I.

Letter from John E. Searles.

December 14, 1888.

Hon. FRANK B. ARNOLD,

Chairman Senate Investigating Committee, Unadilla, N. Y.:

DEAR SIR.-There is one matter which I hesitated to state before your committee yesterday, inasmuch as for purely commercial reasons it would not have been for our interest to have the statement spread by the newspapers throughout the country, but which it is due to ourselves as well as to your committee should form part of the record of yesterday's proceedings, and which I respectfully ask to have added to my remarks at the close of the investigation.

Trusting to your further courtesy in this matter,

Yours, very respectfully.

JOHN E. SEARLES, JR.

ADDENDUM

To the statement of John E. Searles, Jr., before the Senate Investigating Committee, Thursday, December 13, 1888:

Referring to the subject of the amount of sugar produced by the refineries in the trust, and especially to the fact brought out by the questions of counsel, that but six of the said refineries are now in operation, I desire to say that the consumption of refined sugar in this country during the months of November, December, January and February is not more than sixty to seventy per cent of the consumption during the summer and early fall months, and that the six houses now running are the largest and best equipped refineries in the trust, which produce daily at the present time a large excess over and above what will meet the demand for consumption. In fact, if the managers of the houses were to confine their output to what is requisite to supply the demand it would result in the closing of another of the refineries. In order to avoid the necessity of doing

this, and thus throwing out of employment the men connected with at least one of these larger houses, the refineries are carrying and steadily accumulating a large surplus of refined sugar, which must be consumed next spring, when the demand increases.

This course on the part of the managers is solely in the interest of the employés, inasmuch as considerations of business prudence would lead them (in view of the uncertainty of the markets for raw sugars and the constant menace of tariff legislation, which, by reducing the duty on raw sugar, will reduce the value of every pound of refined sugar correspondingly) to manufacture, from day to day, only so much as is required to meet the consumptive demand.

JOHN E. SEARLES, JR.

J.

Statement by Mr. Thurber, and Constitution and By-laws of the Wholesale Grocers' Association, and Resolution.

COMPETITION v. COMBINATION.

STATEMENT BY F. B. THURBER.

Within the last twenty years, and especially during the last ten, great changes have taken place in the production and distribution of products, due chiefly to the increasing use of steam, electricity and machinery. Steam and machinery have enormously increased the power to produce, as well as to distribute, products, and electricity has greatly assisted in leveling values throughout the world. If a scarcity exists in any part of the world the news is flashed to the favored points of supply-under the ocean and around the world even and steam hurries supplies to the points where they are required. Ingenious inventions in machinery have invaded every department of manufacture, and have revolutionized the conditions which ruled twenty or even ten years ago. These forces have enormously increased competition, both in production and distributionin many cases to an unreasonable and ruinous extent. The law of self-preservation has, in efforts to counteract this, compelled coöperation or combination, sometimes to neutralize extreme competition and sometimes to effect economies which were possible only by doing things on a large scale. Combination is not necessarily wrong. It is only the abuses of power which are wrong, and should be guarded against. For instance, laborers combine in trades unions, or other forms of organization, to prevent the force of competition from compelling them to sell their labor at unreasonably low rates; capital combines for the same purpose. Neither is wrong unless the com

bination does unreasonable acts. Manufacturers and dealers do the same, and, during the last ten years especially, the law of competition, working to extremes, has compelled them to combine. Almost every branch of business has its organization, sometimes for one ostensible

6

purpose and sometimes for another, but all having, more or less, the same object-mutual benefit. Newspapers combine to collect and sell news; insurance companies to prevent the selling of insurance at ruinous rates; railroads combine for the same purpose as regards transportation, and so long as they do not use the power thus acquired unreasonably, it is not only not wrong, but, under the conditions now prevailing, is an absolute necessity. A careful study of this subject during the last fifteen years has changed my views materially; there was a time when it seemed to me that combination would overcome the force of competition; that monopolies would be created, and capital would oppress labor and the public, but the experience of the past few years has shown that I overestimated this danger, and that in the long run the competition of capital with capital will protect the public interest. Indeed, the share that capital receives in the profits of production and distribution is generally lessening, while that of labor is increasing. There will be exceptions to this rule regarding combinations of capital, but such exceptions can not last long, for other capital will be attracted to those lines and so increase production that prices will soon be lowered. There may also be exceptions to the rule as regards labor; for instance, in unorganized and crowded occupations wages may be pressed down to an unreasonable limit. But these are exceptions again, which prove the rule. I append herewith a table showing the average wholesale market prices of the principal food products in New York for the last eighteen years, which shows that notwithstanding occasional sharp fluctuations in supply and demand, prices as a whole, have largely declined: