has been gradual enlargement until it has become merely nominal in this country as between individuals, at least. In Leslie v. Lorillard (110 New York, 519), which involved the validity of a contract between certain steamboat companies (corporations) to restrain competition, the contract was held good. The court in that case used the following language, which comes very close to the subject of this inquiry. "At the present day there is not that danger (from contracts in restraint of trade or competition), or at least it does not exist to an appreciable extent, except possibly as suggested in the case of corporations. In their supervision and in their restriction within the limits of their chartered powers, the government and the public are directly interested. Corporations are great engines for the promotion of the public convenience, and for the development of public wealth, and so long as they are conducted for the purposes for which they were organized, they are a public benefit, but if allowed to engage without supervision in subjects of enterprise foreign to their charters, or if permitted unrestrainedly to control and monopolize the avenues of that industry in which they are engaged, they become a public menace, against which public policy and statutes design protection * * * I do not think that competition is invariably a public benefaction, for it may be carried to such a degree as to become a general evil.”

Upon these lines and to these results the courts through a long series of years have slowly proceeded, until the rule seems to be settled "that public policy justifies and requires the largest liberty of contract within the law, untrammeled by unnecessary legislative and judicial interference or restraint."

The tendency of successful trade is to increase and expand, and the inventions and improvements peculiar to this age have so changed the conditions surrounding every industry that the old rules devised to protect the people in the earlier and simpler stages of production and manufacture and in more primitive forms of government, if not entirely unwise, would seem to be certainly inadequate to remedy the evils, fancied or real, of which complaint is made.

It is a rule of wise statesmanship never needlessly to intermeddle with the social or business affairs of a community, for these are subjects which have laws unto themselves. And there is no more interesting study in any department of political science than to trace the history of every progressive government in this regard. The tendency everywhere is towards less and less governmental interference in the social and business affairs of the citizen. As intelligence increases, and wealth accumulates, larger liberty of person, and use and [Senate, No. 64.]

2

disposition of property follow by an invariable law. Laws to protect what are called weaker classes, to fix the price of bread or to declare at what price the middleman, manufacturer or producer shall sell any commodity, are unsuited to this age. They belong to a paternal form of government which is everywhere passing away. And yet laws of this character can not at any time be altogether abandoned with entire safety. The police power of the State, "which enables it to prohibit all things hurtful or detrimental to the comfort and welfare of society," justifies its interference in regulating the rate of interest on loans of money to prevent extortion, requires it to impose restrictions upon the sale of certain commodities as dangerous to the peace or health of the public, to fix the maximum limit of charges for services to the public of certain corporations, and in many other ways to interfere with, restrict and control commercial intercourse and obligation.

The committee have thus far endeavored to trace in brief outline its impression regarding certain legal propositions closely connected with the subject of trusts, and in the light of which, modified by later conditions created by the use of steam, electricity and machinery, such combinations are likely to be considered by the courts.

It is claimed by the advocates of these combinations that they are not necessarily hostile to the public interests, but on the contrary contribute largely to the public advantage; that their objects are to place great business interests in the best form according to the judgment of the shareholders, that the interests therein can be easily transferred by the owners of the trust certificates, and that its operations may not be interrupted by the transfer of its stock, or by the death of any of the persons interested in any of its properties; that its purposes are in the line of larger capital, of economy of administration, of improved machinery, of a better and more abundant product, of cheaper prices, of larger profits and of steadier and more remunerative employment for labor; in short it is the escape from ruinous competition, which would destroy the producer without permanent injury to the consumer.

These results may not necessarily be inconsistent with the trust organization, which when conducted on wise business principles, which implies good management, with reasonable profits only, may be a benefit rather than an injury to the public. But enlarged capital, extended industry, great capacity of production, with a constantly widening market, bring increased powers to unduly increase or decrease prices, and with such power comes also the temptation to exercise it contrary to the public interest.

It must be conceded, however, that combination of some sort is a law of trade; that while individual enterprise is the unit or ultimate factor in the world of business, the law of combination develops the individual and the copartnership into the joint stock company, the joint stock company into the corporation, and finally the corporation

into the trust.

The combinations which of late years have caused the greatest anxiety are those engaged in the manufacture of commodities known as necessaries of life. Industries of fabulous proportions have almost destroyed the business of the small manufacturers and tradesmen, who in former years carried on business in every town and village in the land. The business of the shoemaker who made the shoes for the community in which he lived is no more. He has been driven out by the large manufacturer, who supplies shoes of better quality and at lower rates. The village blacksmith is no longer the important personage of earlier days, but a part of his trade is left to him. His horseshoe nails, as well as the shoes themselves, are bought ready made at a less price than he could make them, and at but a very slight advance of what he would be obliged to pay for the iron unfashioned. The same is true of the miller. He can not compete with the great capital and modern appliances of his richer western competitor. This is true also of many other employments.

