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Cornell University Library HD2795 .B66 Trust question — a solution. 3 1924 030 067 288 olin The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924030067288 h^~^ \ '^ ^■ THE mST QUESTION-A SOLUTION. is still on the ts ruin. Tho tliu concentra- f middlemen, lit enterprises it presidentiiil You cannot stay this movement toward consolidation and centralization. It is a natural evolution. The commercial spirit is talking- advantage o£ the wonderful facili- ties given by steam and electricity. In- junction against striliers will not stop it; legislation against trusts will not. At- tempting to stay the movement of its chariot wheels by injunction or statute is lunacy, compared with which Dame Part- ington's efforts to stop the Atlantic with a mop was supreme wisdom. Appeal must be taken to the great court of public opin- ion, whose decrees are irresistible. In that court every man is counsel and every man is Judge. That court may not stay the move- ment, but will control it. * * * In the opening hours of the French Revo- lution Mirabeau roused the rabble in Paris, and the roused rabble whirled social order into choas, provoking Mme. Roland's dying words; " Oh, liberty, what crimes are done in thy name! " We want no Mirabeau here. We turn to the educated lover of his country, the one who believes in her insti- tutions; w^ho would not destroy but keep pure, and is filled evermore with the thought that true service of the public is the greatest glory of man. We look to him in that court for the preservation of the liberty of the individual against the threat- ened dominance of wealth and organization to invigorate the so-called generalities of the Declaration of Independence, and to fill ihe land with such a spirit of independence and liberty as shall give new emphasis to the grand old song, " America, the Land of the Free."— From Justice Brewer's address at the Yale Bi-Centennial, Oct. i':], VMT. "joying gre-'it n trade bad if those prod- The people lone. idvocated the lile no doubt id, there wns 1 bring about ■vative voters I calami t}'. it the general lanufacturing ible to check bv a general Alone le restoration impossibility, nds of former ( )hio State Bar ork and Ohio le h-'T- \ •■'' THE mST ODESTIOH-A SOLUTION. The tendency to combine in the business world is still on tl increase and its power is so great that it will prove its ruin. The public will not endure dictatorial advances in price, the concentra- tion of wealth in a verj- few, and the crowding out of middlemen, who, but a short time ago, wei-e in control of important enterprises and independent. For two reasons, action was postponed at the last presidential election : The fnrst, was the fact that the country was enjoying great agricultural prosperity and the balance of foreign trade had turned in its favor through the heavy exportation of those prod- ucts and of oil — another direct product of the soil. The people were, consequently, disposed to leave good enough alone. The second, was the fact that the party that advocated the abolition of the trusts presented no plan; and, while no doubt was entertained but that it would legislate to that end, there was a corresponding certainty that such legislation would bring about disaster to all financial institutions. The conservative voters proved themselves to be strong enough to stay such a calamity. The body of this class appreciates the fact that the general welfare of the country depends upon that of the manufacturing and commercial institutions and will, doubtless, be able to check any violent movement, unless the country is stirred l>y a general panic or is under the stress of hard times. Adetiiiate Relief from tlie Courts Alone Cannot be Expected. To undo one of the trusts and make an equitable restoration of the properties which compose it, would be an impossibility. Business plans and secrets have fallen into the hands of former ••'■Prepared for the Annual Meeting (July, 1901) of the Ohio State Bar Association, by William H. glymyer, of the New York and Ohio Bars, -V', BroadWa}^ New York City. J) competitors who hare joined it and the exchange has necessarily been niiequaL Usually, the management of the business has been concentrated in the hands of a certain few and the others havo lost touch with the trade, which itself, has undergone a great change. Some of the plants have been developed more than others and some have even been closed and have begun to deteri- orate. In some cases, each house joining the trust has entered as a unit and retains its identity; in others, the stockholder has ex- changed his stock for that of the combination and his former house has disappeared; and in most, new capital has entered. All these considerations make the task of i-estoration too great for the human intelligence to do equitably or in any degree satis- factorily. If a trust considers an attack upon it in the courts to be danger- ous, it employs the most able of counsel and sees that the array is doubly as powerful as that of its opponent. Any increase in the force of the latter, is instantly met on the part of the trust; and, if the question is one that will permit of a decision that would be an unfavorable precedent to trusts in general, the community of interest secures the co-operation of their several legal forces. The court has before it, then, on the one side, men of the highest distinction obtainable, usually treating the questions in the ab- stract by presenting plausible arguments as to the dangerous effects of decisions tending in the direction urged by the attack and refuting with masterful ingenuity, those advanced by the latter. Moreover, being on the defensive, there is