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 Hibtati) 
 
Cornell University Library 
 HD 2795.D68 
 
 Commerical mortmain; a study of the trust 
 
 3 1924 013 738 509 
 
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COMMERCIAL 
 MORTMAIN 
 
 A 
 
 Study 
 
 of 
 
 THE TRUST PROBLEM 
 
 By 
 
 JOHN R. DOS PASSOS 
 
 Of the New York Bar 
 
 Author of 
 
 "The Law of Stock Brokers & Stock Exchanges," 
 
 "Interstate Commerce Act," "Commercial 
 
 Trusts," "The Anglo-Saxon Century," 
 
 "The American Lawyer." 
 
 NEW YORK 
 
 THE BENCH AND BAR COMPANY 
 
 1916 
 
COFYUGHT, 1916 
 
 BY 
 
 JOHN R. DOS PASSOS 
 
PREFACE 
 
 After a trial of twenty-five years the Sherman 
 Anti-Trust Act must be pronounced a failure. 
 
 This so-called Anti-Trust Act and the supple- 
 mentary legislation consisting of the Clayton and 
 Trades Commission Laws, should be repealed. 
 They are useless, calculated to stop the natural 
 progress of commerce and trade, and can never 
 accomplish beneficial results. Business to thrive 
 must be untrammeled. The course of a river may 
 be changed and diverted by dams and other sci- 
 entific methods for agricultural or sanitary pur- 
 poses; the necessities of travel by land or sea 
 may require a permanent check or diversion of 
 the natural operations of water ; but to undertake 
 to regulate and control the progress of business, — 
 to bid it stand still; or to move in a fixed chan- 
 nel; or to go so far and no farther — ^to say to 
 merchants that all of their operations must be 
 
 III 
 
COMMBECIAL MOETMAIN. 
 
 scrutinized or dominated by commissions, will 
 cause commercial affairs to shrink and eventually 
 to pass into the hands and control of the govern- 
 ment. 
 
 The recent attempt to enforce the criminal part 
 of the Sherman Act in the case of directors of the 
 New Haven Road shows the futihty of such legis- 
 lation. Juries will never convict men for ignor- 
 ance or mistakes of judgment or for business am- 
 bition or rivalry. If they are thieves or embez- 
 zlers they can be prosecuted by common law in- 
 dictment — and anti-trust laws are supererogatory. 
 
 I have endeavored to set forth in the following 
 pages in a didactic form, a fair statement of both 
 sides of the question of "trusts" and I place in 
 juxtaposition in the introductory chapter, the his- 
 tory of the English Statutes of mortmain, which 
 undertook to prevent the accumulation of lands by 
 corporations, to show the impossibility of checking 
 the trend of national development by penal legis- 
 lation. 
 
 Mortmain means dead-hand — the locking up of 
 real estate by corporations — because corporations 
 having perpetual life it was assumed that once 
 being possessed of lands they would continue to 
 hold them indefinitely, and thus withdraw them 
 from the open market. 
 
 Applying the doctrine of mortmain to personal 
 property it means the acquisition and aggregation 
 
 IV 
 
PBEFACE. 
 
 of industries by corporations, so that the latter 
 possess control of particular businesses to the 
 detriment of trade and damage to the people. 
 
 A study of the Statutes of mortmain shows that 
 laws to circumvent land aggregations were evaded, 
 but when the period of evolution arrived in Eng- 
 lish history, the practice of land accumulation 
 disappeared in the abyss of a new industrial era. 
 Feudal tenures were abolished and England was 
 transformed into a commercial nation — real es- 
 tate, passing into the hands of individuals, became 
 relegated to the background in favor of personal 
 property. 
 
 If the Sherman Act and parasitic statutes are 
 not repealed they will fall into desuetude. Direct- 
 ly the National legislature fails to vote the ex- 
 penses of the Commissions the artificial episode 
 will end. The nation is already showing signs of 
 weariness with trust legislation. If neither polit- 
 ical party has the courage of conviction to repeal 
 them they will soon take their places upon the 
 shelves of unexecuted laws and be thickly covered 
 with the dust of forgetfulness. I once undertook 
 to array the laws passed by the National and 
 State Governments, existing unrepealed, but not 
 enforced. I gave up the task in a wearisome fit 
 of despair. An ephemeral public emotion pro- 
 duces a statute which having no place in a perma- 
 nent public policy soon passes out of sight. 
 
COMMEECIAl, MOETMAIN. 
 
 A few examples from the history of legislation 
 directed against the operations of business, show 
 their inefficacy. 
 
 (a) Not many years after the Bank of 
 England had been estabhshed there sprung 
 into existence enormous speculation in the 
 public funds. The result was that in 1734 
 the British Parliament passed a law, known 
 as Sir John Barnard's Act, which was amend- 
 ed and made perpetual in 1737, and was en- 
 titled "An Act to prevent the infamous prac- 
 tice of stock- jobbing." It declared that all 
 contracts relating to the future price or value 
 of stocks or securities should be void, and 
 provided a method for suing and recovering 
 back the money paid out under such agree- 
 ments. This Act was in effect until 1860 — 
 always a perfect dead letter — when it 
 was repealed, the Act repealing it con- 
 taining this preamble: "Whereas an Act 
 was passed in the seventh year of the reign 
 of King George II., * * * to prevent the prac- 
 tice of stock- jobbing * * *. And, whereas, said 
 acts impose unnecessary restrictions on the 
 making of contracts for the sale and transfer 
 of public stocks and securities, and it is there- 
 fore expedient to repeal the same; * * *." 
 
 VI 
 
PBEFACE. 
 
 After one hundred and twenty-five years the 
 English people were satisfied to let these specula- 
 tions be regulated by natural laws. 
 
 (b) In 1812, a statute was passed by the 
 New York legislature similar to the Barnard 
 Act, just quoted, which declared void con- 
 tracts for the sale of shares, which the party 
 who purported to sell the same, did not own. 
 This statute was re-enacted in the Revised 
 Statutes of 1830. In 1858, this statute having 
 been inefficacious to stop short sales, was re- 
 pealed; but the remarkable feature of the 
 repealing act was that the people turned a 
 complete somersault in their public policy and 
 legalized the "Short Sale" of stocks ! And it 
 is the law to this day in New York ! 
 
 (c) In 1863, transactions in gold were so 
 enormous in the City of New York, that Con- 
 gress in March of that year, undertook to stop 
 the speculation by statute and a law was 
 passed preventing a loan on the security of 
 gold or silver exceeding the par value of the 
 amount placed on deposit. The effect of this 
 law was that the premium on gold immedi- 
 ately enhanced and it finally sold up to around 
 280. The demonstration of the futility of 
 this act was so swift that Congress in the 
 same session repealed the law. 
 
 VII 
 
COMMEECIAL MORTMAIN-. 
 
 (d) In March, 1869, Congress passed a 
 statute making it unlawful for national bank- 
 ing associations to certify checks unless an 
 amount of money equal to the certified check 
 was on deposit. This statute has been amend- 
 ed, and on several occasions sought to be 
 enforced. But it is practically a useless piece 
 of legislation because those who wish to deal 
 in stocks on margins are enabled to do so by 
 devious methods notwithstanding the heavy 
 penalties of the act. 
 The true reformer knows the fact but the dema- 
 gogue ignores it : that in the evolutions of business 
 some must suffer — the small give way to the large, 
 the little to the great. The legislator should never 
 attempt to convert the progress of business into a 
 crime. This is what tihe Sherman Act endeavored 
 to do and the mighty stream of commerce has 
 swept away its barriers as if they were construct- 
 ed of straw. 
 
 VIII 
 
COMMERCIAL MORTMAIN 
 
 CONTENTS 
 
 CHAPTER I 
 
 Introductory — Mediaeval Mortmain, Page 1 
 
 CHAPTER n 
 
 Definitions of Monopolies and Trusts, Page 9 
 
 CHAPTER m 
 
 History of Origin and Growth of Capital 
 
 and Industrial Development Page 19 
 
 CHAPTER rv 
 
 Capital of Corporations — ^How Raised — 
 
 Shares and Bonds, Page 31 
 
 CHAPTER V 
 
 Over-Capitalization, Page 37 
 
 CHAPTER VI 
 
 Limitation of Capitalization, Page 47 
 
 CHAPTER VII 
 
 The Consolidation of Businesses, Page 51 
 
 CHAPTER Vin 
 
 The Evils of Trusts, Page 55 
 
 CHAPTER IX 
 
 Existing Laws Against Trusts, Page 69 
 
 CHAPTER X 
 
 Eemedies, Page 75 
 
COMMERCIAL MORTMAIN 
 
 CHAPTEE I. 
 
 INTEODUCTOEY— MEDIEVAL 
 MOETMAIN. 
 
 Each nation has, in the course of its life, many 
 great internal questions and difficulties to solve 
 and overcome. 
 
 One of the most prominent in England was the 
 struggle to prevent religious orders from absorb- 
 ing vast bodies of land and removing them from 
 circulation or commerce. In the effort to prevent 
 this absorption many statutes were passed, but 
 before the subtleties and evasions of the eccle- 
 siastics were overcome nearly four centuries 
 elapsed.* This transfer of lands to ecclesiastical 
 bodies was called "Alienation in Mortmain," 
 which was a transfer of lands to any corporation, 
 sole or aggregate, ecclesiastical or lay. These 
 purchases of lands were chiefly made by religious 
 
 ♦Constitution of Clarendon, Henry II, 1164 to Henry VIII, 1509. 
 
 1 
 
COMMEECIAIi MOETMAIN. 
 
 houses, as these bodies were called, in consequence 
 of which the lands became perpetually inherent in 
 one dead hand — in mortua manu — dead to the out- 
 side world — stopping their circulation. 
 
 The history of these statutes of mortmain ex- 
 hibits the wonderful address and subtle contri- 
 vance of the ecclesiastics, who were in fact law- 
 yers, in eluding from time to time the laws in 
 being, and the zeal with which successive parlia- 
 ments pursued them through all their finesse; how 
 new remedies were still the parents of new eva- 
 sions, until the people at last, though with mani- 
 fold labor and difficulty, obtained a decisive vic- 
 tory. The successive grounds, which were from 
 time to time used to evade the statutes of mort- 
 main, are of supreme historical interest in consid- 
 ering the question of trusts, or the aggregation 
 of industrial corporations. 
 
 It was always necessary for corporations to 
 have license in mortmain from the Crown to en- 
 able them to purchase lands. The ground was 
 that, as the King was the ultimate lord of every 
 fee, he ought not, unless by his own consent, to 
 lose his privilege of escheats and other feudal 
 profits by the vesting of lands in tenants that 
 could never he attainted or die — a corporation was 
 immortal. As Coke said: "It has neither body 
 to be kicked nor soul to be damned." Wherever 
 there was an intermediate lord between the King 
 
MEDIEVAL MOETMAIN. 
 
 and the alienor it was also necessary to obtain Ms 
 license to alienate tlie land upon the same feudal 
 principles. If no such license was obtained the 
 King or other lord might respectively enter on 
 the land, so aliened in mortmain, as a forfeiture. 
 The necessity of this license from the Crown was 
 expressly acknowledged by the Constitution of 
 Clarendon, in the reign of Henry II, 1167. 
 
 Yet such was the influence and ingenuity of the 
 clergy, as Blackstone asserts, that notwithstand- 
 ing this fundamental principle, the largest and 
 most considerable dotations of religious houses 
 happened within less than two centuries after the 
 Conquest (WilUam I, 1066). 
 
 It is interesting — ^nay amusing — at this date, to 
 observe the superficial devices to which the clergy 
 resorted to avoid the doctrine of mortmain. 
 
 As the forfeiture of such alienations accrued 
 in the first place to the immediate Lord of the fee, 
 the tenant who meant to alienate first conveyed 
 his lands to the religious house, and instantly took 
 them back again to hold as tenant to the monas- 
 tery which kind of instantaneous seizing was 
 probably held not to occasion any forfeiture, and 
 then by pretext of some other forfeiture, surren- 
 der or escheat, the religious society again entered 
 intd those identical lands in right of such newly 
 acquired seigniory, as immediate lords of the fee. 
 It was discovered, however, in due course, as these 
 
COMMEBCIAL MORTMAIN. 
 
 dotations began to be numerous, that tbe feudal 
 services ordained for the defense of the kingdom 
 were every day visibly withdrawn; that the cir-s 
 culation of landed property from man to man 
 began to stagnate and that the lords were cur- 
 tailed of the fruits of their seigniories — from es- 
 cheats, reliefs and the like.* 
 
 To prevent therefore the last named results, it 
 was ordered by the second of King Henry Ill's 
 Great Charters,! that all such attempts should be 
 void and the land forfeited to the Lord of the fee. 
 
 Then the question arose as to how to evade the 
 last named law. Now as the prohibition of that 
 Statute extended only to religious "houses," the 
 lawyers began to play upon that word and to con- 
 tend that bishops and other sole corporations, 
 were not included therein, and that the aggregate 
 ecclesiastical bodies (which Sir Edward Coke ob- 
 serves in this were to be commended that they 
 ever had of their counsel the best learned men 
 they could get — ^which modern ingenuity, by the 
 way, has not failed to imitate) found many means 
 to creep out of this statute by buying in lands 
 that were bona fide holden of themselves as lords 
 of the fee, and thereby evading the forfeiture or 
 by taking long leases for years, which first intro- 
 duced those extensive terms for a thousand or 
 
 •See in elucidation 1st Maltland & Pollock, pages 333, 334. 
 tl207. Chap. 43, Oxford BdlUon. 
 
MEDIEVAL MOETMAIN. 
 
 more years, which are now more or less frequent 
 in conveyances. 
 
 The effect of this superficiality by which the 
 spirit of the last named Charter was expressly 
 violated, produced a Statute called De Eeligiosis, 
 7th Edward I, which provided that no person, 
 religious or other whatsoever should buy or sell, 
 or receive under pretense of a gift, or a term of 
 years, or any other title whatsoever, nor should 
 by any art or ingenuity appropriate to himself 
 any lands or tenements in mortmain; upon pain 
 that the immediate lord of the fee, or, on his de- 
 fault for one year, the lords paramount, and, in 
 default of all of them, the king might enter there- 
 on as a forfeiture. 
 
 This would seem to have been a sufl&cient secur- 
 ity against all alienations in mortmain, but as 
 these statutes extended only to gifts and convey- 
 ances between the parties, the religious houses 
 now began to set up a fictitious title to the land 
 which it was intended they should have, and to 
 bring an action to recover it against the tenant, 
 who, by fraud and collusion, made no defense, and 
 thereby judgment was given for the religious 
 house, which then recovered the land by sentence 
 of law upon a supposed prior title. . And thus the 
 clergy had the honor of inventing those fictitious 
 adjudications of right, which have given law stu- 
 dents so many headaches in their efforts to under- 
 
COMMEKCIAL MORTMAIN. 
 
 stand, and which soon after became the great 
 assurance of the Kingdom of Great Britain under 
 the name of ' ' common eecoveeibs. ' ' But the legis- 
 lature seems to have soon discovered that these 
 recoveries were fictitious and in the same reign,* 
 it was enacted that in such cases the jury should 
 try the true right of the demandants or plaintiffs 
 to the land, and if the religious houses or corpora- 
 tions be found to have it, they shaU stiU recover 
 seizin — otherwise it shall be forfeited to the imme- 
 diate lord of the fee, or else to the next lord and 
 finally to the King upon the immediate or other 
 lord's default. In other words, provision was 
 made for a trial as to the real ownership of the 
 land, and if it were discovered that the recovery 
 was a fictitious one the principles of mortmain 
 would apply, and Blackstone says that so careful 
 was this provident prince, Edward I, to prevent 
 any future evasions that when the statute of quia 
 emptores, (18 Edward I) was passed, abolishing 
 all sub-inf eudations and giving liberty for aU men 
 to alienate their lands to be holden of their next 
 immediate lord, a proviso was inserted that this 
 should not extend to authorize any kind of aliena- 
 tion in mortmain. 
 
