cent or less of the production. The facts showing the development of new competition side by side with the great consolidations, are perhaps the most important ones that the report of the industrial commission has given the world. These facts ought to be recognized both by the consolidations and by the legislators; by the consolidations, since their existence depends upon observing the course of events in this particular; by the legislators, since laws are unnecessary to protect the public so long as the competitive forces are able to work.

Upon the subject of wages, there is a large amount of testimony, the most of which is of small value. It is generally shown that the consolidations have not reduced the wages of labor. It is not shown, however, what is the effect of consolidations on the growth of labor unions and the consequent ability of labor unions to protect themselves. There is a certain amount of evidence at least to show that so far the tendency has been to unite the forces of the consolidations with those of the labor unions to secure higher wages for the members of the union and somewhat higher prices for the products. This simply means that the added profits have been maintained with the aid of the laborers employed, at the expense of the public and the outside laborers. If this be the fact, it is evident that the union of the trusts with the labor unions constitutes one of the most dangerous features in connection with the consolidation of industry.

V. THE PUBLIC CONTROL OF CONSOLIDATIONS. This subject, which ought to be considered only after a full investigation of the four preceding ones, is treated by the commission with considerable fullness. John R. Dos Passos and Charles C. Allen testified at length on this subject. Professor Huffcut treats the subject in its legal aspects, and it is considered in the final report by both Professor Jenks and Mr. Stimson, the legal representative of the commission. Much attention is also given this subject in the examination of witnesses. The general source of information upon this topic is furnished by volumes two and eighteen. Volume two gives the antitrust legislation both of the United States and of the states and the decisions of the courts, together with a summary of

the corporation law of the various states in the United States. The report of Professor Jenks in volume eighteen gives the laws relating to corporations in foreign countries, especially England, Germany and Austria. Professor Jenks's report is especially valuable, showing, as it does, the effectiveness of foreign legislation in checking the growth of speculative corporations, limiting their power, and directing their activities within legitimate channels. The examination of the witnesses who testified in regard to the corporation law of New Jersey, Delaware and West Virginia, shows the weakness of our present corporation law under changed economic conditions. The present law was formulated and enacted for the government of small corporations, working under the laws of competition. These laws are entirely inadequate to govern the large corporations, some of which have a certain degree of monopolistic power. This investigation of state corporation law calls attention to two aspects of the problem that ought not to be neglected. First, the control of the corporations by means of improving the statute laws of the various states, and, second, the control of corporations through a federal corporation law. The testimony regarding the corporation law of those states in which the great corporations are chiefly formed show how inadequate are the present laws to control corporations whose business is world-wide. Both the public and the lawmakers are beginning to see the folly of granting charters with no restrictions upon the operations of the giant corporations and afterwards filling the statute books with drastic laws attempting to curb the creatures which have grown strong on the favors given them. If the report of the commission should have no other effect save that of calling attention to the absolute necessity of revising the corporation laws to fit the changed economic conditions, it would be justified in its existence. The investigation of the Industrial commission directs attention to the desirability of changes in the state laws or to the adoption of a federal corporation law. The difficulties of the latter step are fully discussed by Professor Huffcut in his paper "on the constitutional aspects of the federal control of corporations." Its advantages and disadvantages are considered by such attorneys as James B.

Dill and John R. Dos Passos. The commission itself recommended a federal corporation law, only in case federal supervision and taxation proved inadequate, "to properly control the great corporations and combinations." Such action, involving, as it would, radical changes in the government and the courts, it hopes may be avoided by federal supervision and taxation. To accomplish this it is proposed to establish a bureau of the treasury department, to register all corporations engaged in interstate commerce, to secure the reports necessary to tax their franchises, to inspect their books, to see that their accounts are properly kept, and to collate and publish information in regard to their operations for the use of congress. It is thought by the commission that such provision "will be sufficient to remove most of the abuses which have arisen in connection with the industrial combinations." In addition to this recommendation and to those formulated in the preliminary report, the commission further recommends, (1) that the anti-trust laws be strictly enforced; (2) that the policy of making local cuts in prices and discriminations to individuals be made a penal and criminal offence; (3) that provisions similar to the anti-stock-watering laws of Massachusetts be enacted and enforced. On the whole, the recommendations of the commission are less radical than might have been expected. It is improbable, however, that the program proposed will be adopted by congress. The chief value of the recommendations consist not in themselves, but in their effect upon the public mind and upon future legislation.

THE GOOD AND THE BAD OF TRUSTS.

BY CHARLES J. BULLOCK,

[Charles Jesse Bullock, economist; born Boston, May 21, 1869; graduated Boston university, 1889; instructor and later professor in economics in Williams college until 1904, when he became a member of the faculty of the department of economics in Harvard. Author of The Finances of the United States, 1775-89; Introduction to the Study of Economics, Essays on Monetary History. Contributor to the Quarterly Journal of Economics in which the following article originally appeared.] Copyright 1901 by George H. Ellis Company

Since most writers recognize that the recent combinations of capital have developed monopolistic tendencies to considerable extent, the outlook for the future becomes a most interesting and important problem. Under all the circumstances, it is not surprising that recent years have witnessed numerous attempts to bring the control of various industries into the hands of single corporations of colossal magnitude, which possess and exercise the power of monopoly. But the reader of recent trust literature finds that many writers of recognized authority contend that these conditions of centralized control are to be permanent in industries that require heavy investments of capital for their successful prosecution, and that competition is a thing of the past.

In considering this proposition, careful discrimination is necessary at the very outset. There are three possible conditions under which industries may be conducted-production upon a small scale, production upon a large scale, and centralized management by a single company or combination. Every student of economic history knows that production upon a small scale was long ago superseded in most important branches of manufactures by undertakings of a large size. The combinations of recent years have sought to replace these large establishments by single consolidated enterprises; and this is the real meaning of the trust movement and the arguments advanced to prove its natural and desirable character. No one wishes to revert to the stage when production was carried on by small establishments. Controversy exists only

concerning the advantages of superseding large scale production by combinations that include all important establishments in a single line of business. The "industrial combination," which those who take a generally favorable view of trusts are upholding, must mean the replacement of independent enterprises already conducted on a large scale by a single centralized management. To combinations of this character writers may or may not apply the term "monopolies;" but the real issue, nevertheless, is the alleged superiority of a single body of producers over independent rival con

cerns.

When it is contended that combination means not "necessarily one great trust, comprising one great industry," but merely "an enlargement of capital," we must insist that this is not what the arguments in favor of centralization are considered or designed to prove. When another writer tells us that combination may be contrasted not with competition, but with "isolation"-by which, probably, production in small establishments is to be understood-we may properly remind him that in his own works combination is used as the opposite of competition, and that he says that sometimes "industrial units which are necessary for proper utilization of labor become so large as to produce actual monopoly." When others tell us that the trusts have seldom secured that immunity from competition which monopoly implies, it must be replied that this fact serves merely to discredit some of the arguments intended to prove the superiority of consolidation, and does not alter the purpose for which these arguments are advanced.

If the tendency towards combination means anything, it means the substitution of centralized and consolidated management for the rivalry of independent concerns; and this may fairly be termed monopoly. If, furthermore, the advocates of combinations intend to defend nothing more than production upon a large scale, they should revise their list of arguments designed to prove that competition is "wasteful," "destructive," "suicidal," and "a thing of the past;" and should make it clear that they do not uphold the action of most of our trusts in consolidating all establish