it would steadily pare down these profits, if unreasonable, by an actual reduction of rates, as would be necessary perhaps in a period of falling prices and wages.

However, if the success of the Interstate Commerce Commission be conceded, a similar success is not assured in the case of the trusts. This is because one commission would hardly suffice for the trusts, as one commission has sufficed to date after a fashion for the railroads. A commissioner familiar with railroad problems can turn with facility from the regulation of one road to the regulation of another, though when there are added the express companies, the sleeping car companies, the telegraph and telephone companies, and the like, the difficulties increase. But were all trusts to be controlled, the great differences in the character of the several businesses would probably make it necessary to have numerous commissions covering the various industries or groups of industry. This necessary increase in the number of appointments and the consequent diffusion of responsibility would militate against effective control. Moreover, it would work injustice as between industries, since some price commissions would doubtless prove radical and some conservative, and as a result the channels into which the country's productive resources would be turned would be dictated in part by the temper of governmental officials rather than, as it should be in a régime of private enterprise, entirely by natural opportunities. The prospect when thus viewed is not inviting.

Notwithstanding the problems and difficulties of price regulation, a program of price regulation may yet assist in the solution of the trust problem.

If the trust be the most efficient business unit, the case for the retention of the trust form of organization and for a consequent policy of price regulation is a strong one. The inherent difficulties are impressive-no attempt has been made to gloss over them -yet reliance can hardly be placed upon the safeguards enumerated in chapter XI.1 The only alternative, therefore, is some social arrangement that takes the ownership or control of the trust properties out of the hands of the present individual own1 Cf. pp. 276 seq.

ers, and vests it in the people, or in some limited group, such as the workers in the monopolized industry. Into the merits of these suggestions it is not now proposed to go; the result would be to carry the discussion too far afield. But it must be clear that if the determination of prices by competitive forces is not to prevail, an effective argument can be presented for governmental fixation of prices. Probably the government could not hope to do more than approximate a fair price, yet the prices established by it would doubtless come nearer to being fair than would the prices to be charged by trusts in the absence of governmental regulation. Moreover, the fact that the government had the reserved power to fix prices might induce the trusts to pursue a moderate price policy, and might therefore render unnecessary the actual exercise of the power except occasionally and in individual instances. How successful regulation would prove to be would depend of course on the state of public opinion, and upon the intelligence and viewpoint and character of the individuals administering the scheme of regulation.

If, on the other hand, the trust is not the most efficient business unit, price regulation might still be employed as a supplement to dissolution. Though the policy of the government during numerous administrations has been to restore competition by dissolving the trusts, this policy has by no means been fully successful. Whether it will ever prove fully successful is an open question, which time alone can determine. Meanwhile it would appear that the government might with propriety couple its measures of dissolution with such further measures as are calculated to protect the people against the failure of its dissolution program to produce results. Among these measures obviously is the control of prices. However, as soon as it appeared that the dissolution proceedings had led to the restoration of competition in any particular industry, control over prices in that industry might properly cease.

In another connection also the regulation of prices may prove useful. Even in industries in which trusts have not been formed, agreements or understandings that operate to restrain competition are widespread. These agreements may be highly

informal in character, and legal evidence of their existence and nature may be impossible to secure. They are hardly open to legal attack, therefore, and yet they may be quite effective in maintaining prices above a competitive level. It is said that "you can not make men compete," and the question is properly asked what is to be done in such cases. There would seem to be only two alternatives. Since the aforementioned violations of the spirit, as well as of the letter, of the Sherman Act are responsible for the abandonment (in those particular industries) of competition as a regulator of prices and profits, the government must embark either upon a scheme of regulation, or upon a program of public ownership.

CHAPTER XXI

CONCLUSION

The conclusions of the preceding chapters may be summarized in brief. The modern trusts were organized primarily for the purpose of suppressing or restricting competition, and thus of securing monopoly prices and profits. An incidental consideration was the prospect of large profits for the promoters. In the prospectuses offering the securities of the trusts to the public much was made of the economies of the trust form of organization; and the trusts were able to realize a considerable number of savings that were not open to less all-embracing business units. Nevertheless, if the conclusions of chapter XIX are warranted, the desire to reduce costs was not the main reason for the formation of trusts; and though twenty years have elapsed since the outbreak of the modern trust movement, the economic superiority of trusts over less comprehensive corporate units has not been established. Moreover, though competition was keen prior to the formation of trusts, it was not ruinous; and therefore the creation of these mammoth organizations can not be explained on the ground of economic necessity. The foregoing considerations serve to account for the anti-trust legislation that had as its object the removal of impediments to the free play of competitive forces, and to explain the series of dissolution suits instituted by successive administrations.

What has been the result of all this agitation and legislation and prosecution? It would appear that much has been accomplished toward placing business on a higher moral plane. Fair methods of competition in commerce have been promoted, and the policy of oppression of competitors has been moderated in response to public opinion and to fear of the law. Moreover, many concerns have reorganized their affairs to meet the wishes of the prosecuting branch of the government. Furthermore,

still others have been forced by court decrees to dissolve into a number of potentially competitive units, and have been enjoined against the employment of sundry anti-social tactics.

Yet the fact remains that the onslaught on trusts has met with only a partial success. Trusts have been dissolved, to be sure, yet in most cases haltingly and ineffectively; and competition continues to be restrained despite the prohibitions of law and the pressure of public opinion.

The explanation, in part at least, is that the trust problem is highly complex, and that our legislation has not taken this fact sufficiently into account. The sources of monopoly power are numerous. Some trusts derive their strength from the use of unfair methods of competition, notably local price cutting, railroad discrimination, factors' agreements, espionage, intimidation, and the like. Some are grounded on the land, maintaining a well-nigh impregnable position through the ownership of a limited natural resource. Others are based upon patents, a monopoly granted by the government for the encouragement of invention, but utilized by trust organizers to serve their selfish ends. Still others owe their position to the act of combination; and they may or may not be supported by artificial props. In all of the cases just mentioned the protective tariff may be a contributing factor through its narrowing of the possible field of competition.

If, then, the purposes of the anti-trust laws are to be achieved, it is evident that unfair methods of competition must be eliminated; the monopolization of natural resources must be prevented, by socialization if necessary; the patent laws must be revised; trust dissolutions must be made more effective; and the tariff must be reformed a far-reaching program, and yet it would appear that in no other way can there be secured a fair field for all and favors to none.

The restoration of competitive conditions would be greatly expedited by the reform of our corporation laws, and in particular by the requirement that all corporations engaged in interstate commerce be compelled to take out a federal charter.1

1 On this subject see Report of the Commissioner of Corporations, 1904;