 It would seem that these efforts should have 
 borne fruit, but ecclesiastical or legal ingenuity 
 was equal to the occasion and it devised a new 
 
 'Statutes of Westminster the Second, 13 Ejdward I. Chap. 32. 
 
 6 
 
MEDIEVAL, MOETMAIN. 
 
 method of conveyance by which the lands were 
 granted not to themselves directly, but to nominal 
 feoffees, to the use of the religious house, thus dis- 
 tinguishing between the possession and the use 
 and which enabled the latter to receive the actual 
 profits, while the seigniory of the land, or title, 
 remained in the nominal feoffee, who was held by 
 the Courts of equity, then under the direction of 
 the clergy, to be bound in conscience to account 
 to his cestui que use for the rents and emoluments 
 of the estate. And it is to these last named in- 
 ventions that we are indebted for the introduction 
 of uses and trusts, a proHfic source of modern 
 htigation. 
 
 But this device was also nipped in the bud, for 
 by statute,* the lands which had been so purchased 
 to uses were to be amortized by license from the 
 Crown, or else to be sold to private persons, and in 
 the future uses should be subject to the statute of 
 mortmain and forfeitable like the lands them- 
 selves. 
 
 Other deAdces of a minor kind were resorted to 
 in order to evade the statutes of mortmain until 
 a final blow was given to them in the twenty-third 
 year of the reign of Henry VIII. 
 
 The greed for land then was what the greed for 
 money is now. Then the effort was to concentrate 
 all of the land in the hands of the clergy; today 
 
 •XV, Richard n. Chap. 3. 
 
COMMEBCIAli MOBTMAIN. 
 
 the effort is to control all industries and place 
 them in the hands of corporations. Ingenuity will 
 be nsed to sustain this colossal attempt but it will 
 not take four centuries to defeat it. But he who 
 carefuUy traces the labyrinthine history of mort- 
 main wiU discover that when the statutes were 
 about to accomplish their purposes the clergy 
 were ready to yield gracefully to the necessities 
 of commerce. It was not legislation that abolished 
 the holding of lands in mortmain, it was evolution 
 — ^the natural processes of commercial develop- 
 ment. 
 
 The Federal Statute — ^the Sherman Act — ^was 
 passed July 2, 1890, more than twenty-five years 
 ago. Designed to kiU them, it has acted as a 
 fruitful and successful fertilizer in the field of 
 trusts, for since its passage, no growth has been 
 so luxurious and plentiful as large corporations 
 formed and designed to concentrate different in- 
 dividual industries under one management. 
 
 The philosopher might well ask: "Which is 
 wrong; the trusts or the efforts to kill them?" 
 And then the other question, "Has legislation 
 ever effectively stopped the natural progress of 
 trade and commerce?" 
 
CHAPTER n. 
 
 DEFINITIONS OF MONOPOLIES AND 
 TRUSTS. 
 
 Are "Trusts" good or evil? Neither of these 
 questions has been answered except in crude 
 legislative condemnation. And this condemna- 
 tion has, unfortunately, preceded an investigation 
 as to what "Trusts" consist of; how and under 
 what circumstances they are bad ; and what is the 
 proper remedy to correct the evils which result 
 from them. 
 
 A definition is sine qua non to a full and in- 
 telligent discussion of any question — ^much more 
 emphatically of "Trusts," because they are of 
 such recent growth that one cannot turn to a dic- 
 tionary to find precise information. It is denied 
 that all aggregations of capital are monopolies; 
 but it is agreed that all trusts which are real mon- 
 opolies should be controlled or suppressed, as 
 dangerous to the welfare of the people. It is 
 therefore of primary importance to define a 
 monopoly. 
 
 A monopoly is the exclusive control by an in- 
 dividual, partnership or corporation of any com- 
 modity or article of commerce — ^with the result 
 that competition is stifled; that the price can be 
 
COMMEBCIAIi MOBTMAIN. 
 
 regulated, the production decreased or increased 
 at the will of the monopolists, and the particular 
 industry closed to the outside world. The effect 
 is the same as if the government should grant 
 letters patent to an individual or a company ex- 
 clusively authorizing it to control a certain indus- 
 try. So far as ultimate influences and effects are 
 concerned a monopoly may be as dangerous and 
 objectionable in the hands of an individual as of 
 a corporation, but in the numerous laws which 
 have been passed by Federal and State Legisla- 
 tures on this subject, no attention has seemingly 
 been paid to this point.* Any properly drawn 
 law against monopoKes should include control 
 by an individual or individuals ; for, if legislation 
 be directed merely against corporations, it may 
 be defeated by an individual or individuals acting 
 alone, or as a syndicate or under some other de- 
 vice, without a charter or corporate franchise. 
 StiU the likelihood of any single individual invest- 
 ing the necessary millions to become a monopolist 
 is remote for many obvious reasons. 
 
 To comprehend a monopoly one must realize 
 that it cannot exist unless it be exclusive. This 
 word "monopoly" occupied a significant place in 
 the time of Elizabeth. She gave out, as Hume 
 
 •But the Federal Anti-Trust Act (The Clayton Bill, in effect 
 October 15. r914) probably covers this discrepancy in the 
 previous Acts. 
 
 10 
 
MONOPOLIES AND TETJSTS. 
 
 records, these monopolies, by letters patent to her 
 courtiers in return for favors or services, other- 
 wise unrewarded. The Queen paid in that way 
 instead of in money. She did not incorporate 
 commercial companies: they were unheard of in 
 her time. 
 
 Now it is very misleading (but our courts have 
 repeatedly fallen into the error) to make a com- 
 parison between the monopohes created by Eliza- 
 beth and the modern aggregations of capital ex- 
 isting in corporate forms, for many reasons, — 
 two of which will illustrate and enforce the truth 
 of what I say. All of the so-called trusts are 
 formed under general laws which are open to 
 everybody and no body of individuals can obtain 
 privileges of a corporate kind which are denied 
 to the general public. Every legitimate busi- 
 ness is open to any aggregation of individuals 
 wishing to engage in it under corporate form. 
 But any previous incorporation does not pre- 
 vent others from engaging in the same line 
 of business. In the next place, the shares of 
 all large corporations are on sale in the open 
 market. One can purchase them, and become a 
 member of the corporation — ^he can buy into the 
 trust. Perhaps he cannot secure control, but there 
 can be no technical monopoly when the doors are 
 open to all to engage in a similar business and 
 when each individual who has the means can be- 
 ll 
 
OOMMEBCIAIi MOETMAIIT. 
 
 come a member of the corporation. "Trust" is 
 the new name given to aggregations of capital — 
 it is used synonymously with "Monopoly," but as 
 we have seen, it is far from being such. What the 
 legislation and criticism of this age are aimed at, 
 therefore, are the evils which arise from the con- 
 centration of capital in one corporate body, oper- 
 ating singly and enabling it by its colossal means 
 and great power to overcome competition and 
 crush out all of those who attempt to enter into 
 similar undertakings, with the same effect as if 
 it were a real monopoly, as if it were operating 
 under letters patent with exclusive powers. 
 
 For despite the fact that incorporation under 
 general laws is open to all ; despite the fact that the 
 shares of a trust are for sale, the control may be 
 so vested in the hands of capitalists or promoters 
 that they can render it practically impossible or 
 futile for the outside world to engage in the same 
 business, either as corporations or as individuals. 
 
 Lawyers, brought up on the milk of Blaekstone, 
 absorb a prejudice against monopolies, to such an 
 extent that when you mention monopoly to them, 
 it is like waving a red flag before a bull. It is a 
 fundamental basis of a lawyer's education to hate 
 and oppose monopohes. But there have existed 
 in this E,epublie, with but few exceptions to which 
 I shall refer, no technical monopolies since its 
 organization. Therefore the use of the word 
 
 12 
 
MONOPOLIES AND TEUSTS. 
 
 "monopoly" in the legal and teclinical sense — ^in 
 the form in which it existed in the time of Ehza- 
 beth — ^must be modified or discarded from this 
 discussion; it has no legitimate place here; the 
 word has no application to existing conditions. 
 
 But there are two monopolies which do, or can 
 exist. There is a monopoly in patents. The peo- 
 ple of the United States have seen fit to declare 
 that when a man invents a process, which goes 
 through the ordeal of the Patent Office, and is 
 regarded as being a practical invention, Congress 
 should give him the privilege for seventeen years, 
 of using it, for his own sole and exclusive benefit. 
 
 In all the denunciations and criticisms of aggre- 
 gated capital, I have not seen any serious sugges- 
 tion that we should entirely repeal the patent 
 laws. So that if some one were to discover a 
 process by which he could make a loaf of bread 
 out of a stone, and sell it for one cent, and every 
 baker and miller in the world would be ruined 
 thereby, there is not one voice which could be 
 effectually raised against the granting of such a 
 patent. And yet the patentee would, Jove-like, 
 armed with the tremendous power of his patent, 
 have in his hands that prerogative directly from 
 the Government of the United States itself, and 
 before which power the monopolies granted by 
 Queen Elizabeth, to her favorite courtiers, would 
 sink into absolute insignificance. But the Supreme 
 
 13 
 
COMMBECIAIj mobtmain. 
 
 Court of the United States has very recently re- 
 stricted the hitherto unlimited use of patents by 
 holding that rights conferred by patents are in- 
 deed very definite and extensive, but they do not 
 give any more than other rights an universal li- 
 cense against positive prohibitions. The Sherman 
 law is a limitation of rights — rights which may be 
 pushed to evil consequences and therefore re- 
 strained. The Supreme Court has held the same 
 doctrine in regard to copyrights, that the copy- 
 right act was not intended to authorize agree- 
 ments in unlawful restraint of trade and tending 
 to monopoly in violation of the Sherman Act. 
 
 The patent is one kind of monopoly that exists 
 now modified by these latter decisions. No com- 
 prehensive scheme for dealing with "trusts" 
 can omit patents. There must be restrictions 
 applied. For patents in the hands of a powerful 
 corporation can become the most dangerous trust 
 imaginable. We cannot put the brakes on trusts 
 and allow patents to run wild ; and the same rea- 
 soning would apply to trade-marks. 
 
 There is still another species of monopoly, and 
 that is a monopoly in the form of a special charter 
 granted by a legislature, or by the national gov- 
 ernment. Here is a monopoly in a certain sense. 
 But it is of no great importance in this discussion, 
 because by force of constitutional provisions, ev- 
 ery special charter which has been granted within 
 
 14 
 
MONOPOLIES AND TRUSTS. 
 
 the last — ^I should say forty — ^years is revocable. 
 I think every State Constitution has given the 
 legislature absolute authority to repeal it, so that 
 no great injury can occur to the community 
 through this instrumentality. And, as almost 
 every State, if not all, has statutes which enable 
 individuals to become incorporated under them, 
 it is unnecessary to apply to the legislatures for 
 special charters, except in extraordinary cases; 
 only when special circumstances seem to disclose 
 a peculiar merit in the enterprise. So, there is 
 nothing to call for particular remark about special 
 charters — except that they are sole prerogatives 
 existing in the hands of a chosen few. 
 
 Assuming that monopoly has been properly de- 
 fined above, the vices which we are attempting to 
 find and correct are those which result from the 
 concentration of capital either in money or goods 
 in the hands of corporations or syndicates which 
 as to the particular lines of business involved the 
 people lose control over. These are popularly 
 known as "trusts." 
 
 Any plan to control these bodies should embrace 
 financial syndicates. An industry may be created, 
 sustained or paralyzed by their operation. Enor- 
 mous financial resources in the hands of a few 
 persons who operate together in their use can 
 become the most dangerous and perhaps the chief 
 evil of aggregated capital. Several individuals 
 
 IS 
 
COMMEECIAL MOETMAIN. 
 
 who possess or control millions of dollars of actual 
 cash can so use it as to exercise plenary power 
 over any industry, by compelling its consolidation, 
 by withdrawing money from use, locking it up, or 
 using it to command a high or low rate of interest. 
 In the discussion of the subject of trusts, this fea- 
 ture has been altogether overlooked. The fact, 
 however, must not be lost sight of that the power 
 of financial syndicates has been most materially 
 affected and weakened by the creation of the Fed- 
 eral Eeserve Bank System. This most admirable 
 project now in full operation has placed the con- 
 trol of the money of the coxmtry in the hands of 
 skilled and honorable men who have the authority 
 and knowledge to check abnormal or unhealthy 
 conditions in the financial world. But a money 
 trust still exists in spirit and often in substance. 
 Another important element to be considered is 
 that of labor, for while the Supreme Court of the 
 United States has held that labor organizations 
 are embraced in the Anti-Trust Act, the influence 
 of labor as an economic factor in balancing or off- 
 setting the results of industrial combinations or 
 monopolies, has not been fully appreciated. 
 Whether the evils of aggregations of capital and 
 industries will not, when they have attained their 
 maximum growth be fully checked or counterbal- 
 anced by the influence of labor combinations, is a 
 question worthy of great consideration in the legal 
 
 16 
 
MONOPOLIES AND TETJSTS. 
 
 and economic study of trusts. Labor is the equal 
 of capital in influence and strength..* The one 
 may well be pitted against the other. They may 
 so neutralize each other as to make absolute pro- 
 hibitive laws unnecessary.! 
 
 I can conceive of conditions in which labor may 
 extort from capital all of its profits, and conse- 
 quently most of its principal. In this connection 
 it is important to consider the remarkable prog- 
 ress labor has made since the middle ages, the 
 most striking features of which are these: — 
 
 1st. The advance in the social position of 
 the laborer; educational faeihties; business 
 opportunities; banks for the accumulation of 
 his savings; the improvements in the houses 
 in which he Hves gradually tending towards 
 every real luxury enjoyed by wealth. 
 
 2nd. The absolute protection of labor 
 unions by the law and their strong endorse- 
 ment by public sentiment. 
 
 3rd. The opening of the doors to the en- 
 joyment of all political offices by the laborers. 
 4th. The phenomenal rise of laborers to 
 the most exalted social positions. 
 
 •See Chapter on Remedies, infra, p. 75. 
 
 fBut labor is now exempt from^ the operation of anti-trust 
 statutes, and bv a deliberate inconsistency, through ignorance 
 or demag-ogism, it is provided that nothing contained in the 
 anti-trust laws shall be construed to forbid the existence 
 and operation of labor, agricultural or horticultural organiza- 
 tions, instituted for the purpose of mutual help, and not 
 having capital stock or conducted for profit, or to forbid or 
 restrain individual members of such organizations from law- 
 fully carrying out the le^timate objects thereof, nor shaU 
 such organizations or members thereof be held or construed 
 to be iUegal combinations or conspiracies in restraint of 
 trade, under anti-trust laws. 
 
 17 
 
COMMEECIAL MOETMAIN. 
 
 It may be asserted that the progress and up- 
 lifting of the laborer (in which term I include all 
 classes which are employed, whether clerks or 
 muscular workmen) has been as rapid as the 
 growth of corporations. 
 
 The climax is reached, and the law must inter- 
 fere in the affairs of both capital and labor, when 
 the community is compelled to yield to the de- 
 mands of either by force, direct or indirect — at 
 that point the fundamental interests of society are 
 threatened and the government must act.* 
 
 Keeping in mind the above, and having estab- 
 lished their connection or relation to aggregations 
 of capital, we are prepared to trace and discuss 
 the conditions which have led to the formation of 
 these gigantic corporations. 
 
 •Se« Chapter on Remedies, infra, p. 75. 
 
 18 
 
CHAPTER in. 
 
 HISTOBY OF ORIGIN AND GROWTH OF 
 
 CAPITAL AND INDUSTRIAL 
 
 DEVELOPMENT. 
 
