any part of the trade or commerce between the States or with foreign nations, shall be deemed guilty of a misdemeanor." Each of the laws passed by the twenty-seven States and Territories on the subject, contain similar declarations and provide similar penalties, more or less severe against com- binations intended to "dominate," that is, control, restrain or monopolize trade. Every trust in the United States is thus pronounced by the leading trust lawyer to be of illegal intent, and most of them in fact. The essence of the trusts is monopoly. While none of them has been able to establish an actual monopoly, in the sense of making, buying or selling the entire product, the most successful ones have so large a share of the market as to control the rest, and this has been held by a Justice of 44 REPUBLICAN, SCRANTON, PENNSYLVANIA. EDITORIAL. the Supreme Court to be a monopoly within the meaning of the law. Mr. Dill justly considers the gravest peril of the trust movement to be the tendency of these combinations "to enter into the field of legislation and thence into politics." How far this tendency has already gone one hesitates to say, but it is no secret that the hand of the trust man is apparent in every law affecting industrial, financial and commercial interests. At Washington and at every State capital in the Union, a compact, well-organized lobby, equipped with every instrument of corruption, cajolery, coercion, with money, influence, social power, keeps unceasing watch and ward. Worse still, this power increases as the industrial organiza- tion grows wider and more powerful. So closely are these great interests related that to touch one is to arouse them all and bring all their combined power to bear for the promo- tion or defeat of any law. No party is proof against this in- fluence, but while the Republicans have in effect surrendered at discretion, the Democrats have led in every serious move- ment to restrain the trusts as a power in both politics and industry. Some effective restraint must be set up if the Republic is to endure. Mr. Dill admits that much. He believes that national legislation offers a more practicable remedy than the divergent statutes of many States, but that enlightened public opinion must precede any wise and effective laws. One impediment to such legislation is the ignoble strife among States for the revenue from corporations. New Jersey led in this, to be followed by Delaware, West Virginia, Maine and finally New York, which State, this lawyer truly says " out-Jerseyed New Jersey in so-called liberality to corpora- tions." [Scranton, Pa., Republican, November 12, 1901.] TRUSTS. Last Saturday Mr. James B. Dill discussed "trusts," the "trust-power" and the "trust-danger" in its many phases at Chicago. Mr. Dill is undoubtedly better able to discuss the innumerable phases of trust problems far better than any other living man. It is not too much to say that there is probably very little to be learned of the inside or outside of trusts that Mr. Dill does not know. It is, therefore, particularly encouraging that Mr. Dill should regard publicity as the only serious safeguard against the abuse of the great powers which trusts may exercise 45 EDITORIAL. PRESS, PHILADELPHIA, PENNSYLVANIA. whether it be what he calls "public publicity" or "private publicity " — that is, information for the public or information for shareholders. Still more encouraging is it that Mr. Dill should express the opinion that in time trusts, like banks, will accept publicity with a willingness proportioned to the real soundness of their condition and conduct. Indeed, it would not be surprising if publicity were gradually brought about by the action of the trusts themselves, the stronger and better ones setting the example for the express purpose of forcing others to follow it. There is another safeguard of correction to the abuse of powers enjoyed by trusts, to which Mr. Dill does not allude, but which, in the long run, may be found to be very effec- tive. This is the tendency of such abuses, especially the arbitrary advance of prices through the relative monopoly of supply, to stimulate competition and destroy the monopoly. It is a fact recognized both in theory and practice by many of the most able and successful of those engaged in the com- binations of capital and energy usually called trusts. But it would certainly be an error of legislative discretion to leave the correction of abuses entirely to the action of the forces here referred to. The enforcement of a rational and effective publicity through governmental agencies is the end to which legislation should be directed. [Philadelphia, Pa., Press, November i6, 1901.] PUBLICITY AND THE TRUSTS. Mr. James B. Dill is a lawyer, whose connection with the great corporate consolidations gives his utterances on " trusts " weight. He knows both the law and the facts. He has just been repeating in Chicago the address he de- livered a year ago before the Contemporary Club in this city. Mr. Dill urges publicity; but he does not want it required by law. He asserts that the presence of investors will in time bring full and exhaustive reports from every trust. As he puts it : " Public confidence is and must be the essential element of the success of any industrial. Public confidence cannot be based upon anything but knowledge of the facts, and this knowledge of the facts must come from the corporation by way of statements to the public, for the accuracy of which statements some one