While this interference with the labor of the small tradesman is to be regretted, it can not be denied that the great body of the public profit by the change.

Of all combinations those which manufacture or deal in what are called the necessities of life are least to be feared; for the sources of such products are world-wide, are in a state of constant activity, and can not be controlled or even affected for any length of time by capital, however large. The history of the copper syndicate (Societé des Meteaux) is given in the testimony taken by the committee in the city of New York in November last, which is presented herewith, and aptly illustrates the utter inability of any combination for any length of time to limit the product or unduly to fix the price of any of the world's great commodities.

The history of that organization is briefly this: It was formed in Paris by M. Secretan, a Frenchman of great business abilities, who formed the design of controlling the world's supply of copper. As part of the scheme, he contracted with the leading copper companies of the United States for all the copper they could produce in five years, up to a certain quantity, which they were not to exceed, agreeing to pay absolutely a price largely in advance of what copper was

then worth, and to share with such companies such advances as he received in excess of that price.

The price of copper immediately advanced from ten to seventeen cents a pound. The consumption decreased; the stock accumulated; new mines began to be developed. The combination found it difficult even with great resources to carry the load of stock constantly increasing until finally overcome by the magnitude of its resposibilities, and notwithstanding the assistance of the greatest financial institution in France, which, it is believed, furnished not less than twenty-eight millions of dollars to avert the failure of the syndicate, it failed and brought ruin on all of its promoters.

Every such combination, dangerous to the public interest, carries within itself the elements of its own destruction.

The history of the copper syndicate also illustrates the difficulty of legislative interference in trust combinations which exists in other States or nations. It would hardly be expected that the New York copper broker would hesitate to deal on advantageous terms with the French syndicate, which offered him a higher price for copper than he could get in any other market. The headquarters of the copper industry in this country is Boston, in the State of Massachusetts. Members of the syndicate or combination reside in France, and none of the principals are resident of New York. It would be difficult, if not imposssible, to frame a law here which would in any way affect such a combination, except to drive beyond the limits of the State, the merchant, the capitalist or broker, who in any way dealt with the trust which temporarily had control of the commodity. To do this in regard to any industry would be to send out of the State a vast amount of capital without obtaining any compensatory advantages. Capital should not be driven beyond the limits of this State, which of all others, is most interested in its protection, for reasons other than the most imperative and substantial. Its prosperity and greatness is due not less to its wholesome legislation for the protection of property and person than to its great natural advantages.

The committee investigated the management of certain elevator companies and interests in the cities of New York and Buffalo. It appeared that said companies were in combination and were evading or openly violating the law of 1888, fixing the charges for elevating grain in said cities, claiming that said act was unconstitutional and void. It is understood that a test case, which will settle the question, is now on its way to the Court of Appeals. Meanwhile the elevators are charging a price one-eighth of a cent a bushel in excess of the price fixed by law, claiming that the work can not be done for less.

In conclusion your committee would frankly state, while the trust, which is a new form of an old and well-known principle, is full of dangers, and should be repressed and hedged around by law, it is not of necessity a monopoly, nor inconsistent with the public advantage within certain reasonable limitations; that every combination in trade has greater power either for good or evil than the individual members of which it is composed; that its power to fix prices or to unduly increase them is indeed greater, but that the danger arising from its exercise is greatly lessened by the inventions and discoveries of this age; that steam and electricity are factors of the greatest consequence in the adjustment of wrongs and differences, which in former times would have been without a remedy; that the new elements on which the principle of combination seizes are balanced and offset by other and if possible more powerful forces of modern civilization, and that, as a general rule, society may rely upon these opposing elements and compensations "to keep the peace" between it and the conflicting interests and influences of the world of trade, no matter how great their interests and influences may be, and that such balancing forces are far more potent to that end than any arbitrary rules of legislative enactment. Combination among laborers, or the right to unite for protection, is a principle justly recognized by law. The limits within which such right may be exercised are plainly designated and sharp penalties are prescribed for all who overstep them. The principles upon which such rights were formerly denied bear a remarkable resemblance to those which are now urged to deny absolutely the right of combination to capital.

The right of combination among capitalists, manufacturers or common carriers for every purpose consistent with the public welfare should not be unnecessarily restrained. But the severest penalties should be prescribed and enforced (and unless enforced they should not be prescribed) for every attempt at combination, the end and purpose of which is an unjust monopoly, or of unduly enhancing the price of any commodity.

This investigation, ordered by the Senate, has not yet resulted in any legislation on this subject. But the investigation has not been without great public advantages. The more that is known of trusts the less they are feared. There has been a remarkable change in public opinion regarding them since the commencement of the investigation. It is a growing sentiment that the evils of which they are the cause are short-lived. The result justifies the deliberate course of the Legislature regarding this question.