 1. INDIVIDUAL PARTNERSHIPS. 
 
 Originally a man embarked in business alone, 
 relying upon Ms own strength, ability and re- 
 sources, and many undertakings were built up in 
 that way. Very early, however, in the history of 
 commerce, it was found impossible to do business 
 with individual capital and energy as effectually 
 as could be done with partnership association and 
 money, — ^that is, money contributed by two or 
 three individuals who went into a business and 
 devoted their whole attention and lives to its up- 
 building and success. Hence individual business 
 was quickly succeeded by partnerships, and al- 
 though history furnished many notable examples 
 of individuals who, by their own exertions, 
 strength and financial resources, built up relative- 
 ly large concerns, partnerships gradually succeed- 
 ed, and displaced, individual effort. In ancient 
 Greece there existed what was called a "Com- 
 munity of Goods." Two or more individuals fig- 
 ured that their personal efforts would be made 
 
 19 
 
COMMEECIAL MOBTMAIN. 
 
 more satisfactory by a combination, — ^putting 
 their goods together — and they formed what was 
 called a "Community of Goods. " That is the 
 equivalent of the Greek word in English, — "Com- 
 munion." These partnerships existed in all na- 
 tions. As long as they were found to be adequate 
 instrumentalities successfully to conduct business, 
 they were used, but when it was discovered that 
 they were lacking in the requisites necessary to 
 proper development of commerce, something else 
 was discovered. A partnership was all very weU 
 so long as it could keep pace with the rapid steps 
 of commercial progress, but the disadvantages of 
 partnerships were apparent when the exploitation 
 of this colossal country really began. It may be 
 said here that this development is alone answer- 
 able for most of the alleged sins of aggregated 
 capital. When we entered upon very large busi- 
 ness affairs, partnerships would not answer. The 
 elephant commerce could not pass through the 
 eye of a partnership needle. 
 
 There were three distinct characteristics in ev- 
 ery general partnership. In the first place, each 
 partner was hable for the debts ; that fact circima- 
 scribed its operations and utility. John Jones and 
 John Smith entered into a partnership, and John 
 Smith was answerable for all the debts; so that 
 John Smith might have put all of the money into 
 the concern, yet John Jones could bring the firm 
 
 20 
 
industbiaIj development. 
 
 in debt to any amount for which he could obtain 
 credit, without the knowledge of his partner, and 
 John Smith was liable. 
 
 Another disadvantage was that when one of 
 the partners died, the business was at an end. 
 Death dissolved the partnership, just as it does 
 marriage, and although the firm might have been 
 in the midst of a flourishing business, the death 
 of one of the partners immediately checked it, and 
 prostrated the business. 
 
 Of course, lawyers have provided for the con- 
 tinuation of a partnership after the death of one 
 or more of the partners, but about this attempt 
 of continuation, the average man argues in this 
 wise: "Well, I don't want to continue it after 
 my death ; I shaU have a widow and children who 
 don't understand business and I want their money 
 free." All that kind of sentiment existed, and 
 there were innumerable difficulties, that are under- 
 stood by practical persons. 
 
 Then there was another element against the 
 partnership — and that is that a creditor could not 
 bring suit against a firm without suing aU of the 
 partners; one partner could not be sued for a 
 partnership debt. It was necessary to join them 
 all, and serve them all, if an individual judgment 
 was desired. All of these disadvantages required 
 us to advance a step further and discover con- 
 
 21 
 
COMMEBCIAX, MORTMAIN. 
 
 centrated and more efficacious metliods for trans- 
 acting business. 
 
 The first step taken toward the introduction of 
 a new and expanded system of capital, was by 
 what was called a "Umited partnership." These 
 partnerships were originally drawn from the cus- 
 toms and laws of Italy, and then transplanted into 
 France, where they were known under the name 
 of en Commandite, and they were subsequently 
 introduced into the United States. 
 
 A limited partnership was a method by which 
 a man, entering into a commercial or manufactur- 
 ing business, could limit his liability. If two in- 
 dividuals wished to enter into a partnership, and 
 one did not want to engage in active business, he 
 could advance, say $100,000 to his associate, who 
 was the general partner, and escape all liability 
 beyond his contribution, by filing a certificate in 
 the proper clerk's office, and making a publication 
 in the newspapers, and announce it on the firm 
 sign, that he was a special partner, — ^the result 
 of which was, that he was enabled to enjoy the 
 profits of a business without individual liability 
 beyond the sum that he advanced in the inception 
 of the enterprise, and the whole responsibility was 
 thrown on the general partner. 
 
 Now in France, and in Pennsylvania also, to a 
 certain extent, I believe, they allowed shares — 
 certificates — to be issued against the interest of 
 
 22 
 
INDUSTRIAL DEVELOPMENT. 
 
 the partners, so that this partnership became a 
 quasi-corporation. The limited partnership only 
 existed for the time mentioned in the articles of 
 copartnership; but the interest of each partner 
 might be segregated into shares and negotiated in 
 the same manner as certificates of stock. They 
 allowed them to be issued, very largely, in France. 
 But one can see that the system of limited copart- 
 nership furnished but a very meagre meal for the 
 rapacious appetite of advancing commerce. It 
 was the stepping stone to corporations. 
 
 2. THE ADVENT OF COEPORATIONS. 
 
 And then came the corporation. The soulless 
 undying creation, which at one time is looked upon 
 as a sympathetic god, at another as a destructive 
 monster, but which with ravishing strides has 
 superseded all other methods of doing business, 
 and which is now so firmly imbedded in the indus- 
 trial or commercial system that to extirpate it 
 would mean a destruction of business itself. 
 
 The ingenuity of every age is equal to its wants, 
 and out of those necessities there came the com- 
 mercial corporations, at first small and timid, now 
 colossal and aggressive. The commercial corpora- 
 tion, as it exists today, was never developed in any 
 substantial form, in this eoimtry, previous to the 
 year 1850. 
 
 23 
 
COMMEECIAIi MOETMAIN. 
 
 "We find that the first book on corporations was 
 published in 1793 by Kyd. But it was altogether 
 limited to questions of municipal corporations; 
 and examining the works of Watkins and Grant 
 and aU the other literature on corporations, one 
 wiU find that down to 1831, and even in the first 
 American book of AngeU & Ames, which was pub- 
 lished in that year, there is hardly an aUusion to 
 our commercial corporations ; and as I have said, 
 it was not until about 1850 that one discovers any 
 legal literature upon this subject. The first gen- 
 eral corporation act, in the State of New York, 
 was passed in 1848 ; it was known as the Manufac- 
 turing Act. Previous to that time corporations 
 generally existed by virtue of special charters. 
 
 When the railroad system of the country was 
 introduced and began to be used, we discover that 
 the commercial and manufacturing corporations, 
 gradually came into vogue, the one following 
 closely in the wake of the other ; at first by special 
 charters, and afterward by general laws. Three 
 or four, ten or twelve, or any number of persons 
 beyond three, might get together, and file a cer- 
 tificate, and become a corporation. The tendency 
 of legislation was at first to narrow the scope of a 
 corporation; that is, in the amount of capital 
 which it was allowed to have and in the extent of 
 its duration; and one wiU find by consulting the 
 Statutes, that in almost every instance previous 
 
 24 
 
INDUSTRIAL DEVELOPMENT. 
 
 to 1861, when tlie Civil War broke out, numerous 
 States placed limitations upon the amount of cap- 
 ital and corporate longevity of these bodies. But 
 restrictions gradually disappeared, and now, in 
 most of the States, in all of what we call the Com- 
 mercial States, an unlimited amount of capital is 
 allowed, and a perpetual corporate life permitted ; 
 so that several individuals may now get together 
 and form a corporation, and do business perpet- 
 ually and with unhmited capital. Moreover laws 
 appeared permitting corporations engaged in the 
 same line of business to consohdate — ^thus paving 
 the way for the colossal corporation or trust. The 
 derivation of the name "trust" arose from plac- 
 ing the shares of several subsidiary companies in 
 the hands of a holding company — a trustee — and 
 thus enabling the latter to control and direct the 
 operations of all with uniformity — ^by virtue of 
 share ownership — the holding company pxdled the 
 string and the underlying Companies danced. 
 
 A study of this subject shows us how naturally 
 business shifted from an individual to a general 
 pai±Qership, from thence to a limited partnership, 
 and from a limited partnership into a corporation, 
 from one corporation into a consolidation of cor- 
 porations, and finally in the holding company or 
 trust. Take the legal history of partnerships, 
 limited partnerships and corporations, on the one 
 side; take the history of commercial and agricul- 
 
 25 
 
COMMEBCIAL MOBTMAIIT. 
 
 tural expansion, the history of territorial and of 
 railroad expansion, on the other, and one "will see 
 what necessary aids they were to each other, and 
 how, as railroads increased and commerce expand- 
 ed ; as new territories and fields were opened, and 
 onr manufacturing industries proportionately en- 
 larged, how capital, like an apt and willing hand- 
 maid, kept apace with all, how, in the colossal 
 development of this country, capital both in sub- 
 stance and form, was always ready to supply the 
 vital means, to feed the modern commercial Titan 
 of business in its most rapacious demands. 
 
 Now, one of the most important elements in the 
 discussion of this question of aggregated capital, 
 is to understand what a corporation is, and, there- 
 fore, I come to another definition. I will take 
 Blackstone's: "A corporation is an artificial per- 
 son created for preserving in perpetual succession 
 certain rights, which, being conferred on natural 
 persons only, would fail in process of time. ' ' 
 
 Let us see what the elements of a corporation 
 are: First, it has perpetual succession. That is, 
 its existence is unbroken and uninterrupted, down 
 to the time when it is to expire by limitation. One 
 can now incorporate a company for a thousand 
 years, or fifty, which is the period generally fol- 
 lowed. A corporation may consist of a thousand 
 individuals; many of them have more than that 
 number; today the New York Central, and the 
 
 26 
 
INDUSTBIAL DEVELOPMENT. 
 
 Pennsylvania Eailroads have each many thousand 
 stockholders. They die; their descendants die, 
 but the corporation is undying. It goes on for- 
 ever. This result a co-partnership could not ac- 
 complish; neither a general nor a limited one. 
 They selected their associates. A corporation is 
 absolutely democratic — anyone can become one of 
 its stockholders by purchasing its shares. A cor- 
 poration cannot object to a stockholder because 
 he has blue eyes or is a blond, brunette or abso- 
 lutely black or because of his politics. 
 
 The second quality of a corporation is, that a 
 stockholder is not liable for the debts of the cor- 
 poration. This is, therefore, as one can see, the 
 most attractive form of carrying on a commercial 
 enterprise. It enables several indivduals to form 
 a corporation, and each to put in five, ten, fifteen, 
 or one hundred thousand dollars, or any other 
 sum, and each stockholder knows the limit of his 
 Hability. This was the feature that most appealed 
 to business men. They knew, that when they em- 
 barked in a corporate enterprise, their responsi- 
 bilities were limited and fixed, which would not 
 be the result in a partnership where the Habihty 
 was unli m ited. 
 
 Another feature of corporations which was of 
 high importance, was the transferability of the 
 stockholders' interest; the power of disposing of 
 their stock in the corporation. They could seU or 
 
 27 
 
COMMEECIAL MOETMAIN. 
 
 transfer their interests in the corporation to oth- 
 ers. Every contributor to the capital stock of a 
 corporation receives a certificate of stock; that 
 certificate of stock he can put in his drawer or 
 safe ; it is personal property, and he can sell it in 
 the markets or give it to his children. It is always 
 there in a tangible, neat and easy form, for him to 
 use. In substance, it is a near approach to money. 
 It is a certificate that the stockholder has an in- 
 terest in the corporation, and his liability is fixed 
 by his original contribution to the capital, or the 
 amount that he paid for that certificate of stock. 
 This could not be done in a copartnership. What 
 perhaps was even a more enticing consideration 
 was that the stockholder could conceal his identity 
 with the corporation under an anonym. A sale 
 could not be made of a partner's interest in a firm, 
 because it was based upon personal and peculiar 
 reasons. In the development of large enterprises, 
 certainly nothing could be happier than the con- 
 ception of a corporation; certainly, nothing could 
 be more practical. The men who originally went 
 into them, who were the pioneers, in the formation 
 of our commercial and our manufacturing cor- 
 porations, our railroad and insurance corpora- 
 tions, who have all long since passed away, were 
 shrewd, bright and skilful financiers. In adopting 
 this system of business a man could sleep peace- 
 ably; it enabled him to limit his liability; to have 
 
 28 
 
INDTJSTBIAJj DEVELOPMENT. 
 
 his certificate of ownership in his pocket; to dis- 
 pose of it when he pleased, and the corporation 
 itself, which was an entity, a legal entity, could 
 carry on a great enterprise, without any regard 
 to who its stockholders were, or whether they were 
 dead or alive, whether they knew the business or 
 not, except as they contributed to its success by 
 choosing proper boards of directors and officers 
 to manage its concerns. They had the power to 
 vote. But this has been restricted of late in many 
 instances by voting trusts and other means. 
 
 29 
 
CHAPTER IV. 
 
 CAPITAL OF COEPORATIONS— HOW 
 EAISED— SHARES AND BONDS. 
 
 So, in regard to the capitalization. The orig- 
 inators of corporations raised the capital, by sell- 
 ing shares of stock. The money needed for their 
 business was procured by selling the stock to 
 whomsoever would buy it — a few or many. And 
 thus from one step to another — from a smaU cap- 
 ital to a large one — corporations advanced until 
 today we have one with a thousand million doUars 
 capital; and with thousands of stockholders scat- 
 tered all over the world. Gradually all individual- 
 ity is disappearing from the business world; all 
 kinds of industries are absorbed by combinations, 
 until if this development continues, every known 
 business wiU appear in corporate form. Where, 
 formerly, fifty or one hundred individuals were en- 
 gaged in the same industry in active warfare with 
 each other, the aggregated businesses have passed 
 into one corporate control. 
 
 All money, however, to run a corporation is not 
 raised by the sale of shares. A large amount of 
 the capital is procured by corporation bonds ; and 
 in this connection, I wish to call attention to a 
 
 31 
 
COMMEBOIAIi MOETMAIN. 
 
 view wMcli is of the utmost interest in the dis- 
 cussion. I allude to corporation mortgages, by 
 which thousands of persons pour their money con- 
 tributions, small or large, through various chan- 
 nels, into the common treasury of a company. 
 Much of the vast capital necessary to run these 
 great railroad companies is contributed through 
 the sale of mortgage bonds imtil the full capital 
 required by a particular project is supplied. 
 
 If one reflects upon the subject, it becomes plain 
 that there is no individual who is capable of loan- 
 ing a very great amount of money on mortgage 
 to a corporation, or in a word, to make one large 
 individual loan. If it were possible for him to 
 do it, it would not be a wise pohcy, and the largest 
 mortgage, I think, that has ever been created, the 
 largest individual mortgage in the United States, 
 was not greater than fifteen million dollars, and 
 that money was loaned on real estate, I think, in 
 New York, by one of the large life insurance com- 
 panies. A capitaUst with four or fi^ve mini on 
 dollars, or with twenty or thirty million dollars, 
 does not care to put large amounts of money, as a 
 loan, in one business, or on one piece of property. 
 As they say, it is putting too many eggs in one 
 basket. He might loan to the extent of a million 
 or two, but when a business requires ten, twenty 
 or one hundred millions, it is too much for one 
 individual to advance. 
 
 32 
 
RAISING OF CAPITAL. 
 
 Large enterprises require immense sums of 
 money to finance and run them. Fifty or one 
 hundred millions cannot be furnished by one or 
 two men. Such sums are supplied from numerous 
 private pocket-books — from hundreds or thou- 
 sands of contributors, as the circumstances de- 
 mand. 
 
