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less true that in a good many instances these appraisals have been made high; but so far as one can learn, it has been only in the rarest cases that there has been issued watered stock to double or treble or quadruple the value of the tangible assets, and rarely also has the stock been issued beyond an amount upon which there might be reasonable hope of paying dividends.

In Germany, Austria, and France, whenever the combinations have assumed the form of a stock corporation, the rigid laws have practically held capitalization down to the actual cash value of the assets, estimating the establishment as a going concern, the promoter receiving his pay, if he receives it at all, either in some fixed sum for his trouble or in the profit that would come from selling shares at a premium.

The effect of the combinations in Europe on prices of the product seems to have been, on the whole, substantially that which has been indicated in Chapter IX as the effects of the United States combinations, although the latest price investigations into the purchasing power of the products of the combinations in terms of index numbers indicates that in sugar and steel at any rate the prices have been held higher in both England and Germany than in the United States. Their combinations seem to have had in some cases at any rate more influence than ours. Managers there as here call attention to the savings of combination, and to the fact that at times prices are lowered; but perhaps more frequently, when one considers the matter with them dispassionately, they acknowledge that they believe the former profits were too low, and that their prices have, on the whole, been slightly increased as a result of the combination. Almost invariably when they began they added that they hoped ultimately to be able to reduce the absolute prices more rapidly than they could have done without the combination; but they expected practically in all cases to maintain the margin between the cost of the raw material and the price of the finished product at a somewhat higher rate than existed before. Practically, however, in every case, from the beginning, they have believed that by their adaptation of the supply of the product to the market demand they would be able to keep prices much steadier than before, and to keep their labor more regularly employed, thus not merely insuring somewhat more secure profits for themselves, but also protecting to a very material extent both the laborers and the consuming public against the ill effects of commercial crises brought on often by unregulated and ignorant over-production. The experience of the past fifteen years seems to have justified this belief; and the readiness with which the great combinations adjusted themselves in Germany and Austria as well as in Great Britain to the exigencies of the great war by either increasing promptly or lessening decidedly their output emphasizes this important phase of the combination question.

More interesting in certain ways than the mere study of domestic prices is the subject of export prices and the relation of the tariff to prices. Of course it has been the custom in most countries, not merely in the export but also in the domestic trade, when customers are somewhat widely removed from the manufacturing establishment and it is somewhat difficult to secure their patronage, to make particularly low prices in order to get rid of a surplus stock. It has regularly been explained, and doubtless with much reason, that this disposal of a surplus stock at low rates, even indeed below cost, does not increase the price of the product to home consumers, inasmuch as by exporting the surplus the plant can be run to its full capacity when otherwise it is necessary to close it down at intervals in order to prevent an accumulation of surplus stock. The cheaper production coming from running the plant all of the time at full capacity may thus so lessen the cost of manufacture that the domestic product may on the whole sell lower, even though the profit on it is paying for the loss of the export goods, than would have been possible had a much smaller product been manufactured at the increased cost brought about by only a partial use of the producing capacity.

Many persons, however, have been inclined to criticize the combinations by asserting that owing to their monopolistic power they were able to secure abnormally high prices from consumers at home, and that when they sold abroad at somewhat lower rates, they were still not selling at a loss, but were thus showing merely the degree of oppression which they were exercising upon the home consumer.

This argument has frequently been combined with that made in connection with a protective tariff. When in a protected industry relieved of foreign competition domestic prices are kept materially higher than export prices, it is a not unnatural conclusion that the tariff is fostering monopoly, and that the monopoly is making huge profits at the expense of the domestic consumer. Doubtless in certain cases there is a very considerable element of truth in the charge, but the reply is ordinarily given as above.

Herr Wittgenstein, the founder of the great iron combination in Austria, explained years ago that the protective tariff was needed for the sake of the industry, and had been levied by the government because it was wise. Ought not, therefore, the manufacturer to meet the expectations of the law-givers by adding to the price at which foreign goods might without the protective tariff be sold in the country the amount of the tariff itself? In case this were unreasonable, why was the tariff levied? If it proved unreasonable, let it be lowered. So far as selling the goods in foreign markets at lower rates is concerned, not merely do the iron manufacturers, but many others, say that, as has been intimated above, only by such low prices can they enter the foreign markets at all and dispose of a surplus which, if it had to be sold in the home country, would compel the partial closing of the plants to the great detriment of numbers of laborers, and with the result of increasing decidedly the cost of production.

In the years 1912 to 1916 and especially since the outbreak of the European war in 1914 the business men of the United States have been studying export problems as never before. In consequence they seem to have reached the conclusion that to force their way on a large scale into foreign markets such as those of South America or China, large capital is needed and an exporting organization must be skilfully handled. More than almost anything else this fact seems to have modified the popular attitude toward the great combinations, until in 1916, the need of combinations, even those of great size and power, seems to be generally recognized as essential to develop the export trade.

The iron manufacturers in Austria and Germany and France have not hesitated at all to say that in fixing their prices they practically take the price of the chief competing foreign country and add to that the costs of freight and their own home tariff. They believe that they are justified in so doing. In individual cases, as, for example, that of the iron combinations in Germany, the combination has even found it wise at times, as did the distillers in the United States under the old Whiskey Pool, to assess themselves in order to pay export premiums to those of their numbers who were selling their surplus stock in the foreign market at a loss.

Beyond much question, in two or three of the European countries at least, the desire to secure somewhat greater power in contests with the labor unions exerted a noticeable influence toward forming the combinations. Nevertheless, speaking generally, the combinations have seemed to be ready to recognize trade unions and to deal with them on reasonable terms. In the case of the coal syndicate of Germany, the manager has said that in his judgment the leaders of the union believe that the combination has been to their advantage; that it has been so managed as to give the men steady employment at, on the whole, steadily increasing wages; and that it is likely in the future to prevent industrial crises which will lead to more unfavorable conditions for them. They, therefore, are, on the whole, inclined to favor the syndicate. In the case of the Bradford

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