creasing the volume of business; by reducing the rate of freight on a barrel of flour to the Atlantic from $3.00 to 45 cents; by reducing the price of steel from $100 per ton to $20; by improving the quality and reducing the price of provisions and of by-products, while paying a higher price to the farmer for the animal; by reducing the price of oil from 30 cents to 10 cents; by reducing the price of cotton cloth from 20 cents to 5 cents. They realized that in order to make their combinations a grand success, they must increase consumption by reducing prices. Thus they not only helped to develop a great home trade, but enabled us to open the door of foreign markets, which has resulted in the enormous trade balance in our favor, on which American prosperity so largely depends.

The industrials to-day are owned by the many. While economic evolution is centralizing production in large corporations, decentralization of ownership goes on simultaneously through the rapid distribution of shares. There are many hundred times more partners in manufacture, mining, and railways than there were thirty years ago, and the number is rapidly increasing. Women rarely had an opportunity of obtaining an interest in business organizations, but now they are large shareholders of corporations, and as such they have the full right of suffrage. Under the old conditions of private ownership, the control of many of our industrial enterprises would have been inherited by one individual or family. Now the control is subject to the rule of the majority. It is seldom, and fortunately so, as preventing great aggregations of wealth in the hands of individuals or families, that the heirs of the industrial giants have the capacity to succeed to the direction of gigantic enterprises. Many inheritors of great fortunes, enervated by ease and luxury, prefer a life of indolence, or to chase the will-o'-the-wisps of society; others prefer to devote their time to literature or art; others to enter upon scientific pursuits. Under the old conditions they would have inherited the control of industries, but under the present conditions of industrial consolidations the majority of the stockholders-for, generally speaking, the numerical majority is also the majority in interest-elect as officers aspiring young men who, through years of application to a

particular industry, have proved their ability and judgment to assume the responsibilities of leadership, and owing to the higher evolution of our industrial organizations, these men are developing greater intelligence and superior ability to those who have preceded them. Thus the fittest survive. In life nothing is stationary; contraction or expansion goes on continuously, and if you do not expand, you contract. It is so with nations, and it is so with industry. There are periods of expansion when the mills are running full, and there are periods of contraction when the number of unemployed is large. Confidence is at the foundation of expanding business activity. The amount of business transacted on credit is over two thousand times that transacted in exchange for gold or silver. If there is confidence, the manufacturer employs many hands, the laborers purchase more, the retailer buys more goods, the jobber orders more from the manufacturer, the manufacturer, to still further increase his output, employs more hands, and every man who wants work can find it. This is prosperity. Lack of confidence causes contraction-the manufacturer is afraid to make many goods; discharges some of his laborers; they purchase less; the jobber cancels his orders; the manufacturer must still further reduce his payroll. The result is "hard times."

In view of the fact that the maintenance of high wages in the United States is largely dependent upon our increasing exports, the question is asked whether we could sustain them in competition with the cheap labor of China, were China to become a manufacturing country. The best answer is that among our other exports, we have shipped 200,000,000 yards of cotton cloth to the Chinese. The average rate of wages paid by us in its manufacture was seven times the average rate of wages prevailing in China. The Chinese, like the ple in our own country who have a Chinese cast of mind, do not recognize the advantages of combination. Industrially, they are living in the land of yesterday, instead of in America, the land of to-day and to-morrow. Notwithstanding her great agricultural and mineral wealth, notwithstanding the fact that she has the largest body of cheap labor in the world, China is not an efficient competing factor in the field of pro

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duction, because, in spite of all these facilities, she has none of the antecedents, intellectual, political, financial, or mechanical, for large scale production under modern conditions, since she possesses none of the instruments of commercial greatness and social well-being. Twenty centuries of stationary policy and of looking backwards have made political progress and economic development impossible for China. She has remained in industrial infancy. Lacking organization and all that goes with organization, production on a large scale, aided by large aggregations of capital, and under conditions which attract and ennoble the greatest abilities, her agricultural and mineral wealth and her cheap labor cannot save her. She is left utterly behind in the economic race.