 Now witness what the ingenuity of a man ac- 
 complished, and an American, too; because I be- 
 lieve, although I am not sure of it, that the first 
 railroad bonds secured by mortgage, emanated 
 from Philadelphia. It is necessary to know what 
 a railroad, or corporation, mortgage is, and how 
 it is managed. A company makes a mortgage, say, 
 for fifty million dollars, on its property, to a 
 trustee to secure many bonds, usually of the de- 
 nomination of $500 or $1,000. Who would, or 
 could advance fifty millions of dollars in one trans- 
 action? Why, the money of the Astors, the Van- 
 derbilts, the Rockefellers and Morgans, and aU 
 those men whose wealth has now become the sub- 
 ject of common talk, and is spoken of every day, 
 as being so colossal, — ^the combined wealth of 
 these men would be but a drop in the bucket, as 
 it were, if they should undertake to carry out, 
 without other aid, the gigantic corporation enter- 
 prises developed in this country. Hence a cor- 
 poration mortgage was invented, which secures 
 bonds, one mortgage of, say $100,000,000 (they 
 
 33 
 
COMMEBCIAL MOETMAIN. 
 
 are as plentiful now as blackberries in season) is 
 made, securing bonds of aE denominations, which 
 are sold and distributed all over, some to one 
 party, some to another, ten thousand dollars here 
 and ten thousand dollars there, and thus through 
 a thousand rivulets money pours in from all 
 sources into a common treasury, and the capital 
 necessary to begin and continue the operations 
 of the corporation is raised; and through that 
 means by the sale of a railroad or corporation 
 bond — all this stupendous capital is found, which 
 enables us to carry on these vast railroad, indus- 
 trial and commercial enterprises ; using the money 
 of the many, and not of the few. And each bond- 
 holder has a mortgage to the extent of his hold- 
 ings upon the property mortgaged, his interest 
 being represented by a Trustee. When shares of 
 stock cannot be negotiated to supply capital, the 
 mortgage bond is the great modern method of 
 raising money for private or public purposes. So 
 long as the business is profitable, the interest is 
 distributed to the holders, and when a loss occurs 
 and the property mortgaged is insufficient to rea- 
 lize the amount of the mortgage, it is so divided 
 that it falls upon many and not heavily upon a 
 few. Thus either from share or mortgage cap- 
 ital, the money of thousands upon thousands of 
 individuals is employed to develop and sustain the 
 great industrial, financial and railroad enterprises 
 
 34 
 
RAISING OF CAPITAL. 
 
 of the country. Today it may be safely said that 
 all of these securities are owned by individual in- 
 vestors whose number soars into the millions. 
 
 I do not overlook, of course, the immense sums 
 of money raised by the sale of preferred and com- 
 mon stocks. Millions upon millions of dollars have 
 flowed into the treasuries of different companies 
 from this source. But it is the speculative side 
 of corporate financing. The investing and more 
 secure side is through the purchase of bonds se- 
 cured by a corporate mortgage. 
 
 It may therefore be truly said that thousands 
 of investors own the railroad and industrial cor- 
 porations of the United States. A measure advan- 
 tageous to them inures to the benefit of this great 
 body of investors ; a blow struck at corporations 
 affects them all. Legislators should carefully con- 
 sider this aspect of the subject. 
 
 35 
 
CHAPTER V. 
 
 OVER-CAPITALIZATION. 
 
 In this connection, it is pertinent to say a few 
 words on the subject of over-capitalization. 
 
 The capital of a corporation is the fund or 
 means provided for transacting the business for 
 which the company is organized. There are two 
 methods of capitalization ; first, there is a capital- 
 ization based upon the actual existing value of 
 property, and, second, a capitalization based upon 
 the good will or the earning power. Upon the point 
 of capitalization economists or financiers differ — 
 one class is in favor of the former method, and the 
 other of the latter. They both have their adher- 
 ents. I confess that I am in some doubt about 
 the matter, for with the experience I have had in 
 creating corporations, and putting them in legal 
 shape, I have no certain and fixed opinion upon 
 the question as to how the capitalization should 
 be fixed, because each case presents peculiar cir- 
 cumstances, which make it absolutely impossible 
 to adopt an unvarying rule. If a property is to 
 be capitalized for what it is actually worth, a 
 manufacturing business or a railroad project, — 
 appraisers can be employed whose reports will 
 enable one to fix its value. Assume that they 
 
COMMEECIAIi MOBTMAIIT. 
 
 appraise it at fifty millioii dollars, that sum is 
 fixed as the capital. Now, on the other hand, sup- 
 pose a property is worth inherently only five mil- 
 lion dollars, as they say the brutal value of the 
 bricks and mortar, but by what is called its good- 
 will or its earning power, it yields more net profits 
 than the property of fifty million doUars. 
 
 In the one case we have a property worth fifty 
 million dollars, and its yearly earnings are, say, 
 only two per cent., or one million dollars. On the 
 other hand, there is a property worth only five 
 million of dollars, which earns twenty per cent., or 
 one million of dollars per year. 
 
 Now, how shall these two industries be capital- 
 ized? Some are disposed to fix an arbitrary prin- 
 ciple or rule by which capitalization is to be predi- 
 cated upon actual value, and without what is 
 known as ' ' water. ' ' But that rule will work mani- 
 fest injustice in many cases. The absorbing point 
 in this connection is what is the idtimate effect 
 upon the consumer? The fifty million dollar cor- 
 poration wiU pay two per cent, and the five mil- 
 lion dollar corporation, twenty per cent. Now if 
 the shares of these corporations are originally 
 divided between the owners the result will work 
 out the same. But it is true that the price may 
 be enhanced to such an extent that the fifty million 
 dollar corporation shares may seU for one hun- 
 dred million when the shares of the five million 
 
 38 
 
OVEB-CAPITAUZATION. 
 
 dollar corporation will only sell for ten million 
 of dollars. 
 
 But the question of capitalization of corpora- 
 tions is a serious one, as it affects not only the 
 individual stockholders, but the public. The suc- 
 cess of all corporations depends upon the profits 
 they make in selling to the consumer, or what they 
 make from the traveller or shipper. If a corpora- 
 tion is grossly over-capitahzed, to earn interest 
 and dividends it must charge proportionately 
 higher prices. These the public must pay. It 
 accordingly follows, as a general rule, that the 
 lower the capitalization the less the tariff of 
 charges the pubUc must pay, because each concern 
 ought to be satisfied with paying its shareholders 
 a fair dividend. But a corporation may be capi- 
 talized at a small figure and pay enormous divi- 
 dends, when the result to the public is the same, 
 whether the capitalization is high or low, because 
 the same amount of net profit is made each year. 
 A corporation which is capitalized at $100,000,000 
 can pay 25 per cent., to its stockholders if its net 
 yearly income be $25,000,000 ; or it can be capital- 
 ized at $500,000,000 and pay 5 per cent. In the 
 first case its stock would sell for $500 a share, 
 and in the second it would sell for $100. The 
 result to the public would be the same in either 
 case, and consequently the question of over-cap- 
 italization would not solve the problem in which 
 
 39 
 
COMMEECIAIi MOETMAIN. 
 
 they are interested, viz.; in not paying more for 
 the goods or services than they were worth unless 
 forsooth a general limitation of five per cent, were 
 established by law. Here is the kernel of the sub- 
 ject. Out of this branch of the subject will arise 
 great questions for future legislators to solve; 
 first, can and ought the profits of these corpora- 
 tions to be limited? And second, if yea, how can 
 this be legally and fairly accomplished! The 
 limitation of earnings it seems to me has been 
 overlooked in the general discussion of this ques- 
 tion. The law fixes the rate of interest which 
 lenders may receive. It has established and main- 
 tained for time beyond memory, usury laws. It 
 has been asked, can the same rule be appKed to 
 corporations or aggregated capital? Why not? 
 This, it is true, is delicate ground to tread upon. 
 It is full of mires and quicksands. But there is 
 no problem which a legislator cannot solve, if he 
 enters upon the inquiry in a proper spirit; a de- 
 termination to be just to capital and fair to the 
 public. 
 
 As yet this field is practically unexplored. We 
 have had little, so far, but denunciation of 
 "trusts," without any real and intelligent exami- 
 nation; consequently, the true underlying princi- 
 ples which should govern us in treating capital 
 have never been disclosed. Until this period is 
 reached injustice and confusion must ensue. A 
 
 40 
 
OVEE-CAPITALIZATION. 
 
 legislator cannot create a remedy whicli will prove 
 adequate or effective unless he understands tlie 
 whole question. 
 
 Much complaint has been made against over- 
 capitalization of railroads. It is undoubtedly 
 true that many of them have been largely over- 
 capitalized. And they, or some of them perhaps, 
 can be duplicated for less money. But each rail- 
 road in this country has its own history. Some 
 of these railroads were partially subsidized by 
 the government — ^the Pacific roads, for example, 
 but most of the transcontinental lines, which make 
 it possible for us to reach California and the Far 
 West in a very short period, were built by English 
 capital; and when I say English capital, I mean 
 the financiering was done through the English 
 houses, with their German and other foreign con- 
 nections ; but it was not American capital ; we did 
 not have the money; and we could not build the 
 railroads. 
 
 In this connection we must not overlook the 
 contemporaneous history which surrounded these 
 railroads. Now that the roads are built ; now that 
 the country is developed ; now that we have these 
 flourishing cities all over the continent growing 
 larger every day, it is very easy to forget the past ; 
 it is easy to Mck over the ladder by which we 
 entered into the realms of prosperity; but when 
 we speak of the enormous capital of the railroads 
 
 41 
 
COMMEBCIAIi MORTMAIN. 
 
 — ^the enormous capital of these transcontinental 
 lines — ^we must remember when and how they were 
 built. For example, fifty or sixty years ago, if a 
 syndicate proposed to build a line from New York 
 to Chicago, or from Chicago to San Francisco, or 
 to New Orleans, or to whatever point our imagina- 
 tion will lead us, how was it to raise the money? 
 Not from the government. It was not the policy 
 of this government to give the money. The banks 
 would not lend the money ; if for no other reason, 
 at those times they did not have it. . It was raised 
 by private subscription. And how could the pro- 
 moters get the capital? What did they do ? They 
 had to go around with an engineer's map, and 
 with the estimated earnings that were to be pro- 
 duced from the operations of the road. And how 
 did they approach capital? Did they go to a cap- 
 italist and say, "Will you take ten thousand of 
 these bonds at par?" — bonds on an incompleted 
 road, which one did not know whether it could 
 earn one dollar of interest or not, whose whole 
 future was problematical? No. To judge the sub- 
 ject fairly we must put ourselves in the position 
 of the early railroad promoters of this country. 
 How coidd the inflation have been avoided? What 
 did these railroad builders do ? Why, they offered 
 a hundred shares of common stock as a bonus, or 
 some other bonus, and they sold the bonds at sixty, 
 fifty or forty, or whatever they could get for them. 
 
 42 
 
OVEB-CAPITAUZATION. 
 
 And there was no other way of doing the business. 
 Without resorting to this method the country- 
 would not have been developed. And in face of 
 all of this, millions upon millions of dollars were 
 lost upon bonds which only cost thirty or forty 
 cents on the dollar, because the development of 
 the country was not then fast enough to enable the 
 pioneer roads to earn their full interest. The 
 commercial tides were not strong enough to float 
 the enterprises to a point of earning power. And 
 foreclosure and reorganization followed. Of 
 course, times have changed, and the marvelous 
 rapidity of our growth has at last brought the 
 earnings of the roads up to this originally inflated 
 capital, and those which were a few years ago 
 hopelessly bankrupt are now earning full interest 
 upon their bonds and paying large returns upon 
 their stock. There is an undoubted evil attendant 
 upon all over-capitalization; but if the railroads, 
 as the volume of business increases, conform their 
 passenger and freight rates to a fair standard, the 
 evil in this way will be at least measurably, over- 
 come. K they do not, the various national and 
 state legislative bodies have amply provided for 
 fixing the rate and charges at a reasonable figure. 
 But under any circumstances we must never for- 
 get the part played by our first railroads in the 
 opening and development of this marvelous re- 
 public. 
 
 43 
 
COMMEECIAL MOBTMAIH". 
 
 Many of these railroads that were given away 
 ahnost have now reached a full measure of finan- 
 cial success — success far beyond the dreams of 
 their most sanguine founders ; they have been re- 
 organized and recapitalized, some of them more 
 than once, and pay handsome profits on each suc- 
 cessive reorganization. The development of the 
 country has been so phenomenal, the business has 
 been so enormous that the tide of prosperity has 
 at length floated the ark of inflation into a safe 
 harbor of investment. If one takes engineers and 
 goes over the lines of the New York Central and 
 Pennsylvania Eailroads; why, they may report 
 that they can build the roads for less money than 
 the sums at which they are capitalized. But it 
 could not have been done at the time when the 
 roads were first built ; nor can a railroad be built 
 today upon an actual hard cash basis. You can 
 project a railroad line from one point of this coun- 
 try to another, but the investing public will not 
 put money in it, when it is new and undeveloped, 
 unless there are extraordinary temptations to 
 them. Even now it is most difficult to float incom- 
 pleted enterprises. The capitalist and banker will 
 tell you that an attempt to sell bonds or stock 
 upon an incompleted road would be almost Utop- 
 ian, imless a bonus of some kind accompanied the 
 proposition. And now we are entering upon a 
 new era in the life of the railroads. The public 
 
 44 
 
OYEB-CAPITATJZATION. 
 
 are constantly demanding new luxuries in their 
 travels. The railroads have supplied them to an 
 extent that reveals wonderland. But electricity 
 and oil have appeared. The motor power may be 
 changed! Where is the enormous capital to be 
 raised which will do this great work? With re- 
 strictions upon their power to do business by fed- 
 eral and state supervision it seems ahnost impos- 
 sible to find the money to make these colossal im- 
 provements. But the public is crying out and 
 pushing the railroads to the wall! What then? 
 Will it not be public ownership ? And all that vast 
 library of hterature and speeches against paternal 
 government wiU disappear in the tomb of the past. 
 
 45 
 
CHAPTEE VI. 
 
 LIMITATION OF CAPITALIZATION. 
 
 I now come to another feature in this discus- 
 sion, as to the amount of the capital a corporation 
 should be permitted to have. Much has been said 
 and written upon this aspect of the question and 
 many are in favor of restricting the capital. As 
 the law is today there is no limitation as to the 
 amount of capital a corporation may possess. It 
 can be created with one thousand or one thousand 
 million dollars of capital. Some are incorporated 
 with capital based upon actual property; others 
 upon earning power; and very many, especially 
 mining companies, upon what they expect to ob- 
 tain in the exploration of the soil. And the ques- 
 tion is, should corporations be restricted in this 
 respect? How much capital is pernicious? Is a 
 million dollars in the hands of a corporation, per- 
 nicious ; or is two millions ; or five millions ; or ten 
 millions; or fifty millions, or a hxmdred millions? 
 If there be a restrictive law, where is the line to 
 be drawn? At what figure? And upon what cal- 
 culation or reasoning? 
 
 47 
 
COMMEBCIAL MOETMAIN. 
 
 Those who oppose aggregated capital have 
 never yet, so far as my observations are con- 
 cerned, or so far as my research has gone, 
 answered these questions intelligently, or in fact 
 answered them at all. They are unsolved prob- 
 lems. Then there is another question intimately 
 connected with the preceding one; if we restrict 
 corporation capital must we not also hmit indi- 
 vidual wealth? 
 
 Are one hundred millions of dollars more per- 
 nicious in the hands of a corporation than in the 
 hands of an individual or a partnership? Are 
 fifty millions of dollars more pernicious in the 
 hands of a partnership than in the hands of an 
 individual? 
 
 Is any serious person prepared to say that he 
 would allow an individual to possess a hundred 
 miUion dollars, but would deny the same right to 
 a corporation, which is simply an aggregation of 
 individuals acting as one? To what point will 
 such a conclusion lead? Let us follow this ques- 
 tion down to a legitimate business result. Logic- 
 ally and practically it must mean the restriction 
 of individual wealth. Are the people ready to 
 sanction a law which wiU limit and restrict in- 
 dividual energy, ability and ambition? Eemember 
 that the capital of a corporation is divided into 
 many parts, — shares. The corporation capital is 
 not generally owned by one person; it is usually 
 
 48 
 
LIMITATION OP CAPITAUZATION. 
 
 owned by many persons ; there are frequently as 
 many as ten thousand shareholders in one cor- 
 poration — ^ten thousand shareholders who put 
 their money into an organized concern for the 
 purpose of reaping a reasonable return for their 
 investment by a fixed rate of interest or through 
 dividends. Now, suppose you deny ten thousand 
 people the right to participate in aggregated cap- 
 ital, and you afford that right to one individual, 
 who has acquired that vast sum of money. Would 
 that be consistent, just or logical? I am express- 
 ing no opinion. I am only opening the subject. 
 
