amount of capital thus concentrated during the first two months of 1899 is considerably greater than during the whole of 1898; and in the thirty-one days of March the capital of the companies chartered in New Jersey was $1,111,000,000. As I am writing these words the morning paper is laid upon my table, with a brief telegram announcing the formation of two new combinations in industries of which I had scarcely heard, one of them involving a capital of six millions, and the other of sixty-five millions. It is rather a dull day which does not report to us some new trust with an issue of anywhere from one million to two hundred millions of dollars insecurities." The businesses which do not fall into this category are getting to be exceptional. About all this it is necessary to form reasonable and temperate judgments. It is impossible to believe that a tendency so universal and irresistible is wholly irrational or wholly unsocial. It must be grounded in economic and moral necessities. It must be the product of causes which we ought to understand, and with which we may be able to co-operate. Doubtless it is an indication of the failure of competition as the regulative principle of our industrial life. The one thing that these multiplying trusts with one voice proclaim is that competition is doomed. Competition, they all say, demoralizes and paralyzes industry. It offers enormous advantages to dishonesty and inhumanity. The sweater and the bloodsucker who have no mercy on their employees can always undersell the employer who strives to maintain a living wage. The merchant who pays his debts can never compete with a rival who fails every four or five years, any more than a solvent railroad can compete with one in the hands of a receiver. The tendency of competition is toward the wrecking of all but the least scrupulous. Besides, the great expense of advertising, and of all other methods of getting business, makes the goods cost the consumer far more than they should, while the moral strain involved in many of the methods which are becoming well nigh universal is often very damaging to character. Such is the testimony of the men who are entering into these combinations. "What is the use," they demand, "of cutting each other's throats? It is better to unite than to fight. Competition is destroying us; let us cooperate." Such is the plea of the new industrial movement, and it has deep moral significance. The whole truth is not yet told, as we shall see; but so much as we have told is true, and it is truth which is bound to have revolutionary consequences. The abandonment of competition as the regulative principle of industry and commerce is what this entire movement contemplates. It may be doubted whether this mighty change can be effected, but the current is flowing that way with constantly increas ing volume. And no man can doubt that one of the forces which are driving busi ness in this direction is a moral revulsion against the oppression and inhumanities of competition, and a sickening weariness of strife. That this tendency has a good side, and that much that is highly creditable to our humanity finds expression in it cannot, then, be doubted. And any one who attends the various trade conventions, and observes the growing spirit of fraternity which animates these bodies of business men, must be made aware of the appearance of new sentiments in the business world. Among the men who assemble in these conventions there is yet, no doubt, a great deal of sharp competition, but the fact that they come together evinces their feeling of a need of co-operation; and the hearty good-fellowship which finds expression among them is a clear sign of a better day. That the trade conventions have prepared the way for the present era of industrial combination I cannot doubt. Economic reasons of force also urge forward this movement. In production on the large scale great economies are secured; the division and the organization of labor can be more effectively introduced; the cost of superintendence as well as of the purchasing of materials and the marketing of products can be materially. reduced. The utilization of waste and the development of by-products are also an enormous economic gain. Out of all this, after reasonable compensation to capital and labor, the consumers ought to reap an abundant harvest. From such a broad application of scientific method to the business of production and exchange the community has a right to expect an immense cheapening of all the necessaries of life. This is the argument by which the trusts justify themselves; and it need not be denied that in some, at least, of the common commodities a substantial reduction of cost has been effected. Whether this reduction in any case has been as great as it ought to have been may, how ever, be questioned. And it is just at this point that the whole tendency comes under criticism. When the promoters of these stupendous combinations cry out against the waste and destruction of industrial war, and proclaim that it is better to unite than to fight, some of us, who for many years have been pleading for the moralization of industry, are more than willing to assent. And it is significant that the head of the greatest military power on the earth is lifting up his voice at the same time to testify against the gigantic competitions of international war, and to call for a trust of the nations which shall put an end to it. All this, so far as it goes—and I think that it goes very far-is a most impressive recognition of the truth that the Christian way is the right way; that Christ's law is coming to rule in all the kingdoms of the world and in all the affairs of life. From such a height of vision there is no possibility of permanent return to the lower conception of a former time. What the Czar has declared and what the trusts are proclaiming is the everlasting truth: the world sees it, and some way must be found of adjusting to it our international and our industrial relations. 