The War Against Trusts in America

Arthur Beaves in the International December 1 1908

The War Against Trusts in America

Arthur Beaves in the International December 1 1908

The War Against Trusts in America

Arthur Beaves in the International

Fwe wish to understand the real causes of the crisis which disturbed the economic life of America during the last few months, we must look beyond financial difficulties to the struggle between the trusts and the people. It was this struggle which destroyed the confidence of the people in the stability of the economic order and of those industrial and financial institutions which are supposed to support it. And since the financial existence of America is. wholly based upon a widely extended credit system, this loss of confidence made the quiet transaction of financial affairs impossible. As soon as this confidence disappeared and ready-money payment was more extensively demanded instead of credit, it turned out that the currency of the country only amounted to a minute fraction of the sums that had hitherto changed hands without requiring recourse to ready money, and the threatened financial bodies could not procure the necessary money that was demanded by the terrified people, although they took the greatest pains and offered the highest rates of discount. Thus it may be explained how institutions that were in reality quite well placed, were forced to stop payment, and could only resume their business and meet their liabilities some months later. But all this reacted upon the industrial life of the country: factories were closed, workmen were dismissed, and the country that had been so prosperous passed through a severe crisis. And the primary cause of all this, as before mentioned, is to be found in the conflict between the trusts and the people.

After the end of the Spanish War at the conclusion of the nineteenth century a movement of concentration, which up till then had been extremely slow, began to make itself felt throughout the industrial life of the country. In the most important industries companies which had hitherto engaged in competition united to form large combines. In some cases a predominant company acquired most of the shares in the

other companies, and thus gained actual control of its business tactics. In some cases all the companies joined in still closer union to form one large company, which thereby acquired a position of monopoly. From that time America has been ruled by several large industrial companies. The “American Sugar Co.” controls the entire sugar production of the country : the

“Standard Oil Trust.”’ the capital of which is just about to be raised to 600 million dollars. controls the petroleum supply : the “Tobacco Trust” the tobacco industry, and the “Steel Trust” the steel production of the country. The union of these industries made large economies in working possible. On the other hand, works which did not pay could be shut down, and the whole production could be concentrated in some few factories which were fitted with tfr best plant and could be worked with all the advantages that wholesale production implies. All plans of industrial activity could be worked out on a large scale, and all possible advantages could be calculated. Thus the Steel Trust proposes to erect gigantic works on the borders of Lake Michigan. A great part of its production is to be concentrated there, and for this purpose a new town has been built on what was formerly deserted land. This town has been called Gary, and accommodates 50,000 people, workmen and clerks and their families. On the other hand, the cessation of all competition between the single companies rendered unnecessary the huge and costly machinery formerly employed for advertising. Their rival agents and travelers bent on underselling each other no longer traverse the country. All industrial activity is strictly limited to the supply required for actual production and sale. All this considerably increased the profits of the companies concerned. Wages could be raised, and the general business life of the country profited considerably by this.

But the trusts did not content themselves

with these natural advantages, which were

indeed good for them and for the whole country. They sought greater profits by making the utmost use of their position of monopoly.

Being free from all competition they gradually raised their prices, and thus exercised a heavy pressure upon the consumers. Other trusts arose—such as the “Beef Trust/'’ which monopolized the meat trade of the country—which in the first place were not at all concerned with working economies, but principally with the raising of prices. The whole body of consumers, i.e. the people of the United States, felt helpless in face of all this, and this very sense of helplessness in face of the encroachments of capitalistic powers, perhaps even more than the actual financial damage, aroused the wild indignation of the people. They forgot all the advantages of centralized trade activity, they only remembered the raising of prices and the loss to the public. They angrily demanded the

breaking up of the trusts, and a return to the free competitive sys-

tem. Only a small minority possessed sufficient insight into the laws of economic development to understand that it was impossible to take a step backwards towards the industrial anarchy of former days, and that the danger of private monopolies could only be avoided by giving them over to State control. They realized that such a course would retain all advantages of working economy and would, avoid all the dangers of monopoly prices. This view of things found the greatest number of adherents among the workers themselves, who naturally repudiated any scheme that implied the splitting up of industrial production *and hence the decrease of profits and wages. But even amongst them there was much confusion and perplexity, if we except the Socialist party.

The farmers and petits bourgeois again, who had grown up firmly convinced of the advantages of industrial competition, excepted everything from the forcible destruction of the trusts and the return to the old system of many separate companies.

This popular feeling found expression in two ways: in self-help and in acting upon the Government policy.

The Civil War in Kentucky is the most characteristic example of the first method. The agriculture of this State consists chief-

ly of tobacco growing, and the farmers who devoted themselves to its cultivation saw their economic prosperity threatened by the Tobacco Trust. The trust made use of its position as a monopoly to exercise severe pressure upon the prices, so that the farmers gained less by the sale of tobacco than the planting had actually cost them. They were furiously indignant, and 27,000 farmers joined the union of tobacco-planters. But even they were not capable of checking the trust, and they resorted to open violence. Armed bands of masked farmers attacked the small towns of the State by night, burned down the trust warehouses and terrorized all the farmers who would not join the union. Thus at midnight on the 6th December, 1907, the Town of Hopkinsville, with about 10,000 inhabitants and a flourishing tobacco industry, was attacked by 300 armed men. The tobacco factories were set on fire, and the fire brigadç was prevented from turning out. Only the fact that it was an absolutely calm night saved the whole town from destruction. A citizen who tried resistance was killed, the houses of the opponents of the union and the printing offices of the Kentuckian, a paper that had advocated the trust policy, were destroyed. Similar raids were repeatedly carried out in smaller towns. But in spite of all this, the authorities of Kentucky State could or would not find out the evil-doers, and, just as in the case of the lynch trials of suspected negroes, the guilty were left unpunished. At the same time the Federal Courts began proceedings against the Tobacco Trust, which was accused of illegal conspiracy to the detriment of free trade. This accusation was based on the so-called Sherman law, which forbids all such combinations. The case is now before the Federal Court in New York, and will soon be definitely decided by the Supreme Court of the United States.

This brings us to the second aspect of the opposition : the fight against the trusts by influencing the Government policy. The destruction of the customs barrier naturally appeared to be the simplest means of breaking the power of the trusts, for European competition was thereby called in against them. The editors and publishers of the country are demanding this course of action at this very moment, because they complain of the rise of paper prices owing to

the Paper Trust. A commission of Congress is at present engaged in investigating all facts relative to this matter, and in deciding for or against the claims of the publishers. It is not impossible that the important influence of these very editors and publishers upon all political parties will prove strong enough to force the giving up of the duties on paper. But with the exception of the paper industry there is little hope of success in this direction, for the ruling Republican party is pledged by its programme and by the feeling in industrial circles, to which it owes its success in the elections, to a rigid system of protection.

In reality other means of warfare were chosen. For some time the Democratic party had been pledged to opposition to the trusts, and for several years the left wing of the Republican party under the leadership of President Roosevelt had also adopted these ideas. At first they were content with punishing the use of unfair means employed by the trusts in fighting the firms which had remained independent. Thus an action was brought against the Sugar Trust, which had taken over the greater part of the shares of a rival company and had then shut down its works to the detriment of the remaining shareholders, owing to the majority it had in the general meeting. The courts are now hearing this case. The trusts were in the habit of forcing the railway companies which were under their influence to grant them preferential tariffs, while the independent firms could only forward their goods at very high rates. Under the influence of Roosevelt a law was passed which makes the granting of such preferential tariffs a punishable offence, and several actions have since then been brought against railway companies who did so, as well as against trusts who were proved to have accepted the offers of the railways. The gravest accusation was brought against the Standard Oil Trust which was proved to have disobeyed the law in this respect several times, and was condemned to pay a fine of 150 million dollars.* Another paragraph of the above-quoted “Sherman Anti-trust Law” condemns every combine that results in the limitation of free trade,

*The United States Court of Appeal in Chicago has since the time of writing this article cancelled the judgment.—En.

and it is clear that in this way any and every activity of the trusts could be thwarted. Everywhere proceedings were opened against the trusts by their most zealous opponents, to which the Federal Minister of Justice Bonaparte, belongs, and the financial circles which had hitherto been so powerful were seized with panic. A short time ago the Supreme Court of Justice of the United States admitted that the Sherman law might also be applied to combinations of trades unions against unorganized workers and firms who employed them, and heavy damages were brought against such combinations of trades unions. This caused a storm of indignation amongst the workers, and their leaders remonstrated in Congress accordingly. Roosevelt actually promised to introduce a bill that would ensure freedom from penalty to combines of trades unions as well as to trusts, in as far as they acted openly and without having recourse to illegal means. But the extended demands of the workers who demanded these rights for their own unions, but not for the trusts, were not considered in the law, and as the two parties did not come to terms the decision of Congress was indefinitely postponed. Thus everything has remained as it was in this direction, and any and every action of the workers’ and capitalists’ combines can be rendered impossible according to the arbitrary decision of the courts which select one case or another from the long list of offences against the law.

All this has destroyed the progressive development of American economic life, which was formerly so stable. It has rendered all calculations with regard to the future impossible, and has aroused a fear of increasingly harmful measures among those concerned. As long as the Government and the people adhere "to the present method of opposing the natural course of economic development by means of legal verdicts and fines, thev will not be successful as far as their wishes are concerned. They will, on the contrarv, prevent the country from regaining its industrial equilibrium, from reemploving its dismissed workers, and from finding a paying employment for its industrv. With the sound sense of the American people this state of affairs can hardly last much longer. The indignation aroused by the tactics of the trusts with regard to

•prices dimmed their keen business sight for the time being, and gained success and the support of the people and the representative bodies for those who were actuated by motives of passion rather than of economic consideration. But the terrible financial and industrial crisis which Roosevelt and his party conjured up has had a sobering influence. The people are beginning to take a different view of things. A strong conservative group is demanding the suspension of the laws of exemption for trusts, and influential combines of organized workers are not unwilling to join them in order to prevent the application of such laws to their own unions. During the recent negotiations they almost united and caused the suspension of the exemption laws. On the other hand, as far as the inveterate opponents of the trusts are concerned, the theoretical understanding of the laws of economic development is more and more gaining ground. Bryan, the Democratic candidate for the Presidency, has openly declared himself in favor of railway nationalization, which plays a much greater part than in Europe, owing to the great distances in the United States, and to the fact that the country is only opened up to a very limited extent. If Bryan were to be successful in the Presidential campaign next autumn, and able to realize this programme.

the nationalization of railways would doubtless be followed by that of the other great industries, and the Trust problem would thus be solved in a socialist sense. On the other hand, William Hearst, the leader of the “Independence League,” and the possessor of an ever-growing influence among the masses of the people, is preaching war to the knife against the trusts. But he, too, does not uphold the exemption laws as much as he recommends the municipalization of the most important urban industries and the more intense control and supervision of industrial life by the State. The policy which he advocates if consistently applied would also lead to socialism.

Of course the ruling Republican party, which has every prospect of reasserting itself, remains true to its advocacy of the exemption laws. Thus the uncertainty and confusion in the industrial life of America may last a few more years, until the evergrowing harm to the national prosperity brings about a change in popular opinion and leads to the success of that political party which does not aim at a struggle against evolution and a return to the industrial anarchy of former days, but rather at the consistent progressive development of industrial life and the nationalization of all private monopolies.

A woman, when she marries, wishes to be taken for her own sake, not as payment for a debt.

I find that attention to the smaller details often makes life possible when the larger worries threaten to overwhelm me.

Whenever a woman meddles with an affair, there is always something else started other than what was originally intended.

Ladies for the most part lie under such a high pressure of propriety that they welcome a little unconventional license at times

1 believe it is one of the attractions for women in the society of the opposite sex, quite apart from any idea of love and admiration, that men do not criticise them.

She was living in a state of existence in which all that is necessary is to travel through one’s allotted span of years without anything very bad being said of one, and then to die, unmourned, unmissed.—From “ Brendavale,” by Ernest Black.