 In the result there is little difference between 
 individual wealth placed in a business, and corpor- 
 ate wealth in the same line. It is true that a cor- 
 poration has no rights or powers not expressly 
 or inphedly conferred upon it. On the other hand 
 an individual possesses all rights and powers not 
 expressly forbidden; yet in practice the corpora- 
 tions and the individuals are governed by the 
 same business rules and principles. Besides, as 
 has been said many times, a corporation has no 
 soul. Does conscience operate upon an individual 
 who possesses millions of dollars? Does it act 
 as a curb upon him in Ms business? 
 
 Then as to the use to which the money can be 
 put. Is it pernicious that a hundred million dol- 
 lars should be invested in railroads? Is it detri- 
 mental to the people that a hundred million doUars 
 
 49 
 
COMMEECIAIi MOBTMAIN. 
 
 are invested in a transportation, canal, or insur- 
 ance company, in banks or real estate? Can we 
 say that a corporation cannot put a hundred mil- 
 lion dollars in a manufacturing business? Or a 
 hundred million doUars in a gas company? Can 
 we deny the right of a corporation with a hundred 
 million dollars, to irrigate lands in Texas, or in 
 Arizona? Can those be declared illegal, while at 
 the same time we allow a hundred million dollars 
 to go into the banking business, or into the insur- 
 ance business? Where is the line to be drawn; 
 where wiU you begin with the chalk? What about 
 the large department stores in this connection? 
 
 We are then confronted with this problem: 
 Whether an individual should be allowed to invest 
 one hundred millions in a business or to possess 
 that sum, and the same privilege be denied to a 
 corporation; or put it in this way: whether an 
 individual should be permitted to establish a gro- 
 cery business with one hundred millions, and the 
 same privilege be denied to one hundred individ- 
 uals united in a corporation for the manufacture 
 and sale of groceries, or oil, sugar or tobacco? A 
 corporation acts singly — so does an individual. 
 The corporation speaks for thousands — ^the in- 
 dividual speaks for himself. 
 
 50 
 
CHAPTER VII. 
 
 THE CONSOLIDATION OF BUSINESSES. 
 
 Fifty years ago, the maniifacturing and indus- 
 trial businesses of the country were in the hands of 
 many individual partnerships and small corpora- 
 tions. Many businesses were controlled in fam- 
 ilies. By consolidation the old manufacturers and 
 merchants have disappeared and where there was 
 one owner before, in a business, there are now 
 a thousand. Stockholders by the myriads, know- 
 ing nothing about the businesses, have taken the 
 place of individuals and partners. Small concerns 
 have again been taken up and merged in greater 
 corporations; their identity lost, their capital 
 enormously increased, and then their shares listed 
 upon the exchanges. Thia process has been re- 
 peated until a billion dollar corporation (which 
 has swallowed up many smaller corporations) 
 heads the list. The share capital of these bodies, 
 distributed all over the land, forms the basis for 
 borrowing and other financial transactions. The 
 expansion of capital of these old companies or 
 small businesses as consolidated has been so great 
 that instead of being reckoned by the hundreds of 
 thousands of doUars, it must now be counted by 
 
 SI 
 
COMMEECIAIi MOBTMAIH". 
 
 the hundreds of millions. Where there was one 
 owner before there are now thousands. Where 
 there was one share of stock, there are now mil- 
 lions. The effect of this evolution has been to put 
 upon the market thousands upon thousands of 
 shares which have added enormously to the trad- 
 ing or available capital of the country, besides 
 which it has added an enormous number of appa- 
 rently rich men to the country. It has created 
 habits of luxury and spendthrift tastes; it has 
 made money a negligible quantity; it has contrib- 
 uted to raise the price of living and wages, and in 
 fine has altered the whole trend of the country's 
 thought and ambition. The Stock Exchange value 
 of these shares runs into the billions. What their 
 real inherent value is when the water is squeezed 
 out of them is a matter of calculation; but new 
 ones are hourly created, and despite hostile legis- 
 lation the printing and engraving of industrial 
 shares and securities go on with lightning speed 
 and in colossal proportions. The desire to con- 
 centrate has developed into a craze, and in a few 
 years every known business will be merged into 
 a corporation, and inside of the political nation 
 there will exist commercial or industrial oligar- 
 chies which must gradually change the form if not 
 the substance of the Republic. 
 
 I am safe therefore in saying that commercial 
 consolidation has marched with colossal strides; 
 
 S2 
 
CONSOLIDATION OP BUSINESSES. 
 
 that smaller corporations have been swallowed up 
 by larger ones, and these again in turn disappear- 
 ing in still greater bodies, until the following prop- 
 ositions are clearly established: 
 
 1st. That it requires more money to carry 
 on successfully any business than one individ- 
 ual can or will furnish. 
 
 2nd. That the details of a modern business 
 are too great for one person to handle. 
 
 3rd. That even the newspapers are now 
 run by corporations, and individual identity 
 lost. 
 
 4th. That whereas fifty or sixty years ago 
 every business was owned and carried on by 
 one or two men and their sons and relatives 
 or by small corporations, all of these busi- 
 nesses are now absorbed by large corpora- 
 tions, whose shares have been acquired by 
 hundreds of thousands of individuals scat- 
 tered all over the country, most of them know- 
 ing nothing of the businesses and having no 
 active participation in them. 
 
 5th. That laws made to control or Hmit 
 corporations affect not merely the latter but 
 they operate upon the property and rights of 
 millions of shareholders. 
 
 6th. We have become a nation of corpora- 
 tions — each corporation being sustained by 
 
 S3 
 
COMMEBOIAL MORTMAIN. 
 
 shareholders or bondholders and the aggre- 
 gate corporation employing as officers, clerks, 
 employees and laborers millions of individ- 
 uals. We are tied up in a web of concen- 
 trated capital becoming tighter and more 
 inextricable each year. 
 
 7th. In a purely commercial nation moral 
 force and character shrink, and great national 
 or international questions are controlled by 
 purely financial policy. The inherent right 
 and wrong of such issues are overlooked or 
 disregarded. "How much will it cost?" be- 
 comes the absorbing point. 
 When this tendency ripens into a real evil it 
 is likely to correct itself by corporate bankruptcy, 
 disorganization or death. Physical and financial 
 evils are alike in this respect. 
 
 54 
 
CHAPTER VIII. 
 
 THE EVILS OF TEUSTS. 
 
 Before laws are passed or amended we should 
 know the real evils which are sought to he cor- 
 rected. 
 
 Legislation down to this point has been either 
 ignorant or speculative because the subject has not 
 been intelligently known or investigated in all of 
 its aspects. It seems to me that the Sherman Act 
 was inspired by the fear of a ghost — and that its 
 framers have never yet grasped or discovered a 
 tangible shape or substance. The spirit of that Act 
 was aimed at particular combinations; it sought 
 to destroy existing and prevent future trusts 
 which absorbed everything in their line, and were 
 in substance monopolistic; but as its language is 
 most general, if not vague, and as the laws of the 
 United States and of the different States allow 
 corporations to be formed without restriction as to 
 business, longevity or capital, the legislation was 
 anomalous and has been futile. Nothing clear or 
 consistent can be evolved from it. What are the 
 evils of industrial combinations ? Does the public 
 suffer from them? How? When? Where? Are 
 private persons — ^individuals in business — dam- 
 
 55 
 
COMMEECIAli MOETMAIN. 
 
 aged by them ? Again I ask : How ? When ? Where ? 
 In every case in which the latter conld show injury 
 was there not a proper and sufficient remedy? 
 
 I have seen no adequate discussion of this 
 branch of the subject. It ought to receive atten- 
 tion — elaboration. Undoubtedly there are serious 
 features arising out of these combinations which 
 should not be overlooked. Are they poisonous to 
 our national Kfe? Or, are we uonecessarily stag- 
 gered or alarmed by the stupendous advance of 
 our commercial growth? 
 
 The influence of great consohdations upon So- 
 ciety is slow and subtle, but that they have already 
 had a measurable effect upon the form of our 
 government, as well as upon the habits, manners 
 and occupations of the people, is unquestionable. 
 Our wonderful commercial development is un- 
 doubtedly producing organic political changes. 
 The time has arrived when the whole nation should 
 seriously set to work to study the question — ^not in 
 the haUs of legislation, but by private and public 
 discussion. Thucydides quotes a sentence from 
 one of Pericles' speeches which is apropos in this 
 connection : 
 
 "Every one fancies in a Democracy that his 
 own neglect will do no harm, but that it is 
 somebody else's business to keep a lookout 
 for him and this idea cherished alike by each 
 is the secret ruin of all." 
 
 The evils which result from some combinations 
 
 56 
 
EVILS OF TRUSTS. 
 
 may be real, but they must be corrected by inteUi- 
 gent legislation. It is undoubtedly true that a f ew 
 of these gigantic corporations, while not monop- 
 olies in the technical sense, are monopolistic in 
 substance and result. They usurp and absorb the 
 whole or a greater part of a particular industry 
 under one management, and while the industry 
 in form is open to all, in substance it is monop- 
 olistic and open to none, — ^which has these re- 
 sults : first, substantially to prevent competition ; 
 second, to place the public as to the article dealt 
 in, in the power of a particular combination ; third, 
 to shut the door of such industry to all other per- 
 sons or corporations, thus sapping the ambition, 
 energy and intelligence of the best individual 
 business talent of the nation; fourth, by allowing 
 corporations with unlimited capital and life to be 
 formed, the nation's or State's approval is placed upon 
 combinations. 
 
 One of the most striking evils of these consolida- 
 tions has been the enrichment of several individuals to 
 such colossal proportions that one or more of them has 
 the power to force any industry into one corporation 
 and by arbitrarily fixing the capital and their own 
 remimeration, which latter is known as "promotion 
 expenses," to repay themselves for any cash expended 
 to advance the consolidation, and to extort a most enor- 
 mous profit from the enterprise. 
 
 The Stock Exchanges and their auxiliaries are 
 
 57 
 
COMMEECIAIi MOETMAIN. 
 
 afterwards used to convert the promoters' shares 
 into cash. Some of the millions thus obtained are, 
 it is true, returned to the public in the shape of 
 gifts to churches, colleges, museums, libraries and 
 other public institutions. But, perhaps, the peo- 
 ple would prefer to distribute their own moneys. 
 
 The particular trusts to which I refer are now 
 run and protected in effect, as if they were oper- 
 ating under letters patent from the government. 
 It is impossible for anyone with even extraordi- 
 nary individual means, resources, or experience, 
 to enter the fields of business which they cover. 
 
 The question is do these gigantic commercial 
 aggregations involve real evil? Are men deprived 
 of means of commercial advancement and fortune 
 by them? Are others diverted from business paths 
 for which they are peculiarly fitted? The law is so 
 solicitous of individual exertion that it regards as 
 null contracts made by individuals restricting their 
 business effort. These conditions may become a 
 pall upon the nation if all industrial development 
 is left to cabals. Worse perhaps than all may be 
 the tremendous financial and political power 
 yielded by these combinations. Through Stock 
 Exchange manipulations, through the banks, 
 through an insidious but most powerful influence 
 upon public officials, can they dominate the coun- 
 try? How can these results be checked so as not 
 to retard the progress of business or the commer- 
 
 58 
 
EVILS OP TRUSTS. 
 
 cieil development of the country is the burning 
 question? Must they be destroyed? Can they be 
 controlled by governmental supervision without 
 throttling the natural course of business? Or 
 must the people share in the benefits or profits 
 which they receive ? Which is the proper course ? 
 If aggregations of capital continue every 
 known business wiU be eventually absorbed. All 
 industrial enterprises will be run by gigantic com- 
 binations. Individuals possessing talent and 
 brains can aspire to no higher positions than to 
 clerkships or to become hveried servants of these 
 tremendous bodies. What is remarkable is that by 
 a periodical lowering of prices, the monopohsts — 
 I use the word as descriptive — expect to create the 
 behef that they are real saviours of the people. 
 It is almost impossible to resist the alluring argu- 
 ments which they offer, — cheapness, promptness, 
 quality and the appHcation of all modern inven- 
 tions, which can be obtained only by a great ag- 
 gregation of money. This main argument, — ^that 
 "trusts" can furnish articles more cheaply than 
 ordinary vendors or manufacturers, is however 
 two-edged. It is perhaps undeniable that com- 
 binations of capital concentrated in one undertak- 
 ing can manufacture more promptly and cheaply 
 than small corporations, firms or individuals. It 
 is also true, in the effort to crush competition, 
 they can sell at even ruinous sacrifice, but when 
 
 59 
 
COMMEECIAL MOETMAIF. 
 
 they have killed off their competitors they can 
 raise the price to suit their will. The absolute 
 control of a business puts the price in the hands 
 of the trust. Suppose it loses several miUions in 
 lowering prices and killing competition. It can 
 easily make up the loss when it again becomes the 
 master of the industry. Some one has said "give 
 me the power of a monopolist, or robber-baron, 
 and I will turn back to the people half of my 
 gains." I have not overlooked the argument that 
 several businesses concentrated in one can cheap- 
 en production. But what should the people receive 
 for the privilege? There's the rub and the whole 
 question in a nutshell. 
 
 The real leaders of these coromercial or finan- 
 cial corporations may eventually be able to dictate 
 the financial policy of the government and to con- 
 trol with almost tyrannical power the money of 
 the country. 
 
 It is easy to name five men who can, by con- 
 certed action, regulate the prices of securities 
 and articles upon our Exchanges; five men who, 
 acting in concert, without the slightest difficulty, 
 can lock up or let loose one thousand millions of 
 cash; and who can work up or down the price of 
 listed securities. They can virtually direct, or at 
 least influence, the operations of the New York 
 Stock Exchange. The question has been raised as 
 to the existence of a "Money trust." No such 
 
 60 
 
EVILS OF TRUSTS. 
 
 organization exists by virtue of any express or 
 written agreement. But so long as the dealings 
 upon the New York Stock Exchange absorb the 
 money of the banks — so long as stocks are actually 
 paid for — so long as these speculative transac- 
 tions or gambhng operations go through the banks 
 — a few men can and do control the money of the 
 country. If the operations upon the New York 
 Stock Exchange were conducted as similar gam- 
 bling deals are upon the London Stock Exchange 
 and the Paris Bourse then all of this vast sum of 
 money used in speculative stock transactions 
 would be released and the control by any com- 
 bination of money kings would most sensibly 
 diminish. 
 
 It is the most remarkable fact of its kind in 
 financial history that the people of the United 
 States have allowed such conditions to exist in 
 Wall Street without real effort to correct or abol- 
 ish them. Of course the Federal Eeserve Bank 
 System operates as a powerful check upon the 
 operations of the Exchange in fixing the price of 
 money. The rate of interest perhaps can no longer 
 be arbitrarily controlled by so-called capitalists or 
 bank syndicates but immense sums of money are 
 stiU fruitlessly used in Stock Exchange operations. 
 