66 When, therefore, the promoters of the trusts and combines say to us, "We have a right to put an end to the wicked waste of industrial war," we answer, Yea, verily;" and when they say, "We ought to be able to avail ourselves of the best scientific methods of reducing the cost of production and of utilizing the by-products of industry," we answer, "Be it so;" and when they say, We must be permitted to protect our capital from destructive competition," we heartily consent; and when they say, "We are entitled to a fair remuneration upon the capital invested," we reply, " By all means." But it is at this point that the whole proceeding must be challenged. Is that precisely what these combinations are aiming at a fair compensation for the use of capital actually invested? If that is all, the movement is clearly beneficent. But the figures, as reported, do not read that way. There may be exceptions, but my eye has not happened to rest on one. In all cases, so far as I know, the properties and businesses thus consolidated have been capitalized for a great deal more than their actual value-generally for twice or more than twice their cost. The intention is not concealed to secure dividends on double the amount of capital which the owners of these properties have invested. Each company apparently expects that by this shifty operation its property will be increased one hundred per cent. or more. For this enormous increase of its computable wealth it has given nobody any equivalent; the addition to the estate of every shareholder consists in an expected contribution from the earnings of his neighbors. In all these cases monopoly is aimed at. Such an inflation of capital is simply absurd unless monopoly is secured. No concern without practical monopoly can undertake to pay dividends on twice as much capital as is necessary for the business; for there will be other concerns that will be content with returns on half the amount, and by such rivals it will be undersold and driven from the market. The enormous inflation of capital connotes virtual monopoly. And this means a determination to extort from the public money for which no equivalent has been given. The excess of monopoly price is of this character. It is simply a method of levying tribute. The billions of capital that are going into these great combinations are thus the bold advertisement of a purpose to compel the army of consumers to contribute to the rapid enrichment of their promoters. It is idle to try to put any other construction upon it; the enormous inflation of capital means this and can mean nothing else. There is another feature of this business which threatens tragic complications. The fictitious capital of all these combinations is thrown upon the market, and seems to find eager purchasers. The claim of monopoly encourages investors to believe that the stock will yield adequate returns, and hundreds of thousands of people, of all sorts and conditions, are becoming shareholders in these great companies 66 many of them thus investing all their small savings, and depending upon the promised dividends for livelihood. The promoters, as a rule, hold preferred stock or debenture bonds; the common stock is marketed. In this way great numbers of people become interested in the maintenance of monopolies. Conservative bank ers all over the country are warning people against these dubious securities, but the warning does not seem to be heeded; a great deal of money is seeking investment, and the industrials" find ready purchasers. A leading banker of Indianapolis said to a friend of mine the other day that what is going on in these days is a redistribution of wealth; the savings of the many, he said, are rapidly passing into the hands of the few. This may be redistribution; I should prefer to call it reconcentration. Certainly the people who purchase these shares do not understand that they are contributing to the enrichment of the few; they suppose themselves to be acquiring ownership in productive property, and they will strenu ously demand that the property be made and kept productive. This can be done, as we have seen, only by the maintenance of monopoly. And, doubtless, the managers of these great companies, backed by the army of those to whom they have sold the shares, will exert all their power to maintain the monopoly, that they may be able to extort from the public profits large enough to pay the dividends on all their fictitious capital. Will they succeed? It is rash to predict; but experience shows that such things are not impossible. It begins to be doubtful whether legal remedies are effective against an aggregation of several hundred millions. It is difficult to organize any competition which shall successfully contest a monopoly of such dimensions, which can well afford to spend several millions every year in killing competition; against the war fund which every great combination of capital maintains it is almost madness to contend. And while many of the trusts now forming will undoubtedly fall to pieces, the economic reasons to which I have referred will continue to operate with increasing power, so that other and stronger combinations for the same purposes are likely to succeed them. tecting