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will be still more restricted without positive action against them, their power over prices and wages and social and business conditions is still too great to be left in the hands of interested parties without legislative check. One of the leaders of a great combination said of their industry some months ago: “We control conditions.” Such power should at least be put and kept under supervision of those who represent society.
INDUSTRIAL COMBINATIONS IN EUROPE
HE study of industrial combinations under the differing conditions in Europe serves to con
firm to a material extent the conclusions reached in preceding chapters. It is probable that in Germany and Austria, if not even in England, industrial combinations cover as many different industries, and control as large a portion of the manufactures in each industry as is the case in the United States.
On the other hand, in England only is the form of combination generally that of a single corporation owning many separate establishments. In all of these countries are found numerous combinations of the primitive form mentioned in the earlier chapters, which are merely agreements—often local in their nature among different manufacturers or dealers to limit the amount of their output or to maintain prices at a rate agreed upon. But in all of the countries also, aside from this loose and often merely local arrangement, there are large combinations controlling 90 per cent. or more of the entire output of a single product within the country named, in many cases having an international influence.
The causes of combinations when they were first developing on a large scale in the late nineties and the first decade of the twentieth century as given by those who have been most active in forming them and in managing their affairs are substantially the same everywhere as in the United States, showing that the principle of combination itself is one which seems normally fitted to our present stage of industrial development and one which is not dependent upon mere local conditions or legislation.
The desire to avoid ruinous competition was practically always mentioned as the chief cause. In later years in this country, owing to adverse legislation, not only is the cause seldom mentioned, but the form of the combination is adapted to other aims. In Germany, however, where agreements on prices or output are not illegal, this cause is more frequently put in the foreground. With that are associated the various savings spoken of in Chapter III, although naturally some of these savings are dependent to a considerable extent upon the form of combination itself, and therefore in many individual cases are not found. Speaking generally, however, the opportunity of avoiding cross freights, of running plants to full capacity and on full time, of special adaptation of machinery, and specialization of different plants upon special products, with the corresponding specialization of individual skill on the part of the managers and workmen, the common use of patents, brands, etc., the savings in advertising, the lessening of the cost of superintendence, the possibility at times of saving of labor, particularly of travelling men, and the other savings enumerated, are some of them found practically everywhere, and practically all of them are found somewhere in studying the different combinations. Naturally the savings mentioned are not all of them applicable in every case.
Where the agreements cover only selling arrangements, special advantages applying to manufacturing would many of them not accrue.
Certain local circumstances in Europe, rarely found in the United States, are met with which tend somewhat to check combination growth. For example, in most of the older countries, a manufacturing firm is frequently found which has been established for several generations, possibly even for centuries. The members of the family naturally take great pride in their business, and the business itself becomes to a considerable extent hereditary. Often, beyond doubt, through this business inbreeding, careless habits and wasteful methods creep in, and at times the sons or lineal descendants of the able founders of the business prove to have much less business skill than their predecessors. In more than one instance men have hesitated to enter combinations, because, as they said, they had hoped to hand their business down to their sons, but they knew that if a great combination was formed, the officers of which must be selected on the ground of business capacity, their sons must either withdraw or take a subordinate place. From the point of view of economic efficiency, it is doubtless desirable in many of these cases for the firm to be replaced by the combination.
Some of these same influences too, taken with others, such as the corporation laws, the attitude of the courts, and the state of public opinion, while not lessening materially the drift toward combination, have nevertheless affected decidedly the form which the combinations have assumed. Not having yet felt the pressure of competition to quite so great a degree perhaps as have manufacturers in the United States in many instances, and not having so often the habit of conducting various kinds of enterprises jointly, and, in consequence, of submitting one's individual will in many matters to what seems to be the joint interest of a group, the individual manufacturers in nearly all of Europe seem to struggle more vigorously against selling out or against subordinating themselves to the direction of a single managing head than do the independent manufacturers in the United States. One can hardly ascribe this difference to a greater spirit of independence, in the proper sense of that word, than exists in the United States, as is so often claimed by the foreigners themselves; but a less degree of willingness to abide by the decision of a majority and to cast one's own lot in with that of others seems to be clearly noticeable.
The law has apparently also in all of the countries, although, as will be seen later, there are some apparent exceptions, been ready to uphold contracts to limit the amount of the output, or even to sell goods at a certain fixed rate-contracts which in the United States would be held contrary to many of our anti-Trust laws, and which even would, in certain instances at least, come under the common law principle forbidding contracts in restraint of trade. It has not been necessary, therefore, in order to bring about a uniform management, that the separate establishments sell out completely; it suffices often if they agree one with the other upon the percentage of the entire output that will be produced by each member of the combination, and then put into the hands of a common selling bureau organized in the