 By a New York Statute it is enacted that "An 
 agreement for the purchase, sale, transfer or de- 
 livery of a certificate or other evidence of debt, 
 
 61 
 
COMMEECIAL MOETMAIN. 
 
 issued by the United States or by any state, or a 
 municipal or other corporation, or of any share 
 or interest in the stock of any bank corporation or 
 joint stock association, incorporated or organized 
 under the laws of the United States or of any 
 state, is not void or voidable, for want of consid- 
 eration, or because of the non-payment of consid- 
 eration, or because the vendor, at the time of mak- 
 ing such contract, is not the owner or possessor 
 of the certificate or certificates or other evidence 
 of debt, share or interest." And by another Stat- 
 ute their usuries are legalized : "In any case here- 
 after in which advances of money, repayable on 
 demand, to an amount not less than five thousand 
 dollars, are made upon warehouse receipts, bills 
 of lading, certificates of stock, certificates of de- 
 posit, bills of exchange, bonds or other negotiable 
 instruments pledged as collateral security for 
 such repayment, it shall be lawful to receive or to 
 contract to receive and collect, as compensation 
 for making such advances, any sum to be agreed 
 upon in writing, by the parties to such transac- 
 tion." Comment need not be made upon these 
 two Statutes. It is sufficient to caU to the attention 
 of the readers that "short sales" are authorized 
 and protected by law and that usury in Wall 
 Street is most specifically upheld. 
 
 Will the financial and industrial magnates be- 
 come so strong — ^that unless checked they will ob- 
 
 62 
 
EVILS OF TRUSTS. 
 
 tain an eventual control of the Executive, Legisla- 
 tive and Judicial branches of the government ? It 
 need not be maintained that they brutally bribe 
 officials — ^make direct contracts — ^whereby valuable 
 considerations pass between them and public of- 
 ficials. Their influence is insidious and indirect, 
 and often not appreciated by the officials affected. 
 The restraining influence of a moral sense, after all the 
 greatest bulwark of a Republic, cannot be any more 
 relied upon. Money has no conscience — ^it buys what- 
 ever it thinks is necessary for its purposes. 
 
 The desultory attempts of our Presidents and 
 Congresses to restore industrial conditions to a 
 normal state, are always met by cries from WaU 
 Street that business is being ruined. Every time 
 the officials do an act which looks toward the uplift- 
 ing of the human race, towards restoring the moral 
 sense of the nation, and to placing men on an 
 equality in business, or of opportunity, the shares 
 in the Stock Exchange drop off, and the country 
 is filled with waihngs and lamentations of stock 
 operators and stock gamblers that the financial 
 and commercial interests of the country are being 
 ruined. As if the magnificent crops and abundant 
 natural resources of the country could be perma- 
 nently affected by the superficial manipulations 
 of WaU Street! The violent fluctuations of the 
 Stock Exchange — the enormous gambling trans- 
 actions therein consummated add no value to the 
 
 63 
 
COMMBBCIAL MOBTMATM". 
 
 shares dealt in — on the contrary they destroy con- 
 fidence. The investor looks at inherent conditions 
 and accepts natural business results. Much of the 
 value of the Stock Exchange as a market is affect- 
 ed or destroyed by excessive gambling. What is 
 curious is that the large body of stock brokers 
 have become the dupes and cat's paws of large 
 manipulators. There is no such thing any more 
 as a real, genuine, independent speculation based 
 upon commercial, financial knowledge or experi- 
 ence. Back of every large Stock Exchange move- 
 ment is a clique. The deluded Stock operator in 
 or out of the Exchange discovers the mystery 
 after he is ruined. He enjoys no equaUty of op- 
 portunity. 
 
 Not the least of the evils is that this financial 
 and commercial oligarchy may eventually seek to 
 exercise through ownership, or a selfish influence, 
 a control of some of the journals of the country. 
 
 With their financial power periodically increas- 
 ing by the millions, through fresh combinations, 
 the people should be ahve to this possibility. It 
 must be remembered that newspapers are now 
 only exceptionally run as individual property. 
 They are incorporated — and have shares of stock. 
 But this particular evil if it should come may be 
 relied upon to correct itself. When the press is 
 known to be subsidized it will very quickly lose all 
 of its influence. 
 
 64 
 
EVILS OF TRUSTS. 
 
 But there is one unfortunate feature that this 
 era of trusts has produced; i. e., a sentiment which 
 is now more or less widespread that the great aim 
 of an individual and a nation is money, — ^that 
 money is better than character; that it will open 
 the door to all social and pohtical preferment. A 
 new and unhealthy standard of ambition is thus 
 created. Thoughtful people should consider 
 where a continuation of these conditions will even- 
 tually lead. 
 
 Still it must not be overlooked that aU indus- 
 tries in this age require to be run by corporations 
 possessing ample capital — ^individuals are no 
 longer competent to transact the immense busi- 
 ness of the country. Individual incentive and am- 
 bition even when it leads to great wealth cannot 
 be checked. A law of that description leads to 
 paternahsm — sociaHsm. It is only when corpora- 
 tions mass their financial resources and business 
 forces into a single consohdation or syndicate so 
 enormous as to become monopolistic in result 
 that they reach the danger point of criminahty. 
 They must then be taken in hand by the central 
 government. 
 
 I should not close this chapter without advert- 
 ing to another feature of this commercial era. It 
 is the gradual growth of an aristocracy of wealth 
 — ^the formation of a class becoming more and 
 more distinctly marked and visible who claim 
 
 65 
 
COMMEECIAli MORTMAIN. 
 
 superiority of social rank from the mere posses- 
 sion of money. An aristocracy may be a complete 
 form of government, although modem history 
 does not disclose any, but it has generally ap- 
 peared in conjunction with a monarchy, and a 
 small or large class of individuals have by con- 
 stitutional sanction been recognized as nobles. 
 The origin of the distinction arose originally from 
 personal merit, or services rendered to the mon- 
 arch or state, and the title of nobility once granted 
 has generally descended to hneal and in many 
 instances to collateral branches of the original 
 aristocrat. The development in England of this 
 class is most clearly portrayed in the life of that 
 nation — ^in its influence in and out of Parliament. 
 I think the House of Lords has been distinctly 
 beneficial to the people. As a body in legislation 
 or otherwise the English nobility has been most 
 always allied with the true interests of the whole 
 people — ^the rich and the poor — of that nation. It 
 has formed a most important and powerful class 
 in directing and aiding broad legislation, and has 
 been at times active in circumventing the com- 
 mands of mobs or the machinations of dema- 
 gogues. As a branch of the British government 
 I look upon the House of Lords as of incalculable 
 value. But we are not a monarchy and the evolu- 
 tion of a class of money aristocrats in our land 
 by a process of slow and steady encroachment 
 
 66 
 
EVILS OF TBUSTS. 
 
 means a change in all of our political theories. In 
 our government, rank exists not. The only title 
 one can gain is to hold oflBce, the tenure and emolu- 
 ments of which are fixed by either the State or 
 Federal Constitution, or by Statute. The spirit 
 of our institutions aims to confer upon the de- 
 serving these pubHc places, and it is assumed that 
 our citizens will be aroused to ambitious efforts of 
 statesmanship or heroism to attain these gifts. 
 The establishment of a body of moneyed aristo- 
 crats who fill oflSces and wield political power and 
 influence through mere wealth is not only incon- 
 sistent with every principle of republicanism but 
 it is repulsive to it. It substitutes chance for 
 ability; it stifles the ambition of our citizens; it 
 makes every position the subject of purchase and 
 sale, and crushes out real ability and knowledge. 
 In a word, it destroys that absolute equality which 
 is the basis of democratic government and dis- 
 tinction; it diverts the minds of our youth from 
 the true paths of political ambition and glory. 
 
 Its establishment in this country would mean 
 the institution of a fourth department or branch 
 which will gradually absorb, control and wipe out 
 all of the checks and balances of our Eepublican 
 system. 
 
 67 
 
CHAPTEE IX. 
 
 EXISTING LAWS AGAINST TEUSTS. 
 
 I come now to the existing laws on the subjects 
 which I have discussed, and to endeavor to dis- 
 cover why they have failed to extirpate or even to 
 prevent the evils at which they are aimed. These 
 laws are contained in 
 
 1st. The Fedekal Statutes : 
 
 (a) Sherman Anti-Trust Act. 
 
 (b) The Tariff Act. Identical with the 
 
 Sherman Act. 
 
 (c) The Clayton BiU. 
 
 (d) The Trades Commission Act. 
 2nd. Federal Decisions: 
 
 (a) Those of the Supreme Court of the 
 
 United States. 
 
 (b) Those of the Inferior Courts of the 
 
 United States. 
 3rd. The State Statutes. 
 4th. Decisions of State Courts. 
 
 The above statutes and the decisions interpret- 
 ing them more than fill two good-sized volumes. A 
 study of this legal literature now grown so volumi- 
 nous that I cannot embody any part of it in this 
 
 69 
 
COMMEECIAi MOBTMAIN. 
 
 little book, will give the student full knowledge of 
 the treatment which trusts have received at the 
 hands of the legislators and the Courts. It will 
 convince him that despite the emphasis of penal 
 legislation and judicial decisions against them, 
 trusts have quietly but persistently gone on in- 
 creasing in number and strength, paying the same 
 attention to the thunder and threats of statutes 
 and courts that a lion would to the bleatings of a 
 lamb. And an astonishing aspect of the subject 
 has been the mingled contempt, neglect or dis- 
 regard of the principal federal statute by the 
 American bar. The lawyers have in face of the 
 Sherman Law proceeded with the consolidation of 
 corporations as if the statute did not exist ! 
 
 Eesults of existing laws and judicial decisions 
 are therefore 
 
 (a) Nil, or else hurtful, or at least not bene- 
 ficial, to the public. 
 
 (b) Most of the trusts which pretentiously have 
 been declared illegal have reappeared in other 
 forms and guises. Chased from one state or juris- 
 diction, they have taken refuge in another. 
 Stripped of one suit of clothes, they have quickly 
 donned another, equally serviceable. 
 
 (c) The segregation of the Standard Oil, for 
 example, has been decidedly disadvantageous to 
 public interests. The market value of the shares 
 
 70 
 
LAWS AGAINST TRUSTS. 
 
 of the subsidiary companies originally forming 
 that consolidation has prodigiously increased, and 
 at the same time the prices of oil and by-products 
 dealt in by that great organization have steadily 
 advanced to the discomfort and loss of the public ! 
 
 It is not a bold statement to say that there is 
 something radically deficient in a law which pro- 
 duces such anomalous results ! 
 
 Certainly the deficiencies of these laws cannot 
 be attributed to their mal- or non-administration. 
 The Courts have been intensely aroused and inter- 
 ested in executing them. The cause is found in the 
 weakness of the laws themselves, and in surround- 
 ing industrial conditions. 
 
 In respect to the decisions of the Supreme Court 
 of the United States upon the topics to which I 
 have alluded I deem it proper and important to 
 make these remarks : that they are generally un- 
 satisfactory and unconvincing for two reasons; 
 first, in almost every instance where a conflict has 
 arisen involving Federal or State control over rail- 
 roads, corporations or commercial industries, or 
 in disputes between capital and labor the decisions 
 lack unanimity, the Court generally dividing into 
 five to four, or six to three and the pubhcation of 
 the majority and minority opinions has shown 
 such a divergence of views between the judges 
 that all the questions probably will be, in due 
 course, re-argued and re-decided, or the laws upon 
 
 71 
 
COMMEKCIAX, MORTMAIN. 
 
 whicli they are based repealed or modified. For 
 instance, out of seventy-seven cases decided be- 
 tween the October Term, 1901, and the same term 
 1909 (187 to 207 U. S. Ct. Rep.), in twenty-nine the 
 Court stood five to four ; in forty-five, six to three, 
 and in three cases, five to three, one judge being 
 absent and not voting. In the Standard Oil and 
 Tobacco cases there was a strange unanimity of 
 result ; one judge dissenting, as to the introduction 
 of a word in the Statute by the majority opinion. 
 I say it was a "strange unanimity" because to 
 produce such a result it was necessary to cast 
 aside as worthless, previous decisions of the 
 Court. In an effort to interpret an impracticable 
 Statute, the Court indulged in a myriad of words, 
 and a style of reasoning quite unsatisfactory to 
 those who really understand industrial and finan- 
 cial conditions. If the Court had held, as the dis- 
 senting judge urged, that all combinations whether 
 "reasonable" or "unreasonable" were within the 
 Statute, the result would still be the same; for 
 after all the gist of the case is to be found in the 
 relief asked by the Government, which is to be 
 seen by examining the prayers of the bills. Sec- 
 ond, the cases have been mostly decided upon 
 technical grounds and not upon principle. Instead 
 of meeting the great and novel issue as an original 
 question the Court has either been compelled to 
 determine it upon grounds applicable to strict 
 
 72 
 
LAWS AGAINST TBUSTS. 
 
 monopolies whicli I have shown to have no rele- 
 vancy, or they have been placed in the position of 
 endeavoring to enforce impracticable statutes. 
 The dissension among the Judges, the multiplicity 
 of decisions and the apparent utter contempt of 
 the legal profession for the Sherman Act, have 
 produced a spirit of doubt in the community as to 
 the efficacy of Courts of Justice — ^indeed a spirit 
 of revolution against them. And yet all of this 
 result cotdd be fairly charged on the National 
 legislature — ^because Courts are to construe sta- 
 tutes, not make them. 
 
 The position of our Judges with relation to anti- 
 trust statutes, however, was substantially the 
 same as that in which Chief Justice Marshall 
 found himself when the Constitution of the United 
 States was placed before him for interpretation. 
 He was suddenly confronted with a comphcated 
 and delicate judicial situation, where knowledge, 
 judgment, discrimination and the purposes and 
 necessities of the people were his sole guide. For- 
 tunately, he had no precedents to aid him. He 
 carved out rules for the interpretation of the 
 Constitution which divorced the dilBFerent branches 
 of the governments from each other and moulded 
 the character of the government to meet the spirit 
 of its founders. 
 
 The Sherman Act was passed at the very zenith 
 of our commercial prosperity. If the Judges had 
 
 73 
 
COMMEECIAIi MOETMAIN. 
 
 determined that it was so incomplete a piece of 
 legislation that it could not be enforced they 
 would have rendered invaluable aid to the nation. 
 TJndiscriminating and general in its language 
 it seems to me, with great respect, the sole 
 question which arose under it was whether the 
 particular trust or corporation aimed at was in 
 substance and effect detrimental to the people. If 
 it were not the corporation should have been up- 
 held — and other remedies such as participation 
 of the people in the profits through taxation 
 should have been created. But even after reaching 
 a conclusion that it was enf orcible the remedies 
 provided by the Act were insufficient and in- 
 applicable to commercial conditions. Hence the 
 Statute has had no effect as a preventive, but on 
 the contrary has acted as a stimulant to the crea- 
 tion of corporations with immense capital, and 
 as an irritant to the commercial affairs of the 
 country. Certainly it is a very anomalous result 
 to untie corporation knots which have been made 
 by invitation of the state and Federal govern- 
 ments. 
 
 74 
 
CHAPTER X. 
 
 REMEDIES. 
 
 I have reached the delicate, — ^the critical, — 
 point of the discussion; the remedy for the evils 
 which trusts are supposed to engender. 
 
 The difference between a technical monopoly 
 and a modern commercial combination must be 
 kept in mind as preliminary to the study of rem- 
 edies. The technical monopoly existed by virtue 
 of letters patent or grants from a monarch or gov- 
 ernment, giving the grantee the sole right to sell 
 or deal in an article of commerce to the exclusion 
 of all other persons. He was as to the particular 
 thing monopolized a despot with unlimited power. 
 The remedy for relief against a monopoly was 
 simple and sweeping — ^by revocation of the grant. 
 Its repeal placed the article in the hands of the 
 people again, and opened the marhet to the world. 
 
 But commercial corporations are created by 
 virtue of general statutes, free to all, inviting all, 
 to form corporations under them. As matter of 
 practice or custom their shares are open to the 
 public and anyone can purchase them and thus 
 enjoy the benefits of the combination. Again 
 their powers are limited by the laws under which 
 
 75 
 
COMMEBCIAL MOBTMAIN. 
 
 they are formed, and they are creatures of the 
 government creating them. But despite these dif- 
 ferences, some of the commercial combinations 
 through money and industrial concentration (not 
 through a grant of exclusive privileges) possess 
 practical monopolies of the particular industries 
 which their corporations control. The exact point 
 should be whether a corporation lawfully and 
 openly incorporated under a general statute and 
 which by virtue of the concentration of money or 
 industries in its hands controls a particular trade 
 is detrimental to the interests of the people? 
 Whether the modern tendency which involves the 
 amalgamation of corporations engaged in a sim- 
 ilar hne of business should be checked? 
 