complete ac- cord between them. On the opposite side, the one or two men of talent approach the situation as the representatives of different interests and their ideas of attack, and even of what the desideratum in anti-trust jurisprudence should be, are at such variance that it is not to be wondered that the courts, being composed of men that are human, should incline toward what appears to be the greater weight of opinion. The very fact that judicial decisions have not succeeded in preventing the existence or thwarting the growth of a single trust, although the common law contains precedents against forestalling, is proof enough of this. One of the reasons why no drastic measures will be taken by courts is, that they always pay a certain deference to existing in- stitutions. Moreover, as their operations permit them only to act negatively — in doing away with that which exists, and not in pro- viding substitutes for that which they may tear away, — they leave almost all reforms to the legislative branch of the government. All that may be hoped for from this department of our Federal and State CJovernnients is some slight regulation. liegislative Action. It is evident, that by legislative action the trusts cannot be made to peaceably yield up those features which are injurious to others. That would hu to expect them to give up their greed, which is the principle of their existence. It is no less certain that, by such action, they cannot be forced to do so, as no combination of those who are oppressed is apt to be formed that will unite in a single plan of legislative action with sufficient strength to successfully oppose tbem. The strongest organizations of today that coufrorjt them, the labor unions, admit that they can only be victorious in their demands — which aim alone at the betterment of themselves — by the aid of money; and this admission is almost equal to a sur- render. However, if they cannot be made to yield these injurious features by direct attack, this object can be attained indirectly. Formation and Present Standing of the Trnsts Examine for a moment into the origin of the trusts and the footing on which they stand today. Combinations first arose as an expedient by which to control selling prices. Some adverse legislation indicated that existence would be less troublesome to them should the component houses unite under one head, rather than to combine simply for the purpose of enhancing prices; and the houses thereupon, as a rule, sold out to a "promoted" trust. The heads of the larger houses entering the trust, perceived tliat, by uniting, the ex])eiises in selling could he cut down; that larger quantities could he purchased more advantageously; that many high-salaried positions could be dispensed with; and that, could they be placed at the head of the trust, their personal im- portance would be augmented with the enlargement of the sphere of the business and they would secure for tliemselves immense salaries. The heads of the smaller houses saw that competition with the larger ones was becoming more and more difficult and that, if a trust were formed between the lattei', there would be no chance for them to continue business. Therefore, with one accord, but from opposite motives, tlie larger and smaller houses rushed together into the trust. The trust once formed, the strong men begaji to assert them- selves and moved to the center of commerce. Today, they aspire to social prominence; less and less of their time is given to the details of the trust; their improved income even has been found to be inadequate, but their control in tlie trust enables them to add to it by placing privileges in other com- panies in which they have certain interests, called " allied interests " or "identified interests," with which liberal arrangements are made, and by favoring their capitalist friends with positions as officers for their sons and relatives, who are usually altogether wanting in business experience, and especially in that of the trust. In the meantime, the men who were at the heads of the smaller houses that joined the trust, inid once enjoyed positions of esteem and independence, have been reduced to mere superin- tendents of the plants; if, indeed, that lias been left them. The other officers of these independent houses have become clerks, and almost all opportunity of advancement to the head has been cut off by the favorites at the center. Unless the monopoly is complete and the profits enormous, the heavy drains of these houses "identified in interest," the increase in salaries, and the mismanagement soon cause the dividends to cease, especially where the stock has been greatly watered; and, one by one, they must fall into the hands of a receiver to be "reorganized." ■• Reorganization '" means that more capital must be paid in; and if that is not done, the small holder of stock is nearly, if not completely, squeezed out, — in which process the "allied in- terests" figure in the background, and the man who has taken stock for his business and retired to live on his income, finds that he must make new plans for his remaining davs. His sons, instead of having had a business training and fitted themselves to take over and continue their father's business, have been counting on the income and have learned little or nothing of work. The country has been deprived of a generation of ynung men who otherwise would have been trained by experience to watch and develop independent concerns; as the need of this was not necessary so long as the monopoly was properly adjusted. Look now at the heads of these monopolies. They have grown strong by acting on the principle of crushing out competi- tion. Have they stopped the crushing when they