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Our contractionists would practically have us put a wall around the United States which would reduce wages and prevent the working out of our destiny as a world commerce, in finance, and in the great and nobler field of doing our part in the advancement and civilization of mankind. Situated as we are, between the great oceans, combining the strength of a great land power with that of a great sea power, we are pushing our way across the Pacific as we have already done across the Atlantic. But this increase is small compared with the increase that is destined to take place when no question is being raised as to the stability of the foundations on which rests this great industrial prosperity. With our untold natural resources, with our inexhaustible supply of metals and coal, with our great forests, with every variety of soil and climate, with the most industrious, most intelligent and most contented of peoples, working under the best conditions of modern methods, we are destined to become the economic masters of the world.

INVESTIGATING THE TRUST PROBLEM.

BY MAURICE H. ROBINSON.

(Maurice H. Robinson, economist; born in New Hampshire in 1865; his special branch of economics has been industrial conditions and he has been employed as an expert in that connection, by the United States government. He is professor of industry and transportation in the University of Illinois and is the author of History of Taxation in New Hampshire and many magazine articles on the subjects in which he is an authority.] Copyright 1902 by The Yale Publishing Company

During the last decade there has been much danger that the trust problem would become a political issue; that the parties would become either champions or defenders; that legislation relating to the trusts would be political rather than economic; that partisan prejudice rather than judgment would be used in the solution of the problem that the growth of the trusts has raised. It is not too much to say that the report of the industrial commission has been the largest single influence in snatching the trust problem from the political arena and laying the basis for a permanent solution upon economic and social grounds. This result was partly due to the importance of the issue, partly to the organization of the industrial commission itself. All interests have felt that a question of such vital importance must be settled, not upon political, but upon economic principles. The organization of the commission, made up of representatives of both the great political parties, together with representatives of the leading industries and organizations of the country, made it almost impossible to use the report of the commission for partisan purposes. Still, notwithstanding these conditions, there may be discerned at intervals a slight tendency to justify by the course of events the policies of the respective political parties. This tendency, most observable in the discussion of the effect of the protective tariff upon the formation and operation of the trusts, is, however, so vague that it may be almost entirely disregarded in judging the value of the work.

The importance of the subject for which the commission was created, to "collate information and to consider and

recommend legislation to meet the problems presented by labor, agriculture and capital," justified the time and expense necessary for the preparation of such a report. The manufacturing interests of the United States are of vast and increasing importance. According to the twelfth census, the total capital invested in manufacturing amounted in 1900 to almost $10,000,000,000. The increase in invested capital from 1850 to 1900 was over seventeen fold. The value of products turned out by the manufacturing industries has increased during the century from about $100,000,000 to a little over $1,000,000,000 worth in 1850 and over $13,000,000,000 in 1900. This increase in the capital invested and the value of products in manufacturing may be compared with the value of farm property and the value of farm products. The value of farm property, according to the census returns, has increased from about $4,000,000,000 in 1850 to a little over $20,000,000,000 in 1900; the value of farm products from a little less than $2,000,000,000 in 1870 to a little less than $5,000,000,000 in 1900. It will thus be seen that while the value of the product in manufacturing has increased about twelve times, that of agriculture has increased only three times during the last half century. During this same period the increase in population has been only two and one fourth fold. The capital invested in transportation, while less than in farm property, may possibly exceed that invested in manufacturing. The total capital liabilities of the railroads of the country were in 1900 almost exactly $12,000,000,000; their gross earnings $1,500,000,000; their net earnings $500,000,000. Thus considered from the standpoint of capital invested and the value of the products, making due allowance for the duplication of the costs of production in passing from stage to stage, it is evident that the manufacturing interests of the country are nearly co-ordinate in importance with either the farming industry or that of transportation. Added to this, it must be noted that the manufacturing industries are increasing more rapidly than the others and likely to continue their progress at a somewhat faster rate in the near future.

In connection with this rapid growth on the material side, important changes are being effected in the manufacturing