 The direct way to check them is to repeal the 
 statutes permitting corporations to be formed 
 with unlimited capital and longevity. But who has 
 the temerity seriously to encourage such a step? 
 Instead of this method an indirect, oblique and un- 
 satisfactory one was adopted — Corporations were 
 encouraged and after years of existence, doing 
 business as it were under the very nose of the 
 people, they are suddenly found to be illegal and 
 fiercely attacked, notwithstanding the fact that 
 the federal government collects annually from all 
 of them a tax for permitting them to do business. 
 The Courts have never discussed this aspect of 
 the question. 
 
 76 
 
BEMEDIES. 
 
 Discarding the subterfuges whicli lawyers in 
 their arguments for trusts have used in interpret- 
 ing the Statute, the point is to find out the actual 
 purpose for which the Sherman Act was passed. 
 When it became a law in 1890 there were but few 
 trusts in existence. Certainly it could not then 
 have been determined whether they were bene- 
 ficial or detrimental to the people. But there pre- 
 vailed a feeling of unrest in respect to them, and 
 they were likened unto monopolies, — grinding, ab- 
 sorbing monopolies. Trade or commercial com- 
 binations were a brand-new creation growing out 
 of the concentration of business in the hands of 
 large corporations. 
 
 The real and sole design of the Statute, as inter- 
 preted by the Courts, was not only to strike down, 
 but to kill all industrial combinations, whether 
 disguised as corporations or existing as syndi- 
 cates, or in any other form actually monopolistic, 
 and which had obtained absolute control of any 
 particular industry. 
 
 The Statute was too narrow: it did not dis- 
 tinguish between the technical monopoly of the 
 common law and modern corporations ; it gave no 
 instructions to the Courts how to carry out a judg- 
 ment against a corporation. The condemnation 
 of monopolistic bodies may have been proper, but 
 the remedial features of the Act were manifestly 
 deficient. How should the monopoly be extin- 
 
COMMEBCIAL MOBTMAIN", 
 
 guished? The property of the guilty corporation 
 was not to be destroyed by fire, nor was any in 
 fact confiscated. — The rights and interests of inno- 
 cent holders and investors were involved. — The 
 parties creating and operating the trust may have 
 had no interest in its bonds or stock. It has been 
 revealed that Havemeyer, who was the principal 
 creator and operator of the Sugar Trust, owned 
 none or very little of the stock at the time of his 
 death. It had been scattered widecast among the 
 investors of this country. Therefore, the Court 
 of final resort in the two noted cases of the Stand- 
 ard Oil and Tobacco Trusts took great pains in 
 granting judgments of dissolution to indicate that 
 rights of innocent investors should not be affected, al- 
 though there is nothing in the Sherman Act warranting 
 this benevolent action. It is justified, however, be- 
 cause the Statute is deficient and impracticable of 
 execution. Imprisonment, if it could be inflicted 
 through a criminal trial — ^which is always doubt- 
 ful, would be aimed at individuals and not the 
 monopoly — the latter might well be operated with- 
 out the former, or if through fear of imprisonment 
 no one could be found to operate it then the in- 
 dustry would be left to perish to the destruction 
 of the rights of bondholders and stockholders. 
 And how unjust it would be to convict men for 
 committing acts which they were justified in doing 
 under their Charter! 
 
 78 
 
REMEDIES. 
 
 Therefore, tte subject must be entirely re- 
 opened, and the past judicial history of this now 
 famous law cast aside as practically worthless. 
 
 There are three questions which arise at 
 the threshold of this inquiry : First, can trusts 
 and aggregated wealth be left to natural 
 remedies; second, will the repeal of existing 
 protective tariff laws produce radical rehef ; 
 or, third, must there be created an entirely 
 new and independent remedy applicable to 
 aggregated property or capital, possessed 
 either by corporations or individuals? 
 
 I wiU pursue these inquiries in the order in 
 which they are above stated. 
 
 First: Can trusts and aggregated wealth 
 be left to natural remedies? 
 
 In haste to correct a present evil natural rem- 
 edies are frequently overlooked. They operate too 
 slowly to satisfy demagogic or popular opinion, 
 and yet their eventual potency is often more rad- 
 ical and sweeping than those supplied by legisla- 
 tion. 
 
 Among the first of these natural remedies is 
 that which may arise from the weakness of any 
 consolidated business. It may go to pieces be- 
 cause, 1st: the individual businesses aggregated 
 are incapable of successful operation when joined 
 
 79 
 
COMMERCIAL MORTMAIN. 
 
 ■together, or, 2iid: the consolidation may be de- 
 stroyed through unskilful or bad management. 
 History of this Mnd has already been made. Ev- 
 ery trust that is organized is not destined to be a 
 commercial success, and many of them must end 
 in failure or bankruptcy. It may however take a 
 few years to develop such results. In the absence 
 of actual demonstrative damage to the community 
 why not wait ? Individual wrong suffered through 
 the action of combinations can always be re- 
 dressed. 
 
 Moreover the discovery of new inventions 
 and processes must be considered as a factor 
 in the discussion of remedies, and its effect upon 
 existing manufacturing businesses. AU of these 
 views while sententiously stated here are capable 
 of elaboration and enforcement. 
 
 Another highly important factor which must 
 eventually operate to check the growth of corpor- 
 ate capital is the concentration of labor. The 
 more tyrannical the power of money, the more 
 tyrannical the demands of labor. Now and then 
 they come together as if to act in harmony, but 
 when labor and Capital agree to participate in 
 the profits, the government will change and a 
 study of the Constitution of Lycurgus wiU become 
 interesting and profitable. One thing to my mind 
 is sure — ^that the effort to check will be as cruel 
 as ineflScacious, if as part and parcel of the plan 
 
 80 
 
BEMEDIBS. 
 
 labor is not also fully dealt with. The tyranny 
 of capital is no worse than that of labor. Yet, as 
 we have seen, labor is now exempt from the opera- 
 tions of the Statute. 
 
 As to aggregated wealth in the hands of indi- 
 viduals or banking or other firms, both modern 
 and ancient history shows that extravagance, lux- 
 ury and mismanagement of large moneyed or other 
 estates have been heretofore sufficiently effica- 
 cious in causing the wealth to flow back to the 
 public. Degenerate or extravagant descendants 
 squandering and scattering their money right and 
 left have operated without the aid of confiscatory 
 legislation. In this country the transmission of 
 wealth to descendants beyond a third generation 
 has been rare — ^perhaps the exceptions embrace 
 not more than five or six estates or famihes. In 
 England the large landed interests which have 
 been handed down from generation to generation 
 after lasting for centuries, seem to be gradually 
 disintegrating, especially through heavy taxation, 
 and the influence of commercialism. 
 
 In the United States, however, some individual 
 fortunes exist in personal property, of such colos- 
 sal character that it will require extravagance and 
 habits of a most wild and phenomenal character 
 to dissipate the accumulated wealth, and in such 
 instances perhaps the aid of drastic or radical 
 taxation should be invoked. 
 
 81 
 
OOMMEBCIAli MOETMAIN. 
 
 Second: Will the repeal of tlie protective 
 tariff laws produce full relief against the evils 
 of trusts? 
 
 Undoubtedly this is the first logical step in leg- 
 islative reform. Every article which is now con- 
 trolled by a trust should be immediately deprived 
 of the protection of the government. As to those 
 articles there should be no protection because the 
 license to consolidate manufacturing interests into 
 a single corporation carries with, it all of the bene- 
 fits of quickness and cheapness of manufacture 
 and m,ore than offsets or counterbalances the dis- 
 advantages ensuing from foreign labor or manu- 
 facture. As to trusts there cannot truthfully be 
 put forth a remnant of logical argument in favor 
 of protection. Several years of fair trial would 
 easily demonstrate the efficacy of such reform. 
 
 Third: As preliminary to a discussion of 
 the third query as to the necessity of creating 
 an entirely new and independent system of 
 laws solely applicable to aggregated capital, 
 or corporate or individual wealth, it is im- 
 portant to settle the question into whose 
 hands should be committed the jurisdiction to 
 deal with this important subject. 
 
 It seems clear to me that plenary jurisdiction 
 must be given to the federal government with 
 
 82 
 
REMEDIES. 
 
 respect to all questions regarding aggregated cap- 
 ital and wealth. 
 
 Forty-eight different states cannot separately 
 deal with this great prohlem. It is argued that the 
 point has fairly arrived in our national career 
 when that full Hberty of commercial and financial 
 operations which has hitherto prevailed, must be 
 curtailed and regulated by law — and that law 
 must be made and administered by central power. 
 Unlimited individual wealth or corporate free- 
 dom of action in industrial aJBfairs it is argued 
 must be checked. Of course, it will be maintained 
 that the interference with private business or in- 
 dividual wealth is socialistic in its tendency — 
 undoubtedly it is — and the grant to the Federal 
 Government of all this power means another great 
 step towards centralization. Yet no one, so far as 
 I can discover, has pointed out any means by 
 which the supposed evil can otherwise be dealt 
 with. As to corporations, they can be wiped out 
 by one statutory sentence: Let there be no more 
 corporations ! But if corporations are to be per- 
 mitted one gets in chaos when he begins to restrict 
 their capital. The real point then is to what 
 extent can the aggregation of capital in cor- 
 porations or individual wealth be controlled 
 without seriously compromising the fundamental 
 rights of the people and of personal liberty? 
 How far can restrictive laws be made against 
 
 83 
 
COMMEECIAIi MOETMAIN. 
 
 such corporations without injuring or interfering 
 with the healthful operations of commerce? 
 At this precise point the main ohject of social 
 organization must be referred to. The pohtical 
 state (as Aristotle puts it) is formed to enable 
 its inhabitants to live well and happily; not for 
 the mere sake of men's hving together, but for 
 their living as men ought. If civil society was 
 founded for the mere sake of preserving and in- 
 creasing property, as some have argued, every- 
 one's rights in the State would be in proportion to 
 his fortune — ^which is the reasoning upon which a 
 financial ohgarchy rests. 
 
 The effort to settle the question through the 
 alteration of the Sherman or so-called "trust 
 laws " wiU be futile. It is mere child's play. The 
 laws of commercial development have blown to 
 the winds this legislative enactment as if it were 
 dead leaves. Either the central government must 
 control aggregated capital or aggregated capital 
 will not be controlled. Either the States must 
 lose a great deal of their individual sovereignty 
 or the people may become the slaves of capital. 
 One great strong arm must deal with this com- 
 mercial giant. 
 
 How to check the unnatural growth of corpora- 
 tions ; how effectually to control them so that they 
 can do no harm to the people or the real progress 
 of the country ; how to regulate them so that com- 
 
 84 
 
REMEDIES. 
 
 merce is not stopped or hindered — so that a brake 
 is not applied to the wheels of business ; and final- 
 ly how to regulate the labor organizations — or 
 whether they should all be left free to laws of 
 supply and demand; these are the great and ab- 
 sorbing questions. They have in my humble judg- 
 ment never been satisfactorily answered. 
 
 The restriction of the amount of capital, the 
 limitation of corporate life, will not accomplish 
 the task. Publicity will be also futile; as it will 
 be a great hindrance to commercial progress. 
 Business to thrive must be free from government 
 control. A man in business cannot stop every 
 five minutes to consult a statute to discover 
 whether he can make a business operation. 
 
 The anomaly which now exists is this : On one 
 page of a statute book is a law permitting corpora- 
 tions to be formed for which the State receives a 
 handsome license fee. On the other page we find 
 laws condemning combinations of capital, the very 
 purpose for which they are authorized to be 
 formed! Here is an absurdity — a paradox. 
 
 Again, Congress has passed a corporation tax 
 law by which the income of corporations must be 
 shown in detail and a percentage of it paid to the 
 Federal Government. The Supreme Court of the 
 United States has sustained this tax as a license 
 ta:s; — a license fee to be paid to the government 
 for the privilege of operating or doing business as 
 
 85 
 
COMMEBCIAI, MOETMAIN. 
 
 a corporation. These license taxes have been col- 
 lected from the two noted companies, — Standard 
 Oil and Tobacco. Yet having collected this tax, 
 which is a clear recognition of the validity of the 
 corporations, the government is in Court asking 
 that they be deemed illegal combinations! Does 
 not this Federal corporation tax clearly vitiate 
 the moral effect of the Sherman Act? Into what 
 a state of confusion do these conflicting statutes 
 place the subject? 
 
 Of course these anomalies show that trust 
 prosecutions cannot be successful without destroy- 
 ing corporations, which cannot be controlled in 
 their natural operations any more than a child's 
 physical growth can be regulated by declaration 
 of law that he should not grow beyond a certain 
 height or weight. A legal Procrustean bed cannot 
 be successfully made for corporations. 
 
 Corporations are invited to be formed by the 
 laws of all the different States, which receive li- 
 cense fees and yearly taxes from the same as a 
 condition of their incorporation. Yet, — and here 
 is another flagrant inconsistency, — they are no 
 sooner launched into corporate life than they are 
 prosecuted, or become subject to prosecution for 
 the very acts which they were incorporated to per- 
 form! Licensed and then prosecuted for doing 
 the things for which they were licensed ! 
 
 Laws regulating or restricting conamerce on the 
 
 86 
 
BEMEDIES. 
 
 one side ; and on the other permitting corporations 
 to be formed with unlimited powers are incon- 
 sistent and futile. They place the nation in the 
 position of sajing in one breath "thou shalt" and 
 in another "thou shalt not." 
 
 It must be remembered that the Sherman Act 
 is a severe one. It provides for both penal pun- 
 ishment and confiscation of property. Neither of 
 the latter can ever be efficaciously apphed. Pun- 
 ishment of the promoters or directors of trusts 
 is ineffectual because others will quickly step in 
 the place of the offenders and proceed with the 
 business. Confiscation would yield money to the 
 government upon a sale of the trust property. 
 But this has two disadvantages : it ruins innocent 
 people, (the thousands of stockholders and bond- 
 holders who are dupes or victims of the 
 billionaire promoters), and it does not stop the 
 aggregation of capital, for the confiscated prop- 
 erty being sold, the purchasers, principally made 
 up of former owners, would step in to continue 
 the business in question, and in another form 
 would soon be as dangerous as their predecessors. 
 Chase them from one hole and they will find refuge 
 in another. 
 
 How can there be any effective dealing with 
 trusts either by imprisonment or confiscation so 
 long as the law allows corporations with unlimited 
 capital and perpetual life? 
 
 87 
 
COMMEKCIAL, MOBTMAIN. 
 
 On tke other hand if corporations are abolished 
 the wheels of business will be at once stopped. If 
 one traces the history of capital for a few years 
 back, he will be convinced of the truth of these 
 assertions. 
 
 Moreover, there can be no complete solution of 
 this great question without labor being made a 
 direct party in the controversy. The dissolution 
 or extirpation of these great combinations involves 
 a blow at labor. I do not mean in this connection 
 to speak of the natural influence of labor organiza- 
 tions to check the deleterious effect of capital, 
 upon the rights and property of the people ; that 
 branch has been adverted to elsewhere. I mean 
 if businesses are broken up or stopped the effect 
 is immediately perceptible upon labor. Besides 
 there is a vast and serious question arising out of 
 the protection of bona fide purchasers and bond 
 and shareholders in the condemned corporations. 
 Every drastic step means the crushing or ruining 
 of innocent investors. 
 
 I BY NO MEANS CLAIM THAT THE CEN- 
 TRAL GOVERNMENT SHOULD NOT BE 
 VESTED WITH POWER TO CHECK A REAL 
 EVIL TO ITS CITIZENS CAUSED BY 
 AaaREGATIONS OF CAPITAL OR BUSI- 
 NESSES. BUT LAWS PASSED TO CHECK 
 SUCH AGGREGATIONS WITHOUT REGARD 
 TO WHETHER THEY ARE GOOD OR BAD— 
 
 88 
 
REMEDIES. 
 