have all ob- tained their shares? No, the same principle is continued; but it is now directed against one another, unless it is seen that some other combination can be gathered in and absorbed, in which case the final squeezing out is only ilcferred. Today, every one of these men knows, that he is subject to this risk; and, wliile one in ten may feel that he is the one who will be able to etfect a combination so as to profit by it, the other nine know that they will suffer unless they withdraw at the right moment. Not only doi-s this peril confront the weaker men in a given trust, but the weaker trusts themselves are menaced by the stronger ones. With the exception of a few of the trusts, there are but two or three multi-millionaires at the head of each. This brings us to the consideration of a way of dejjriving the trusts of their great power and greed without attacking them directly or resorting to violence. The Plan. It is to proceed against the individual by limiting his financial power. The effect of this would be, that the multi-millionaires would be obliged to give away the greater part of their wealth. f) Most of the great trusts of today would fall, either for th reason that, rather than leave great amounts of capital in th hands of a few men and give them the great emoluments, th capitalists of the day would prefer to have concerns on a smalle scale, in which they too could share in the emoluments; or, be cause of an inability to select an individual to remain at the head In many instances in the trusts of today, the man in contro is not at the head by reason of his qualifications for the particula: business, but because he has been able to outdo his rivals in stocl manipulations, and holds this position only by the fact that Ik holds the financial control. Unless the man supposed to have th( necessary qualifications is at hand, dissolutions would take place but they would take place in a natural way: that is, certair groups would form among the owners, that would take over as their shares certain plants and sever their relations with the trust and this process would continue until the trust would be dissolved. It would cause no such upheaval as a law abolishing trusts or i law having socialistic lines. In such a dissolation, every person possessing up to the limit, in figuring to obtain his share, would estimate it on a solid value basis; and in doing this, he would figure the running expenses al the maximum, which would not only give the workman maximum wages, insuring against strikes, but would give a larger plant tc represent the limited fortune. The efificiency of this plan in depriving the trusts of their greed, now appears. Solidity would be the chief aim in selecting the property to be retained and not high productive qualities; for, as the value of an investment is based upon the revenue that it produces without impairing the principal, — it would not be to the interest of the owners to increase the income. Were that done, it would immediately be claimed that the investment exceeded the limit and the owner would be obliged to give up a part of it. In industries which have been built up by the aid of a pro- tective tariff and have outgrown its need, the manufacturer would ask to have the tariff taken off, in orcler that there might be no artificial element of increase in the valuation of the productive power of his plant. This plan would have to be carried out in all branches of life; but it is the idea upon which this llepublic was founded. As expressed by Lincoln, this is a -''government of the people, for the people and by the people," and it is only through the lethargy of the people, that in recent days, they have allowed it to become one in which they have fallen to the condition of serfs chafing under the dictations of a plutocracy. Bach and all, in accumulating tlio great fortixnes of today, has done so with due notice that this country is not for them in particular, but for all, and that the country, when it is ready, may carry out this policy. Some who have accumulated great fortunes are to be admired for the skill and honesty with which they have done it; many more, for the spirit to excel which has led them to do everything that was possible within the letter of the law; but there are many, especially among the owners of the later fortunes, who have built them up by the methods of the brigand, and while there would be greater justice in requiring only the last of these parties to lay down the greater part of their accumulations, here again it would be impossible to make distinctions equitably; and after all, no fortune has been made without the toil of the masses, and the masses have not always received their full share of the reward. These parties should not be deprived of wealth, nor should anything be confiscated, unless an attempt at evasion were made. They should be allowed an abundance; but, having retained an abundance, they should permit others to have a chance. If they possess real ability and are worthy citizens, their value v,'ill not be lost to the country, as there are fields enough in which they can attain distinctions that are more desirable than that of possessing much. One of the greatest practical difficulties in putting through such a plan, would be to prevent the escape of the multi-million- aires with their fortunes, from the country. To prevent this, measures of the greatest severity would be necessary, but they need work no greater hardship than the giving away of the excess of their fortune to those of their choice, where there is conformity to the law. Coii>itifiitioiial Aiiiendnieiiti^. The following amendments to the Federal Constitution might suffice: Limited Fortune.