policy and our own is found in the common law. From that point of departure the anti-trust policy has been developed in the United States to a position almost the exact opposite of the British attitude. We have no half-way programit is either prohibition or regulation of monopoly. Many students of the subject will agree with Dr. E. Dana Durand "that it is necessary either to prohibit and destroy the trusts and pools, or to regulate their prices and profits."*

Those who take the former horn of the dilemma stand with the Federal policy of enforcing to its full intent the provisions and amendments of the Sherman Act. Those who take the other course regard the government's policy as mischievous and futile. The first word in their creed, as Henry L. Higginson affirms, is, "I believe the Sherman law is bad." To them the British policy of widest liberty within common law limits, or the German plan of governmental sanction is far more to be desired.

Reasoning from analogy, foreign experience has failed to take account of difference in national policies. What meets European needs may not be at all in harmony with our own economic institutions and our ideas of freedom. President Taft met this preference for foreign methods by saying:

*Quarterly Journal of Economics, May and August,

"There is a tendency among some foreign governments to encourage what they call trusts, to take part themselves in the management of the trusts, to fix prices and to depend upon governmental control to secure their reasonable conduct; but such a system with us is absolutely impossible, and it might as well be understood. The countries to which reference is made are veering toward state socialism. This, indeed, if competition is to disappear, is the logical escape from the evil of private monopolies, because if private companies are to be allowed to manage everything and fix prices, then there is every reason why the control thus exercised by them should be transferred from them to the government, and this is state socialism."*

5. Cooperation in Foreign Trade

In the effort to promote foreign trade a situation has arisen in which the anti-trust laws appear to stand in the way of the desired development of our external commerce. Foreign countries, as a rule, whose international trade is large, favor combination among exporters to meet competitive conditions. But the prohibitions of the Sherman law and its amendments, extending to foreign as well as to interstate trade, put our own exporters and importers at serious disadvantage, it is claimed.

At this date the law has not as yet been con

* Speech at Waterloo, Iowa, September 28, 1911.

strued as to exports. In the Harvester Company decision, the lower court, after dissolving the combination, approved petition for modification of decree, excepting the company's foreign business from disintegration. But this was only for the time being and largely on account of the pending European wars, making it impossible to adjust business under prevailing conditions. In the importing branch of foreign trade the so-called Coffee Trust suit can not be taken as at all conclusive.

The Potash Selling Association of Germany is often cited as an instance of governmental cooperation with private interests to promote foreign commerce. In that case the imperial authorities went so far as to cancel contracts between German mine-owners and American fertilizer makers for a long-term supply of this commodity, and then put in its place a contract much less favorable to the American party. This conduct of an official character is cited to show to what lengths some governments go to support combination against the world market in international bargaining.

It is claimed that the small manufacturer is the main interest sacrificed by these anti-trust restrictions in foreign trade. "No small manufacturer can develop a market abroad for any product he makes, unless it is a patented article on which foreigners cannot compete, for he has not the capital or the organization to seek the

markets and fight for them single-handed,” is a fair statement of this view. But it overlooks the fact that many exporters of shoes, and similar kinds of goods have made world-wide successes of their business through recognized export agencies, or even independently.

The argument is by no means all on the side of the big business in exporting, even though the large combinations have without doubt done more than any other means to build up foreign trade. No other country in the world has more efficient exporting than is to be found in our own United States Steel Products Company, the International Harvester, or the Standard Oil. On the other hand, among individual companies the Singer Sewing Machine Co. stands out as a most successful exporter. But it has vast capital resources.

There can certainly not be one interpretation of the anti-trust acts for domestic and another for foreign trade. But it is entirely reasonable to recognize certain kinds and degrees of cooperation in the promotion of foreign commerce as making neither for restraint of trade or tending to monopoly. In this middle domain it is believed by some that there are vast possibilities for judicial and administrative adjustment without amending the law itself.

* National Foreign Trade Convention, 1914, p. 168.

CHAPTER XI

COMBINATIONS AND THE COMMUNITY

S industrial combinations are now organ

ized, the application of labor and capital to the utilization of natural resources results in turning out a vast supply of commodities for the market. This supply passes through the market to the consumer, and the prices which he pays are the measure of the gross value to be distributed among all who have participated in the productive process. To this so-called income fund made up of all that the consuming world pays for commodity needs in the course of a year, there are several claimants. The validity of their claims rests on their proportionate share of necessary participation in advancing the goods from their natural state to the point at which property right passes over into the consumer's hands by the payment of a price for consumption goods.

1. Pioneering Risks in Modern Enterprise

Now, there are four main contributors to this cumulative value of the products of industry. They are the owners of natural resources, the contributors of labor, the lenders of capital. A fourth participant is the organizer of these three