 WHICH MOW DOWN INDISCRIMINATELY 
 —ARE DETRIMENTAL TO THE WELFARE 
 OF THE PEOPLE. 
 
 Comiiig now to a direct answer to the third 
 qnestion which I have propounded, I submit that 
 the nearest approach to a remedy to eradicate the 
 evils of trusts or unbounded individual wealth is 
 through taxation; that is, to give power to the Fed- 
 eral Government to tax combinations, and exact a fixed 
 percentage of all their profits: and to tax individual 
 wealth commensurately with its size. The income tax 
 amendment has now been passed, and much if not all 
 can be accomplished under its authority, — ^plus the 
 Commerce clause of the Constitution. 
 
 Those corporations that are in substance monop- 
 olies could be made the subject of the heaviest 
 taxation. At present the power to legalize combi- 
 nations and aggregations of capital enables indi- 
 viduals to enjoy monopolistic prerogatives by their 
 own voluntary act because under existing general 
 laws to form a corporation it is simply necessary 
 for a certain number of individuals to execute a 
 certificate, whereupon the license to act as such is 
 granted as a matter of course upon the payment 
 of the statutory fees. The most important of 
 these bodies usually begin in a smaU and unosten- 
 tatious way, but gradually increasing their cap- 
 ital, the public soon beholds vast combinations 
 created by consent of the statutes of the different 
 
 89 
 
COMMEBCIAIi MOBTMAIN. 
 
 States, enjoying all of the necessary powers to 
 enable them to become monopolies — ^large and 
 small corporations standing on the same ground 
 and clothed with the same privileges. In countries 
 where monopolies are legalized they are under the 
 control of the government and pay a fixed sum for the 
 valuable prerogative — thus, tobacco, matches and other 
 monopolies exist in European countries. How can 
 this be accomplished? 
 
 First. If the government concluded to license 
 monopohes. 
 
 By virtue of a law giving Congress plenary 
 power to create and control all corporations, 
 to regulate monopolies and to tax individual 
 and partnership wealth in proportion to its size. 
 It is hardly an open question (in view of the very 
 recent decision of the Supreme Court of the United 
 States) whether all of this power is not already 
 given under the pecuhar wording of the Income Tax 
 Amendment to the Constitution of the United States. 
 The States having denuded themselves of these 
 prerogatives, the central government can hence- 
 forth exercise exclusive authority over the sub- 
 jects involved. I do not stop to elaborate at 
 length the question of centralization. It is a 
 grave one. But we are met with this dilemma. 
 Either the States must yield the full power to deal 
 with the corporations and , the taxation of indi- 
 vidual wealth to the general government; or the 
 
 90 
 
KBMEDIES. 
 
 evil will go on — ^unchecked and increasing. Sup- 
 pose the states should limit the capitahzation of 
 corporations to small figures, and their oflScial 
 longevity to a reduced number of years! Their 
 usefulness as business instrumentalities would be 
 lost, and a blow struck at the commercial interests 
 of the country which could not be estimated. Cor- 
 porations are now as necessary a part of the com- 
 mercial system as the head is to the human body. 
 On the other hand, if certain corporations were 
 allowed even to possess monopolistic powers, 
 while the fields which they cover would be closed 
 to everybody else, the people of the country would 
 reap a large profit from the business. The devel- 
 opment of commerce would not be checked in other 
 fields, and persons of small means would create 
 corporations and use them effectually without fear 
 of government intervention until and unless they 
 arrived at such proportions in respect to capital 
 or pecuniary or business influence as to become 
 monopolistic, when the government would in due 
 course control them through the taxing powers. 
 To which horn of the dilemma shall we cling? 
 Moreover the government would then always have 
 the power to withdraw or dissolve the monopoly 
 and leave the whole field of industry involved 
 again opened to whomsoever chose to enter it. 
 
 But let us inquire as to what the surrender of 
 all this power by the States involves. Conferring 
 
 91 
 
COMMEECIAIi MOETMAIN. 
 
 express authority to tax corporations and individ- 
 uals upon the central government, as has no\*' been 
 done, hardly gives it more than it now claims to 
 enjoy through the Commerce Clause of the Con- 
 stitution. That clause has been so liberally con- 
 strued by the Supreme Court of the United States 
 that the central government is sustained in almost 
 every move it makes to guide or control corpora- 
 tions in the exercise of their respective functions. 
 This upon the ground that it can exercise full 
 interstate powers. Of course it is almost impossi- 
 ble to conceive of a corporation of any importance 
 which does not transact business in different 
 States, and step by step the Supreme Court of the 
 United States has advanced in its claim of power 
 until it is almost safe to say that all corpora- 
 tions of any importance are under the control of 
 the Federal government. Out of the necessities 
 and customs of men arise the law, and looking at 
 that small provision of the Constitution relating 
 to commerce, through the eyes of existing condi- 
 tions, the highest Court in the land has construed 
 the few words of this important clause so broadly 
 that it has taken under its fostering care not only 
 the control of commerce but all the instrumental- 
 ities of commerce which are necessary to create 
 or continue it — ^with the formidable additional 
 power to tax through the last amendment. 
 Many lawyers think tte Courts, in an honest 
 
 92 
 
EEMEDIES. 
 
 effort to check what is popularly beheved to be a 
 great and constantly growing evil, have already 
 stretched the meaning of the commerce clause of 
 the Constitution too far. But be that as it may, 
 the Income-Tax Amendment now opens the way in 
 conjunction with the Commerce Clause to clothe the 
 general government with all necessary powers. 
 
 Another thought presses on us in this connec- 
 tion. This question is not one of pohtics in its 
 restricted meaning, but of business. It would not 
 fimdamentaUy or disastrously infringe upon the 
 doctrine of federative government, if at all, to 
 clothe the central power with exclusive authority 
 to deal with corporations as one which must neces- 
 sarily be exercised by it for the coromercial benefit 
 of all of the States of the Union, and consequently 
 of all the inhabitants thereof, belonging to that 
 class of poicers which could not he separately ad- 
 ministered by the individual States with success. 
 And when we come to look into the principles 
 which underlie the formation of a federation it 
 would not seem inconsistent that the complete and 
 exclusive control over commercial corporations 
 should inherently belong to the central govern- 
 ment. It is akin to the power to regulate com- 
 merce, to levy taxes, etc., etc., "to pay the debts 
 and provide for the common defense and general 
 welfare of the United States," to establish a uni- 
 form rule of naturalization and uniform laws on 
 
 93 
 
COMMEECIAli MOETMAIlSr. 
 
 the subject of bankruptcies; to coin money; to 
 establish post offices and post roads; to declare 
 war, etc., etc. It is clear that the different states 
 cannot successfully treat the great commercial 
 problems of the day. 
 
 Second. As I have intimated, there must neces- 
 sarily be congressional legislation to carry into 
 effect the amended constitution. 
 
 Third. The amount of tribute to be exacted: 
 
 Here another important question arises; what 
 would be fair, in consideration of the enjoyment 
 of a monopoly? What should the government re- 
 ceive of its net profits? This question I do not 
 discuss. It is most delicate and far reaching. I 
 simply open it for discussion. But in any case 
 the returns would be almost sufficient to run the 
 government without other taxation, and as the 
 monopolies could be carried on under the eye of gov- 
 ernmental agents, only a fixed and reasonable cheurge 
 for the particular product dealt in could be exacted 
 from the public. 
 
 A fair idea of the revenues which the central 
 government would derive from its interest in these 
 chartered monopolies can be drawn from the tax 
 which the steel corporation could pay. Its net 
 annual profits average say about one hundred and 
 twenty millions of dollars. Having the business 
 in its hands without any substantial interference 
 it could perhaps easily earn one hundred and 
 
 94 
 
EEMEDIES. 
 
 fifty millions a year, of which the government 
 would receive its fair share; say one-third — leav- 
 ing enough for fair dividends on its shares. 
 
 In consideration of the States having relinquished 
 their right over these subjects a considerable part of 
 the revenue derived from the above source should be 
 distributed cimongst them in some fair proportion. 
 The states would thus be reimbursed the income 
 which they now enjoy from corporate and other 
 taxation directly taken from them. 
 
 Fourth. When is a corporation monopolistic? 
 
 There are two methods of determining this 
 question: by the influence and control which the 
 accused corporation exercises in the particular 
 field of industry in which it is engaged. It is a 
 palpable fact that there are several corporations 
 which now absolutely dominate their respective 
 businesses. 
 
 But there is another and perhaps a more satis- 
 factory method of declaring a monopoly, i. e., by 
 its earning power. It seems that we have reached 
 a point in our national life when incomes of corpora- 
 tions and individuals of great dimensions must be taxed 
 by the government and it must arbitrarily fix the limit 
 of individual wealth at a figure which when reached 
 must be subject to governmental control. 
 
 I have no fixed views as to exact figures. I am 
 only outlining a general plan — putting forth sug- 
 gestions upon which exact legislation may be 
 
 95 
 
COMMEECIAIi MOETMAIN. 
 
 based. As to individuals — suppose a basis of 
 twenty-five million of dollars should be adopted 
 as the liTrn't of wealth — ^the earning power of 
 which, at four per centum would be one million of 
 dollars per annum. After such sum was earned, 
 the government might levy a tax of a fair per- 
 centage of aU income beyond the one million. Of 
 course some outcry would be raised against any 
 such plan as confiscatory and socialistic, but it is 
 not socialism in any of its abhorrent forms. It is 
 nothing more than the levying of a just tax as a 
 return for governmental protection of individual 
 fortunes. The evil influences of aggregations of 
 capital I have already shown (pp. 55-67). Their 
 direct tendency, nay their actual effect is, to pre- 
 vent that equality of opportunity which every 
 republican or civilized form of government is 
 bound to guarantee to its citizens. To check the 
 evils of financial oligarchy is a pressing duty and 
 it is easily and rightfully performed by requiring 
 such contributions to the general treasury as will 
 eventually remove many distressing burdens 
 which now weigh upon the people, and enable the 
 government to re-distribute this body of wealth 
 in such a way as would produce a greater equality 
 of conditions than now exist — ^without waiting for 
 such wealth to return to the community through 
 the natural but slow methods of extravagance and 
 luxury of its possessors. 
 
 96 
 
REMEDIES. 
 
 Measures which now seem radical are not in 
 fact so. The power of corporate and individual 
 wealth has been allowed to go on unchecked until 
 we suddenly find ourselves almost in the fetters of 
 a financial oligarchy; the government has kept 
 no tally upon the resultant evils ; it has not from 
 time to time gauged the influence of aggregated 
 wealth, nor has it applied restrictive measures in 
 proportion as the evils developed. All at once we 
 are conscious of the existence of a serious disease 
 in our midst which may become fatal if heroic 
 measures are not invoked. Hence any efficacious 
 treatment of the malady must seem radical, which, 
 if remedies had been timely apphed as the evil 
 progressed, would have seemed natural. Having 
 passed the period of gradual treatment, the cure 
 can only be effected by a coup d'epee. 
 
 Governments from time immemorial have regu- 
 lated the rate of interest. Their right to do this 
 has never been seriously questioned. And yet the 
 exercise of this power involves the decimation of 
 property — the absolute taking from the owner of a 
 substantial part of it. If the rate of interest be 
 six per cent and the legislature decreases it to four 
 the loss upon those who depend upon income for 
 support is very large. An investor with $100,000 
 instead of receiving a return of $6,000 for his 
 money only has $4,000. This is a clear net loss 
 and it in effect deprives him of, in round figures, 
 
 97 
 
COMMEECIAL MOETMAIN. 
 
 about one-third of his principal. It would not be 
 novel therefore if a government under a scheme 
 of a graded income tax should so regulate it as to 
 compel those persons who possess large incomes 
 to pay a very substantial part of the same every 
 year or in fact to tax the principal itself. It hag 
 been frequently said that in the exercise of its 
 taxing powers a nation can invade the sacred pre- 
 cincts of an individual ownership even to the ex- 
 tent of confiscation. 
 
 I come now to suggest a specific remedy to meet 
 cases of monopolies, combinations and syndicates 
 which are detrimental to the real interests of the 
 people; for the government is interested in no 
 other case. To justify a criminal statute there 
 must be involved a positive wrong to the public. 
 
 The whole community, as Blackstone argues, 
 is assumed to be the person injured by every in- 
 fraction of the public rights belonging to that com- 
 munity and is therefore in all cases the proper 
 prosecutor for every public offence. 
 
 If the common law could be invoked in the fed- 
 eral courts in criminal cases it would be unneces- 
 sary to frame any new law to punish and suppress 
 monopoKes. 
 
 But these Courts have no jurisdiction in such 
 cases without express legislative authorization. A 
 statute is therefore essential. 
 
 98 
 
BEMEDIBS. 
 
 Cases may arise which may call for prompt 
 action and there should be a remedy at hand to 
 meet such an emergency. But statutes are always 
 dangerous instruments ; for when a legislator puts 
 his pen upon paper to write a law it is simply 
 impossible to avoid disputes as to the meaning and 
 application of his language. Words cannot be 
 used which will cover every case. The more spe- 
 cific the language the more prolific the disputes. 
 Language meant for one state of affairs is applied 
 to another, and words intended for one class of 
 offences are diverted and applied to others. Law- 
 yers are trained dialecticians and can often make 
 the worse appear the better reason to dash and 
 perplex maturest counsels. One of the great ob- 
 jections to the Sherman Act is it aims to be too 
 specifia For example, its framers deliberately and 
 unjustly sought to discriminate in favor of labor 
 but the Supreme Court of the United States, dis- 
 regarding the debates in Congress, held that the 
 language of this Statute was broad enough to em- 
 brace labor combinations and it was so decided; 
 whereupon labor goes to Congress and prevails 
 upon that body to exempt it from the operations 
 of the Sherman Act — ^which unfair discrimination 
 practically destroyed the morale of the law, be- 
 cause combinations of labor are as obnoxious as 
 those of capital. 
 
 The safest course for a law maker is, whenever 
 possible, to use general language which wiU meet 
 
 99 
 
COMMEEOIAli MOBTMAIN, 
 
 all cases within the scope and intent of the legisla- 
 tion. 
 
 There is a series of crimes at common law 
 which are known as "Offenses against Public 
 Trade" in which were embraced monopolies and 
 all kindred acts. Congress should re-adopt the 
 common law — ^making all acts against public trade 
 punishable criminally and civilly. Of course they 
 must be of an interstate character to confer fed- 
 eral jurisdiction. I should leave it to a Court and 
 Jury to decide whether particular acts assailed 
 were against public trade and injurious to the wel- 
 fare of the people, and I should empower the Jury 
 to fix the punishment and assess the damages to 
 any party injured by the monopoly — ^thus closing 
 the controversy in one litigation. A statute of the 
 kind suggested would simplify both the law and 
 the practice. 
 
 The Court and Jury having found as matter of 
 law and fact that an act challenged was an offence 
 against public trade there would be little or noth- 
 ing left for an appeal, and the public would be 
 satisfied with the result. 
 
 To sum up: The treatment of corporations 
 small and great is the problem of the age. Hither- 
 to our laws have been illogical, partial and even 
 slovenly. The great point is whether this sup- 
 posed evil of corporate consolidation and finan- 
 cial aggrandizement is not one which may correct 
 
 100 
 
BEM£DI£S. 
 
 itself; whether we have not already reached an 
 epoch in our commercial history when business 
 must assume another form; whether, if there be 
 evils connected with industrial aggregations they 
 will not be checked by combined labor ; and lastly 
 whether the whole subject should not be regulated 
 through taxation. Everything has its limit of 
 life and the inevitable laws of final destruction 
 applicable to humanity will in due course through 
 the disease of mismanagement, new discoveries or 
 natural causes, ultimately destroy the most 
 powerful industrial consolidations which man can 
 build. 
 
 THE END. 
 
 101