— On and after January first, nineteen hundred and four, no citizen, whether living in the United States or elsewhere, and no other person living in the United States, shall ]i()ssu,ss a fortune of the value of over a million dollars, and ill addition thereto a homestead of over fifteen acres in extent; and no other pei-son shall possess proi)erty in the United States unless ho or she, or, should it be a company, its wealthiest member, is a person whose fortune does not exceed said maximum amount. Confiscation. — TTx i^nst facto Application. — The for- tune of every person who shall have been, or shall be a citizen after the first of January, IDOO, and theseizable property of every other joerson after .January first, 1904, who shall be amenable to the above provisions and shall fail to conform thereto, shall be confiscated. Except in the case of foreigners, said laws may be c.r post ftirlo in their operation. Registration of Interests in Corporations. — No interest in any corporation or association of individuals shall pass unless reg- istered in the Federal Registry (for which provisions shall be made and which shall be open to the public) and, unless a Inma fide attempt to register such interest within four days after the acquirement of the same shall bo made by the person acc[uiring it, it shall revert to the person from whom it was acquired, and the latter need make no restitution of the price paid therefor. Statutes. These might be supplemented by Statutes along the follow- ing lines: Initial Reduction. — All property owned by any person who shall have been or shall be a citizen of the United States on or after January 1st, 1900, whether living within or without the United States, and of any foreigner who shall continue to live in the United States after January 1st, 190-4, and whose maximum fortune at any time between the first day of January, 1900, and the first day of January, 1904, sliall have exceeded the amount theri'in allowed, shall be confiscated to the United States, sold and the proceeds paid into the Treasury, unless the same shall he reduced on or before the first day of January, 1904, to within the said maximum limit, by gratuitously and unconditionally passing the excess either to citizens of the United States who are living within the United States, or to institutions established and located in the United States. Illegal Holder, Trustee — Shall such alternative disposition not be made of such property, the whole fortune of the persoa so in default shall be deemed to be held in trust for the Treasury of the United States; and both the owner and all persons to whom the same or the proceeds thereof shall pass, whether by sale, gift or inheritance, shall be deemed trustees against whom process by attachment shall issue. Renewed pursuit, either against the owner or any of said transferees, shall not be bari'ed by the plea res judicata and no prescription shall run in favor of any of them. Listing Property. — The Federal Register shall, either of his own motion or upon the petition of ten reputable citizens, cause any person comprehended in the Amendmeat to the Constitution whom he or they shall believe to possess more or about the maximum fortune to designate his or her homestead and list the property which he or she owns; and, thereafter, revise the same during the month of December in each year and submit to examinations concerning the same when required. Publicity. — Said lists, as well as all other papers to be filed in the Registry, shall be open for public inspection. The following three sections shall apply only in the case in which no evasion shall have been made in the reduction of the fortune on the first day of January, 1904. Undervaluation. — In any case where the full amount or about the full amount has been listed, there shall be found property listed so low that an upset price of twenty-five per cent, advance shall be offered therefor, the holder shall be admonished to dispose of the same or readjust his list, if he prefer; and, if that shall not be done within twenty days, the property shall be sold at public sale 10 and the excess, together with a penalty in an amount eqnal to one-lialf the excess, shall be collected of him and paid into the United States Ti-easury. Concealment. — Shall any person who shall have been re- quired to list his or her property intentionally have omitted to include all of the same, such parts as have been omitted shall be seized, sold and the proceeds paid to the Treasury of the United State.s, and the informer shall be decreed an amonnt equal to the part so seized to be paid out of the listed property of the defendant. Failure to Produce Books, etc. — Shall any person compre- hended in the Amendment to the Constitution fail to produce all books and papers concerning his fortune from the first day of January, 1900, or, being a director or officer of a corpora- tion or association, shall fail to produce the books and papers thereof for said period, he or she shall be allowed but one-half of the maximum fortune and the i-emainder shall be confiscated. Reports of Corporations and Associations. — All corpoia- tions and associations of individuals shall make, and file at the Federal Registry, a semi-annual report setting forth the property of the same and its value in detail; the dividends paid within the last half year; and the names of all bond and stockholders, together with the number and value of each holding; and all of the books and papers of the same shall be open to the inspection of the Federal Kegister at all times. Foreigner, Not Living in the United States. — Certifi- cate. — On and after .January 1, 1904, no foreigner living without the United States, and no foreign company shall possess property within the United States until it shall have been satisfactorily proven that his fortune, or if it be a company, that of its wealth- iest member, does not exceed the limit and a Certificate to that effect from the Register shall have been obtained, which shall be renewed yearly. Any breach of this provision shall operate as a confiscation of his or its property within the United States; and in addition, a penalty of one hundred dollars a day for each day that he shall have done business in the United States, shall be collected of his associates or agents in the United States with whom he shall have acted. 