land of combinations and cartels in the pursuit of her industrial and commercial aspirations. Government in the United States has avowedly entered upon the program of restoring competitive conditions as the basic aim of its industrial, commercial, and financial policies.

Half-way between these two opposing codes of economic conduct, partaking partly of both of them, is a third principle recognized as cooperation, including many varieties of corporate and collective policy ranging from profit-sharing to state socialism.

These three-Competition, Cooperation, and Combination—in varying degrees have been present in all stages of development of modern business. But just at this time the issue is preeminently that of the possibility of the continuance of competition. Professor John B. Clark, one of our most incisive thinkers in the field of economics, declares: "Our industrial system has become what it is as a result of competition and our entire policy in dealing with it depends on the question whether competition will or will not continue." *

2. The Case Against Competition

That competition in its captaincy of civilization was forcing society back into savagery, if not into suicide, is what the communistic experi

*The Problem of Monopoly, J. B. Clark. Lemcke & Buechner, New York.

ments in Europe and America about 1840-50 claimed in protest against the existing order. Yet these were mere voices crying in the wilderness compared with the two great social movements which came later against competition as a code of industry in the form of Trade Unionism and Socialism. The future of competition is probably more completely wrapped up with the progress of these two collective efforts than with anything else. In fact, under the upward trend of prices and costs of living since 1897, the conviction has been gaining ground rapidly in some quarters that Unionism, Socialism, and the Trusts—the best organized factors in industrial society, and each aspiring more or less directly for the control of government-are already dominating the policy of the modern state in opposition to earlier conceptions of economic freedom.

This view, that old-fashioned competition is a thing of the past, whatever truth there may be in it, finds forceful expression in Arthur J. Eddy's The New Competition. This examination of the adjustment that is taking place in business a change from competition to cooperation - concludes: "Two very large factors in modern society are opposed in theory and practice to competition as commonly understood. Unionism will have none of it in the world of

*The New Competition, Arthur J. Eddy. A. C. McClurg & Co., Chicago.

labor. Socialism will have none of it in the world at all. When to the opposition of these two factors is added the opposition of the capitalists, society would seem to be pretty nearly a unit to the effect that competition is not the good thing it is said to be." If any more ag gressive indictment of the competitive policy were wanted that of President Charles R. Van Hise in his Concentration and Control✶ lacks nothing in its portrayal of the shortcomings of the old order in contrast with our newer era of large-scale business undertakings.

3. Through Competition to Combination

The trust movement, as a matter of more remote history, had its origin and its earlier development in business conditions prevailing be✓tween the two panic years of 1873 and 1893. That was not only an era of unprecedented progress in railway construction, but also one of unequaled intensity of rivalry in railway operation. To manufacturing and trade it brought with it, as we have seen, the necessity of meeting competitors in over-supplied markets. "This was the beginning of modern industrial competition in the United States," says Allen Ripley Foote. "It grew without restraint until it developed destructive tendencies, which grew stronger and

* Concentration and Control: A Solution of the Trust Problem in the United States, C. R. Van Hise. The Macmillan Company, New York.

more vicious until they culminated in the panic of 1893. During the recuperative period from 1893 to 1898 men capable of intelligent thought came to the conclusion that competition as then practised was destructive, and that combination, or a recognition of a community of interests in some form was absolutely necessary to enable all persons engaged in productive industries to make a profit. Unregulated competition forced the era of cooperation into existence, which commenced when men began to change their business methods to safeguard their business against wastage and destruction by adopting measures to restrain trade by regulating competition between themselves.'

[ocr errors]

The trust problem, as it has been known ever since, has always been the problem primarily of these great consolidated corporations formed for the purpose of effecting some reasonable measure of escape from bankrupting competition by cooperation among its units, but with more or less inherent tendency toward the two things forbidden by the Sherman Anti-Trust Act-restraint of trade and monopoly or attempt at monopoly.

These combinations, in the order of their appearance as factors in the general movement, furnish four groups of trusts, of which Collier in his classification down to 1900 gives three.

* Annals of the Am. Acad. of Polit. and Social Science,, Philadelphia, July, 1912, p. 113.

"The three generic types of combination [he concludes] are, first, combinations, pools, and associations based simply upon agreements made by persons who still continue as individual owners and which generally affect prices, but sometimes affect output and methods and scope of business; second, trusts proper, in which the owners of the several properties transfer their respective interests to several persons in trust to manage them as one property for the common benefit; third, great corporations which absorb, amalgamate, and unify into one gigantic company various small concerns.

[ocr errors]

4. The World's Greatest Trust

This was the situation prior to the conditions of competition which led to the formation of the United States Steel Corporation. In this development we have the fourth type of trust-a holding company controlling eleven constituent subsidiaries whose combined capital liability, as measured by stocks and bonds issued, is $1,402,846,817. That was precipitated by a very simple yet significant change-the decision of the Carnegie company to go into the manufacture of finished products from its own semimanufactures; that is, to make pipes from billets simply by extending its own operations one

*The Trusts: What Can We Do with Them? What Can They Do for Us? W. M. Collier. The Twentieth Century Pub. Co., New York.

« ForrigeFortsett »