is responsible." It would be pleasant to believe that public sentiment will bring here the corporation reports which the law requires 46 PRESS, PHILADELPHIA, PENNSYLVANIA. EDITORIAL. elsewhere. It might, if the interests of managers and stock- holders were the same. They are not. Stockholders make their profit out of dividends. Managers make theirs out of stock manipulation. The one profit by the activity of busi- ness; the other by the activities of the stock market. Corporate control once meant ownership of a majority of the stock. It does no longer. The number of stockholders has become so great, reaching over 55,000 in the Steel Trust, that common action is impracticable. In all these corpora- tions a small, but powerful group of capitalists controls, often with a very small interest in the shares and none in the divi- dends. Their primary interest is in the quotations of the stock and its fluctuations, far more than in the business suc- cess of the corporation. Why should they want publicity and full reports ? Their money is made by the use on the stock market of the business secrets of the corporation or trust. The Sugar Trust, Ameri- can Sugar Refining Company, is over a dozen years old. Be- yond the meager return required under a Massachusetts law it has never published a report. Its stockholders, who got 12 per cent., are satisfied and ask for no reports. If they did they would not get them. Its managers, " who work the market," are satisfied, too. What is there to force the "knowledge of the facts " which Mr. Dill assures us is " the essential element of the success of any undertaking ? " Nothing whatever. Unless some law comes in, no trust will ever publish full reports. Did any insurance company in the century of insurance before reports were required ? The compulsion of law was needed to secure reports from them. It will be needed by the " trusts." Yet there is the gravest difficulty in applying this statutory compulsion. States charter their corporations. A single State, like New Jersey, with a loose corporation act, can flood the land with trusts. Practi- cally no State can exclude them. The most rigorous law in this State would not force a report from the Steel Trust, most of whose property is owned in Pennsylvania. Over thirty States have passed anti-trust acts. Not one has been worth a rap. The Federal law-making power cannot reach the corpora- tions directly. As long as the biggest trust confines itself to manufacture in a State under a State charter, even if from another State, a Federal law cannot reach it. This the Su- preme Court held in the Sugar Trust case. Congress has power only when the trust or its products enter interstate commerce. When this occurs, the power of Congress is supreme, complete and adequate. Whether it is wise to use this power is another question. 47 EDITORIAL. UNION-ADVERTISER, ROCHESTER NEW YORK. But there is no possible doubt that no State can regulate trusts or secure publicity for their operations. Congress alone can do that by its power over interstate commerce, and even Congress can only do this by a wider interference with all corporate action than this country has ever known. [Rochester, N. Y., Union- Advertiser, November 14, 1901.] THE COMBINATIONS AND LEGISLATION. In an address the other day before the Merchants' Club of Chicago Mr. James B. Dill discussed the trusts from a practical point of view. He considered "the tendency of in- dustrial corporations to enter the field of legislation perhaps the most imminent danger from the combination to the pub- lic." It is understood that Mr. Dill is an authority on this snbject, as some of the great corporations are among his clients. His address was not, of course, an attack upon com- binations ; it was rather a defense of them in a general way, and in some particulars a warning to them. What he said about their tendency to seek control of legislative action is perfectly true and it is this tendency more than any other that excites public distrust of combinations and hostility toward them. This distrust is not by any means confined to the so- called proletariat ; it is found among all classes. A commer- cial contemporary says, in commenting upon Mr. Dill's warn- ing : "Mr. Dill is a good friend of the combinations in warning them that their participation in politics is dangerous. The temptation is, of course, very strong. They are subject to attack, and they defend themselves by the most convenient means. They wish legislative favors and they get them through the same agencies. But it is a dangerous policy. An appeal to the public would not yield so immediate results, but it would be safer. Whenever public sentiment is sufficiently aroused it makes short work of political and financial rings, and it is undoubtedly irritated by the thought, which is not without some foundation, that large aggregations of capital have a great influence in politics, and that influence is not exerted for the public welfare. Mr. Dill's advice to the com- binations to retain public confidence is sound." In this there is no note of hostility to the trusts apart from their interference with legislation ; but it emphasizes the danger that Mr. Dill points out. It is notorious that the great combinations exercise much influence over legislation, municipal. State and national, and that the machinery by 48 BRADSTREBT'S, NKW YORK. EDITORIAL. which they do this is perfectly organized and enormously effective. At present the influence of some of the most