escaped consolidation. Finally, the losses that competition often entails, which have been made worse by unwise laws, have furnished a pretext of no little plausibility for attempts to form monopolies. It is at this point that the arguments in favor of trusts possess most weight.

Yet, with all the strength that the movement towards combination has acquired, competition has always vexed the would be monopolist, and is especially active at the present moment. As this is written, one trust is already confronted by fourteen independent companies, while another rival enterprise with a capital of $1,000,000 is in process of formation. Another combination owning 290 mills was, in October, confronted by independent companies operating seventy four mills; and in December a new concern with a capital of $5,000,000 was formed. Almost every day brings word of the appearance of new competitors for various trusts, and that the revival of competition may be considered a general movement. Some of the independent enterprises may have been started with the purpose of selling out to the trusts; but, if combinations have the superior efficiency that is claimed for them, they are under no obligation to purchase, and the investors in rival concerns would be taking inconceivable risks if competition were really useless. Trusts purchase rival concerns because competition from such companies is dangerous, and not hopeless; and the revival of independent enterprise is a reason for believing that the business world has not accepted the theory that a combination possesses material advantages over separate companies of a large size. Experience may yet demonstrate that the attempt to "regulate" industry by consolidated enterprise is the surest method of producing over investment and depression.

If one concedes that competition is attended with real evils, he is admitting nothing that economists have not known for a long time; and, if it is denied that combination is a good, or even possible, remedy for the ills from which we occasionally suffer, all hope of escape does not disappear. The growth of fixed capital has undoubtedly introduced into industry a disturbing element, productive sometimes of fluc

tuating prices and excessive investments of capital in certain directions. The situation can be improved by the repeal of unwise laws that intensify whatever unhealthful tendencies competition may have; and, beyond that, relief can be found in measures that will raise business management to a higher plane. The moral and legal responsibility of our captains of industry must be made commensurate with the enormous powers that they wield; and the same moral restraints to which, in the last analysis, even believers in combination appeal, would prove a solvent of the very ills which monopoly is supposed to remedy. Then sound judgment can be fostered by the further development of industrial statistics; and, finally, the substitution of a moderate policy in the place of monopoly hunger, would be more helpful than all else. It may be found, in the long run, that a willingness to allow one's neighbors to live not only possesses more solid advantages than the "economies of combination," but is the only basis upon which private ownership and control of industry can continue. As corporate enterprises in America grow older, each company may cease to be dominated by a few men; and the management may come to represent the average opinion of the stockholders. Such conditions would probably favor the development of a "live and let live" policy. In any event, it will prove easier to impress upon independent business firms the saving grace of moderation than to persuade the monopolist to exercise his powers in a wise and benevolent manner. Good despots there have been, undoubtedly; but we have had no experience with human nature that goes to prove that autocratic control is generally safer in industry than in politics.

TRUSTS AND PRICES.

BY I. A. HOURWICH.

[Isaac A. Hourwich, statistician; born Wilno, Russia, April 27, 1860; his life has been devoted almost entirely to statistics, and for the past fifteen years he has done much of the most important statistical work for the United States government, and is statistical expert for the bureau of the census; he has also written many articles on copper, gold, silver, lead, and zinc mining, and is author of The Economics of the Russian Village.]

We propose to consider in the following pages the effect of combination on the prices of raw material and finished products. The United States industrial commission concludes, in its review of evidence on the subject of combinations, that the latter are in a position to buy their raw material cheaper than their competitors. The commission is inclined, however, to minimize the effects of this advantage. It is shown, e. g., that the saving of the sugar trust on this item does not exceed one sixteenth of a cent per pound; it appears, however, from the testimony, cited further, that if the competitors of the trust find it "difficult to secure a customer, they will cut the price perhaps one sixteenth of a cent per pound. One or two of the chief competitors seem to be forced to put their prices quite frequently at one sixteenth of a cent below that of the American Sugar Refining company." It would follow that this saving of "not more than one sixteenth of a cent per pound" would enable the American Sugar Refining company to meet the cut and still retain the former advantage over its competitors. The difference is, accordingly, one not to be treated as a negligible quantity.

The figures published on the subject of the prices of crude materials by the commission relate only to the oil combination and have been furnished by Mr. Archbold, vice-president of the Standard Oil company, and Mr. Boyle, editor of the Oil City Derrick, a witness friendly to the company. The tables confine themselves to Pennsylvania oil, which is a high grade product, and give the total amount of crude oil produced annually from 1860 to 1898, the total annual valuation

of the product, the number of wells drilled by decennial periods and the estimated cost per well, from all of which the sum of $263,968,413.75 is obtained "as the profits of the producing business for the last thirty nine years, or an average of $6,768,420.86 per year." The result appears to be quite satisfactory, compared with the annual valuation of the product, which averaged, for the period from 1870 to 1890, in round numbers $20,000,000, and from 1890 to 1898, about $28,000,000.

These results are obtained, however, by combining the early period of oil production, when prices were generally high, with the later years, following the organization of the oil combination, which were marked by low prices of crude oil. Whether this was a mere coincidence, or there was a casual connection between the combination and low prices, can be ascertained only by treating each period separately. An element of uncertainty in estimates of this sort is the landed interest, which has varied, since the beginning of oil production, from one half to one eighth of the output. Mr. Boyle's calculation is made upon the basis of an average rental of one fourth for the whole period 1860-1898; Mr. Archbold

adopts the present rental of one eighth throughout the period. The tendency of this assumption is to give the total an appearance more favorable to the oil producer.

As totals do not lend themselves to comparison, the figures must be reduced to averages. We first take the tables furnished by Mr. Boyle and calculate from them the averages per well drilled and per barrel of crude oil.

In this calculation the bonus, or rental paid for holding the ground, is not considered at all. Mr. Boyle concedes that "it operates against the profits;" he concedes also that it is necessary to pay this bonus in order to pursue the business, but he thinks that "the lease is speculative" and should therefore not enter into the cost of operating.

Granting, for the sake of the argument, the contention to be correct, it appears nevertheless that within the last two decades, i. e., since the organization of the oil combination, the average profits of the producer have been reduced from $3,439 to $715 per well, or from 63 cents to 11 cents per barrel. The average price has for the last two decades remained constant, as well as the average cost of operating; that is to say, in the long run, the fluctuations within each decade, extreme as they were, affected neither the average price, nor the average cost. This stability points to an equalization of supply and demand, when taken for periods of sufficient length. The inference is sustained by a comparison of the average annual production with the total stocks on hand before and after the organization of the trust. In the following table the year 1882, in which the trust was organized, is excluded and the averages are taken by eight year periods.

During the first period following the organization of the trust the production of crude oil increased by 64 per cent as compared with the period next preceding, which resulted in an increase of the stocks slightly above the amount of the annual output. The oil combination justly claims the credit for having brought American oil into every nook of the world;