their investors these companies will either succeed or fail. Let us assume that they will fail-that they will not be able to maintain their monopolies, and that they will, therefore, be unable to pay dividends on their shares. The billions of dollars now being poured into their treasuries will in that case be lost to the investors. Can any man estimate the suffering and distress which such a default would entail? Is any prudent man willing to face the indignation of these multitudes? Will any far-seeing man outline for us the social discontent and fermentation likely to result from such a colossal disaster? On the other hand, let us assume that the trusts will succeed in maintaining their monopolies, and thus in paying dividends on the masses of fictitious capital which they are now putting into circulation. In this case the investors should be measurably content; but how about the consumers? From them all this vast tribute will be extorted. Many of the necessaries of life will be made dearer to them by these monopolies. The drain upon their resources of this stupendous over-capitalization will be constant and deadly. Does any sane man believe that they will continue to submit to it? It is not to be expected. The American people are not slaves, nor will they endure such an imposition. If these combinations are protected by law, some way will be found of setting aside the law. Of course such mighty masses of wealth, with vested rights, and with their roots spreading so widely throughout our society, will not yield their power without a struggle. The nature of this struggle will be quite different, however, from that indicated by Mr. Kirkup in the passage I have quoted. The "vast educated and organized democracy, subsisting on precarious wagelabor," is not going to "find itself face to face with a limited number of mammoth capitalists" merely. If that were the issue, the problem would be simpler. These mammoth capitalists will be backed by a large number of shareholders, whose interests have become adverse to the interests of the consuming masses, and who possess enough intelligence and social influence to make the contest difficult and perhaps desperate. They will maintain, One of two results is certain. In pro- and with some justice, that the State has legitimated the property they hold, and encouraged them to invest their money in it, and that the State must protect their interests. Such is the conflict which we are preparing for ourselves. I do not pretend to know exactly how it is coming out, but I know that the seeds of madness and violence are being sown broadcast every day, and the harvest is coming sure and soon. Such a gigantic attempt to bind burdens upon the whole community of consumers must provoke a violent reaction. These billions of watered stock are simply a legalized demand upon the people for contributions of their substance to those who have given them nothing in exchange. The feudal lords of the olden time made no more unjust demand. It will not be endured. And there is terrible danger that these injustices will be swept away by a whirlwind of popular wrath. Professor Albion W. Small, the head Professor of Sociology in the University of Chicago, cannot be suspected of reckless enmity toward capitalists, but he has just been testifying that the tendencies of which we have been speaking are ominous. "In this age of so-called democracy," he says, "we are getting to be the thralls of the most relentless system of economic oligarchy that history has thus far recorded. That capital from which most of us directly or indirectly get our bread and butter is becoming the most undemocratic, atheistic, and inhuman of all the heathen divinities." Professor Small goes on: "I am not thrusting the dust of my library in your faces; but if you heed the symptoms from bank and office, factory and railroad headquarters, and daily press, you have discovered that the very men who have made these combinations are beginning to be frightened at their shadows. These very business men, who claim a monopoly of practical horse sense,' have involved themselves and all of us in a grim tragedy. They are asking in a quiet way how it is all going to end. Whether they realize it or not, our vision of freedom is passing into the eclipse of universal corporate compulsion in the interest of capital. The march of human progress is getting reduced to marking time in the lock-step of capital's chaingang. It would make infinitely more for human weal if every dollar of wealth was cleaned off the earth, if we could have instead of it industry and homes, and justice and love and faith, than to be led much further into the devil's dance of capitalization." I do not quote Professor Small's words to indorse them all, for I am trying to speak in a manner somewhat less heated; but I am sure that he is not astray in his prediction that those who are pushing these schemes of inflation are involving "themselves and the rest of us in a grim tragedy." That many of them have no conception of the probable consequences of their conduct I freely admit. But there is slender comfort, after the disaster, in being able to say that you "didn't know that it was loaded." There is one class of capitalistic aggregations, based on monopoly, against which popular indignation is likely to be kindled even sooner than against the so-called trusts. I refer to those which are founded on municipal franchises. Most of the companies owning these franchises have issued capital far in excess of their actual investment, have disposed of the stock thus issued, and are charging enough for the