powerful combines is being used against any opening of the tariff question in Congress this winter. The plea of the agents of these special interests is that a tariff debate of any sort would have a disquieting effect upon the business of the country. Hence it is urged by them that even the ratification of the reciprocity treaties would be injudicious, and they are working hard to prevent such ratification. As a matter of fact these protected monopolies are simply concerned for their own profits, as even the dullest observer of affairs must see. The interference of these special interests in their own behalf when legislation which they do not want is proposed, is obviously against the general public welfare, and it is very naturally resented. Under such conditions the combinations display amazing hardihood when they attempt to convince the public that they are the innocent victims of an unreason- ing and unintelligent prejudice. The facts concerning the attempts of the corporations to control and direct legislation are notorious and beyond controversy. Therefore, the cor- porations will do well to take the advice of Mr. Dill and refrain from meddling with law-making if they desire long life. [Bradstreefs, New York, November i6, 1901.] TRUSTS AS FORCES TO BE UTILIZED. No subject has been the theme of more discussion of late years than that of trusts, their uses and their abuses. Not always, however, has the discussion been illuminative. Too often it has been colored by passion and clouded by lack of insight and information, and, therefore, it has not only been lacking in helpfulness, but has even been misleading. Of a different character is the address delivered before the Mer- chants' Club at Chicago by Mr. James B. Dill. The speaker is well known as a lawyer who is thoroughly well versed in the legal aspects of trusts and who has done much construc- tive work for great organizations, but he is also known as a student of trust problems from the public side, and who recognizes that there are certain tendencies peculiar to the great combinations which require to be guarded against. Mr. Dill regards the great combinations not as excres- cences or things alien to the country's industrial life, but as 49 EDITORIAL. BRADSTREET S, NEW YORK. developments growing out of conditions and as forces which are not to be eliminated by legislative dictum, but which, under wise guidance, may be directed to advantageous ends. The great question to-day, he says, is not how combinations may be averted but rather how they may be utilized and con- trolled for the best good of the community. In a word, util- ization and restraint of trusts are the essential elements of industrial success, and the dangerous tendencies developed, or likely to be developed by them, are not to be cured by hasty legislation or overcome by vituperation and abuse. Some of those tendencies are noted by Mr. Dill. One is the temptation to become in a measure callous to public opinion owing to the feeling that from the corporate point of view much of the criticism passed on combinations is the result of a lack of understanding. The tendency of indus- trial corporations to enter the field of legislation and thence to go into politics is another to be regarded with apprehen- sion. So a combination is to be carefully watched which is controlled through its management for the purpose of ad- vancing or depressing the price of its securities on the mar- ket. As a means of guarding against dangerous tendencies and of affording a basis for a sound public opinion upon which to base useful legislation, Mr. Dill lays stress on the value of publicity, both public and private. The former kind of pub- licity has not yet been fully arranged for by legislation, and private publicity or information to stockholders is not always secured to its fullest extent. The time is, however, coming, when public publicity will be an essential element of the suc- cess of every industrial combination which seeks its success from the community at large. Publicity is to industrial combi- nations, this authority says, what street lighting is to munici- palities; it promotes legitimate business and prevents crime. To-day, he says, the better corporations are voluntarily prac- ticing publicity, and they would welcome a statute which would secure public publicity from all corporations. Two other untoward tendencies affecting combinations are noticed by Mr. Dill. One is the competitive strife among States for revenue from corporations, and the other is the disposition to discriminate against business combinations. These tenden- cies will doubtless yield in time to sounder views of public policy; but Mr. Dill suggests that the matter of corporate regulation is national in its extent, and can only be dealt with by legislation equally broad. Of one thing, at any rate, there can be, we think, no doubt. The better day to come would be hastened if statements possessing the sanity of view which marks that of the speaker to whom we have referred were more widely disseminated. 