11 Court Rights.— No person living in the United States in whose name property, in excess of the value of three-quarters of a million dollars shall be listed, shall maintain an action in any court within the United States to recover the possession of prop- erty, or to recover in any claim arising out of property, unless the property concerning which the suit arises shall be listed; and no foreigner who shall not possess a Eegister's certificate for the cur- rent year shall maintain a like action. Point of licast Resistance. An argument in favor of its feasibility is, that, out of eighty million people, only two or three hundred would oppose it on the ground that they would be personally affected. In this respect it is unlike the Single Tax plan, which appeals possibly to a great majority of the people theoretically, but wants the active support of one of the largest and at the same time the most influential class of the voters: that is, of those who own real estate. This class will naturally induce no change without being assured that the change will be beneficial to it and the calculation is too close to inspire that assurance. It may be objected, that such a readjustment would bring about a panic. It would doubtless cause the water to drop out of watered stocks; especially those the value of which depends upon the monopoly that they are novv maintaining, and, as their volume is great the disturbance would be great. No one will contend, how- ever, that the presence of monopolies in our midst will pre- vent the further recurrence of panics. However, our great insti- tutions are too well -rooted in the soil to be seriously shaken and our workmen will not quickly lose their cunning. Some incidental benefits might arise by such legislation. It would possibly limit the trading on our stock exchanges to bona fide purchases of stocks; it might prevent the name "American" from becoming opprobrious in foreign countries, as is threatened, by reason of the dislike of the practice of crushing out competi- 12 tion by sclliiii;- at a loss — even if it is Ivnown tliat they are tempo- rarily buying- at a less price than that which is being paid in America: and it might introduce a tendency of migration from tlie cities to the country, where home life ilevelops stronger. It lias l)een said, that the trusts are beneficial, inasmuch as thev hriug about a decrease in prices to the consumer by utilizing snjierior lalidr-saving methods; and, it is admitted that this effect is experienced as long as the trusts are driving out competition, although it cannot be said that competition among strong inde- pendent houses, had they continued to exist, would not also have lowered prices. After competition has been suppressed the true position of the trust — the position held out by the promoter in soliciting sub- scriptions — appears. Here are a few instances of the effect that the trusts have had upon the consumer in New York: by the dictation of the gas trust, that commodity was raised from (io cents to $l.()."i; when the . ^ combination was effected between the railroads and the coal interests, the price of coal went up ■">(» cents a ton, and I'c- cently notification has been given that an additional 50 cents will be taken from the pocket of the consumer this fall ; ice, which was selling at "iO cents while the '" crushing out'" process was in operation, shortly after was raised to 50 cents a cwt ; about a month ago, the butcher informed his customers that the trust would take two cents more on each pound of beef ; and, as each article of consumption has fallen under the control of a monopoly, a few cents have been added. It has not stopped with the first raise: as rapidly as any of the trusts feel that the people will stand an increase of a few cents, they are added to the prices. One trust is not going to stand by and allow the more avaricious to take all of the people's money. Should a number of the trusts even conclude to stop the increase, as a matter of policy, their action would only be to benefit certain others; for the latter could then take more without hastening the crisis. All are grad- ually closing in at the round-up and the people will continue to pay tiie price that is demanded only until the situation becomes nnljearable. That part of the price wdiich does not represent the cost of production and a fair competition profit, but is taken dictatorially 13 by reason of the monopoly, is forced from tlie consumer with no more conscience or morality than is the purse hy the thug. To what have the free and independent people of Amei-ica descended, that they will permit this!'' and of what avail is the progress of the nineteenth century if such oppression is not to he met by timely laws, but to continue until revolt will be accompa- nied by violence ? Society should be ever mindful of the fact that but few of its members would act othei'wise than do the heads of the trusts, if they were placed in the same position, and that the fault, there- fore, lies first of all in society itself for not providing the neces- sarv laws to avoid this evil. L