service rendered the public to pay the dividends on all this watered stock. If they were content with a fair return on what the plant has actually cost them, the price of the service could be greatly reduced. A fair return on their actual investment nobody grudges them, but the privilege of taxing the community to pay dividends on two or three times as much money as they have invested is going to be questioned one of these days. When the reckoning day comes to our monopolies, some sharp inquisition may be made into the fundamental equities of many of these institutions. Vested rights will be respected, I have no doubt; but vested wrongs may be called to account. It is probable that some new legal maxims will be framed and enforced, and that our jurisprudence will be enlarged and invigorated by a new application of ethical principles. Whether corporations in any sense private will long be permitted to manage public utilities may be doubted; but if they do, they will certainly be required to govern their conduct by a strict regard for the public welfare. The principles which should rule in this department of our social life are perfectly clear; if our lawmakers and our city authorities and our judges would recognize and enforce them, we might hope to solve these problems peacefully. But here, more recklessly and rapaciously than anywhere else, capitalistic and corporate greed is seeking to fasten its grasp upon great privileges and to secure legal power to tax the community heavily for years to come. In many cases, in most cases, I fear, these efforts are successful; some of those who are called our best citizens are interested in the perpetration of this injustice; the rest of us sit still and permit the yoke to be bound on our necks. All this is likely to cost us heavily some day; here, too, we are sowing the wind, and shall reap the whirlwind. Is it not time that sober men and women of all classes were trying to think this business through and see what the issue must be? Can the enormous creation of fictitious capital which we are now witnessing have any other significance than this a determination to exact from the industries of the country vast contributions for services not rendered? Is this consistent with justice or freedom? Is not this the very substance of feudal oppression? Will a free people continue to submit to it? "Universal corporate compulsion in the interest of capital" is the goal toward which, in the estimate of Professor Small, our economic world is moving. Of course we shall not tarry at that goal; probably we shall never reach it. The swifter and the stronger the movement toward it, the more prompt and resolute will be the revolt. When the purpose becomes evident, these vast aggregations of capital will be seized, their holders will be expropriated, and the properties will pass under the control of the people. Industrial feudalism, when it is finished, will be speedily transformed into industrial democracy. Thus it is that the present tendencies in the business world are carrying us toward Socialism at a plunging pace. The shrewdest capitalists themselves recognize the fact; one of the monopolists is quoted as saying the other day what Mr. Kirkup said twelve years ago, that the promoters of trusts are the most powerful agents of State Socialism. It is greatly to be deplored that we should be driven toward it at this rate and along this route. It would be better to go slowly and tentatively: by the municipalization of public utilities, by the nationalization of railways and telegraphs, and by the education of the people through these great co-operations. The danger now is that we shall be forced into the undertaking of great tasks for which we are not prepared, and that the tempers engendered in the struggle will unfit us for wise administration. Doubtless the industrial methods which the trusts are introducing have come to stay. All that they urge about the waste and mischief of competition and about. the great economies of co-operation on the large scale is perfectly true. Concentration in all the great industries is the word of the hour. We can no more go back to the old economic régime than we can return to the stage-coach and the hand-loom. The only question is, Who shall control these vast enterprises? Is the capital of the country all to be gathered into the hands of a few men, and administered by them according to their pleasure? Doubtless if we could be sure that the managers of these gigantic industries would all be sagacious and unselfish men, consulting the public interest in all their actions, this might be a desirable arrangement. But experience does not encourage us to look for such virtues in those who possess such enormous power. What we should have, if this condition prevailed, would be an economic feudalism, with powers wholly unexampled in history. The only alternative seems to be industrial democracy-the possession and administration by the people of the means of production and exchange. Toward this we are surely moving, but it would be well if we could go very slowly. It ought to take us several generations to arrive at this goal. The people need to be educated in the comprehension of their social relations. They are receiving this education; the progress that they have made during the past quarter of a century has been rapid; but it is not easy to unlearn the maxims and extirpate the habits of the old individualism, and to train the people to work together for the common interest. The trusts are right when they tell us that this is the way; they are only wrong when they limit the maxim to the |