50 MUSIC TRADES, NEW YORK. EDITORIAL. [St. Louis, Mo., Post-Dispatch, Novemberi3, 1901.] THE TRUST-MAKER ON TRUSTS. In his Chicago address James B. Dill, "the godfather of the trusts," gave small comfort to those who fear the great cotahinations and consolidations of capital in industrial undertakings. He foresees the continuance of the process as " a part of the growth and expansion of the American nation," and " essentially a part of the aggressive American policy of commercial supremacy." He is inclined to think that there will come a great controlling financial institution under the United States law and controlled by the United States Gov- ernment. Mr. Dill thinks the most imminent danger to the public lies in the tendency of industrial combinations to go into politics and legislation. He wants the trusts utilized and restrained as essential elements of industrial success. In the matter of remedies, Mr. Dill has nothing definite to suggest except publicity, which would undoubtedly be a restraint, and would serve as a basis for regulative legislation. Enlightened public opinion must provide proper restraints. Those who know most about the trust problem can do little more at present than define it and point out the dangers of the process and of hasty and ill-considered legislation. How to eliminate the evils of combination without dislocating busi- ness, in other words, how to utilize the power of combination for the welfare of all the people, is a problem to be solved and requiring for its solution the highest wisdom. But at least one thing can be done — the evil of monopo- listic privilege may be removed. [New York, Music Trades, November 16, 1901.] At the banquet of the Merchants' Club, of Chicago, last Saturday night, Mr. James B. Dill, a prominent New York lawyer, who has been identified with the formation of a large number of combinations and trusts, made the principal ad- dress. Mr. Dill's speech was devoted to trusts, their uses and abuses. He described a trust as a " dominant combination of money, property, business, or commercial power or energy." He said that every prominent combination of capital, if 51 IDITORIAL. MUSIC TRADES, NEW YORK. it correctly gave its purpose when it organized, would state that that purpose was: " To dominate in the manufacturing, to dominate in the transportation, and to dominate in the marketing of the product." Mr Dill then went on to point out that it is not the combination in itself which is vicious, but it is the methods employed by some corporations in the attempt to dominate which create the tendencies which are dangerous. The combination and consolidation of capital, as a new force, Mr. Dill said, could neither be evaded nor overcome. It was essentially a part of the American policy of commercial supremacy. It showed the general tendency towards centrali- zation. Mr. Dill likened the history of the Trust movement to the development of electricity. Half a century ago every habitation bristled with lightning rods, in an endeavor to avert electricity, a force then known best from its dangerous ten- dencies. To-day, the house is not equipped with instruments to divert the electricity, but is wired to receive and utilize the electric current. The difference is not only that the force is better understood, but also that it is under control. The last generation paid money to keep electricity out of the house. To-day we pay the electric companies to bring electricity to us for the purpose of light, heat, power and communica- tion. " The great question, therefore," said Mr. Dill, " is not how combinations may be averted, but how they may be utilized and controlled, for the best good of the com- munity." Mr. Dill thought that the evils of these great combinations could be overcome by insisting upon the most complete pub- licity regarding their affairs. With respect to those com- binations of capital which are controlled, through their management, for speculative rather than industrial pur- poses, Mr. Dill believed that they must all ultimately land where they belong — in the gutter. Mr. Dill is quite right when he claims that there is a new force in industrial, commercial and financial life. He is also right when he claims that what we have to do is to try and utilize this new force just as we have succesfully done with electricity. The trouble with the new force, how- ever, is that it is at present almost entirely in the hands of schemers, speculators and promoters, to the great disadvan- tage of industry and commerce. 52 [New York, Dry Goods Economist, November i6, 1901.] AN EXPERT ON TRUSTS. The address of James B. Dill on trusts before the Mer- chants' Club of Chicago last Saturday night has attracted a great deal of attention, and naturally, for Mr. Dill has been connected with the formation of so many great combinations of capital that he speaks with exceptional authority. It is interesting to note that he does not close his eyes to the dan- gers accompanying the beneficial results of combinations of interest, capital and plant. Most important is the warning he addresses to corpora- tions against entering the field of politics and legislation, a warning which necessarily carries with it advice to legislators and the public not to drive the combinations into the kind of action deprecated. No less impressive is the warning which Mr. Dill gives to corporation managements against endeavor- ing to influence the stock-market value of their corporation securities. Fortunately, the great and sound corporations are setting a good example by using all legitimate means to avoid having the securities of their corporations made the football of either public or private speculation. Publicity is regarded by Mr. Dill as the public's greatest safeguard against fraudulent practices on the part of trusts. A sound corporation will always be ready, as was recently the case with the United States Steel Company, to make known its financial