control of the market in many cases, even though monopoly has not been reached.

5. Large sums of money are frequently spent by competitors in the payment of cross freights which might readily be saved by combination. When the Michigan Salt Association was formed some years ago for the special purpose of effecting sales through a single agency, it acted as the sales agent for salt wells on both the east and west sides of the state of Michigan. Orders for salt to supply Chicago and the West were filled regularly from the salt-manufacturing establishments on Lake Michigan, while those for Detroit, Toledo, Cleveland, and the East, as far as salt was shipped in that direction, were supplied from those on Lake Huron and the St. Clair River, a saving thus being made of the shipment of salt across the state of Michigan by rail or around the state by boat through the Straits of Mackinaw. This saving in freights was great enough to make a profit for those in the Association, when the sale of salt to be shipped the longer distances at the same prices would inevitably have resulted in a loss.

In like manner, the Standard Oil Company, with its large refineries at Bayonne, N. J., on the Atlantic seaboard, and others at Whiting, near Chicago, aside from any question of freight discrimination, is enabled to secure a great advantage over many of its rivals who have but a single refinery from which all orders must be shipped both east and west. Indeed its control of the New England market for years resulted from the fact that it was able to make Boston-supplied by boat from Bayonne-its chief distributing point for that

territory, while its rivals found themselves in good part cut off by high freight rates from the West into New England. It was thought by many that rates had been purposely made to the advantage of the Standard Oil Company, but they were at any rate uniform and within the law. Had its rivals possessed the same facilities, the Standard Oil Company would not have had this advantage. The Tin Plate and Steel Companies, when organized into large combinations, made similar saving in cross freights, Mr. Gates, of the American Steel and Wire Company, estimating their saving at more than $500,000 a year, while other manufacturers name also large savings. The United States Steel Corporation in 1914-1915 built a large plant at Duluth, somewhat earlier an even larger one at Gary, Indiana, and in other places it has erected and improved plants with locations so chosen with reference to raw materials and markets that great savings in freights would result. It will be noted that this advantage comes particularly to those manufacturers whose goods are bulky, so that the freight forms an essential part of the cost to the consumer. Manufacturers of ribbons, watches, or other expensive and highly finished goods, while able to obtain a slight advantage in this direction, would yet find freight but a small part of their expense.

6. For some years before the formation of the old Whiskey Trust, the capacity of the existing distilleries was far more than was necessary to supply the normal demand of the country at profitable prices. In consequence, agreements were made from time to time among nearly all the leading distillers to restrict the output. One year each distiller pledged himself to

run his plant at only 40 per cent. of its full capacity. Another year the agreement limited the output to only 28 per cent. of the full capacity. After the formation of the Trust, out of more than eighty distilleries which joined, all were closed with the exception of twelve of the largest, best located, and best equipped, which ran at their full capacity; and the output of these was equal during the first one or two years to the entire output of all of the distilleries which had been running before. Of course it is true that, owing to the pressure of competition, a good many of the distilleries had been shut down before the Trust was organized. It is nevertheless probable that no other source of saving was so great as that which came from running the best distilleries to their full capacity and all the time. Mr. Havemeyer, in connection with the Sugar Trust, calls attention emphatically to this waste of excessive competition. Before the organization of that Trust, about forty sugar refineries had been running, but none of them could work to their full capacity and all of the time, and, as has been said, as a result of the competition some eighteen went into bankruptcy. The Trust was formed, and while eighteen corporations joined, the whole resulting capacity was in a relatively short time concentrated into six or seven, the combination finding it profitable to shut down or even dismantle several of the refineries which it bought. It then ran the rest to their full capacity all of the time, and in this way, Mr. Havemeyer thought, the greatest saving of the Trust was made. Even at present, when five or six independent refineries are running in competition with the American Sugar Refining Company, it is

thought by the combination that it derives a somewhat similar advantage. In most cases the rivals, owing to the fluctuations in prices, are not able to run to their full capacity, and in many cases run only part of the time. On the other hand, the Trust, supplying some 90 per cent. of the market, adopts a somewhat more thrifty policy. Substantially all of the refineries, with the exception of the largest and best equipped one in Brooklyn, are run to their full capacity all of the time. In this one refinery the sugar combination places its most skilful men, and through the operation of that one establishment fits its supply to the demands of the market. This is most carefully watched from day to day, and every possible method of avoiding waste and loss from the restriction of output, which at times becomes necessary, is employed. The loss from a partial output is thus confined to the one establishment which forms but a small proportion of the total capacity of the organization, whereas in the case of its rivals the loss applies to the entire capital invested when only one refinery is under consideration. It has been estimated that this saving to the American Sugar Refining Company is as high at times as one-eighth cent per pound, a margin sufficient in itself to give a large profit. It is interesting to note that the new sugar combination formed, in June, 1900, to compete with the American Sugar Refining Company, gave this saving as the chief reason for its formation. Many people indeed put the ability to adjust their output to the market as possibly the main advantage of a great combination and ascribe the steady profits of the Standard Oil Company and of the Sugar Combination during periods of depression

to this factor. Of course, when a combination produces a large percentage of the entire output of a country its influence in this regard is marked, and may often prove an important factor in tiding over a period of depression following a crisis, as was the case with the United States Steel Corporation after the crisis of 1907. This waste of competition, then, which comes from the inability to adapt one's plants and output to the needs of the market without excessive loss, can be partly saved by combination of many manufacturing establishments in one industry under one management.

7. When one establishment, in order to supply the needs of its customers, manufactures several different grades or qualities of goods, it becomes necessary frequently to change the machinery, and even to stop it at times while changes are made from one class of work to another. For example, the former president of the American Steel Hoop Company, Mr. Guthrie, testified that he manufactured from eighty-five to ninety different sizes and kinds of goods. If these goods were manufactured in one or two establishments, there would be frequent changing of the rolling machinery in order to fill any one large order which called for many different sizes. Under the new circumstances, a large order calling for different classes of goods could be distributed among the different mills, each one adapted for the manufacture of a particular class. In this way changes of the rolls are largely avoided, and the delays are obviated which would result in large waste of time and energy, provided the competitive system, or the system of small independent mills, were in vogue. Mr. Guthrie's opinion was that this saving alone amounts to from a