condition. Other corporations will either have to follow suit or rest under the imputation of being not only unwilling but unable to set forth their financial conditions. As Mr. Dill epigrammatically says: " Publicity is to industrials what street lighting is to municipalities. It promotes legiti- mate business and prevents crime." The wide diversity in the existing State laws regarding combinations Mr. Dill would remedy by means of national legislation, thus avoiding the undue liberality afforded to corporations by some commonwealths and the over severity with which they are treated by others. That a national law will eventually become necessary is evidenced by the amount of industrial securities already held by the commercial inter- ests of the country. As there is good reason to believe that the enactment of such a measure is favored by President Roosevelt, some interesting developments along these lines may be looked for in the near future. 53 [Minneapolis, Minn., Tribune, November 14, 1901.] STATES GENERALLY POWERLESS. The experience of all the States with legislation for regu- lation of trusts strengthens the growing view that, so far as this is needful, it must he undertaken by the federal govern- ment. The reasons for this were stated very clearly by James B. Dill, of New York, in his address before the Mer- chants' Club, of Chicago, a few days ago. Mr. Dill is a cor- poration lawyer, and has taken part in the organization of some of the greatest trusts in the country. He recognizes the supreme value of this principle of industrial organization, and believes it a natural development and permanent organic form ; but he believes that the elimination of competition makes necessary the compensating force of State legislation to prevent abuse of power by managers of trusts to the hurt of both stockholders and the public. As a friend and sup- porter of trusts, he welcomes State regulation as a necessary condition of their permanent existence. But Mr. Dill has small hope that the States will be able to achieve this regulation successfully. Most trusts are engaged in interstate business, much of which is out of reach of State legislation. State legislatures are subject to a variety of ;n- fluences which hamper them in performance of this large function. They are led by ignorance and demagogy into ex- travagant legislation that defeats its object. They are sub- ject to the corruption of capital which obtains extreme legis- lation in the other direction. They are moved by desire of revenue obtained by incorporating trusts to do business in other States, which leads them to grant extraordinary powers under which their corporation creatures may disregard and defeat the public interest. The State of New Jersey has grown rich by incorporating trusts for large fees. This invited competition of other smaller States with the inducement of liberal corporation laws, and now New York itself has amended its corporation act upon the theory, as Mr. Dill puts it, " that the greatest paper liber- ality would produce the greatest revenue." There is small hope of effective regulation of trusts by States whose legisla- tion is conducted on this system. The only hope is in the federal government. 54 [Pittsburgh, Pa., Dispatch, November 13, 1901.] THEORY AND PRACTICE. Mr. James B. Dill, who has combined a large output in the line of industrial charters with a recent academic approval of an entirely abstract regulation of those great industrial corporations, is quoted as declaring that public confidence is essential for the success of these enterprises, and that this can be gained only by accurate and authoritative public statements of their financial condition. Mr. Dill does not wish this required by law, but holds that the demands of investors will enforce it. The most obvious comment on this declaration, from a cold and external perspective, is that an opportunity to ensure this asserted necessity has presented itself in every charter which Mr. Dill has drawn up. Perhaps Mr. Dill's omission to insert in each charter a provision calling for the publica- tion of periodical statements was a mere oversight, to be cor- rected, as Gilbert's Mikado says, at the next session between Mr. Dill and a group of industrial promoters. But the cynical mind may have its doubts whether the clients who pay Mr. Dill high prices for the construction of these charters have desired any such provision in the funda- mental instrument of their corporate existence. Indeed, Mr. Dill's professed purpose being to gain the public confidence, the promoters of some of the combinations might cogently object that full publication of all the facts would not aid pub- lic confidence at all. As a matter of fact, Mr. Dill's assertion is not borne out. The industrial combination movement is largely on the abil- ity to induce the public to buy shares in expectation of the profits of a real or fictitious control of the market. The parent of the whole brood, the Standard Oil combination, publishes no reports of gross or net earnings, expenses or balance-sheet. Yet its shares rule at the highest rates. The Sugar Trust, nextinlength of duration, gives very little information, butits stockholders are satisfied so long as they get their 12 per cent, dividends. Publicity is theoretically correct in the interest of the pub- lic. But any evidence that it will come from the enlightened self-interest of the corporate management is conspicuously absent from the present situation. (E1144) 55