Imágenes de páginas
PDF
EPUB

from the raw material through to the highest finished product be carried on without delay or unnecessary friction. In other cases the large establishments find it necessary to secure by purchase, control of raw material for years in advance, often at an expense greater than that secured by the so-called "integrated combination."

It would seem that if there is any real economic function of combination of capital, whether it has attained monopolistic power or not, it is this: saving the various wastes of competition,* in great part by providing for the direction of industrial energy to the best advantage. Only by such large scale production and distribution and often only by combination of many separate plants and minor industries can it be made possible for the general public to secure articles of consumption at an absolutely low price on the basis of a low cost of manufacture. How far combinations thus far have permitted the public to gain these advantages, how far they have used them for the benefit of their workmen, and how far they have themselves selfishly taken advantage of their superior productive power to the detriment of the public, will be considered elsewhere.

*Under wastes of competition may properly be understood also those of subdivision in production or of production on a small scale; under combination also mere aggregation of capital. But in other connections these separate meanings should be distinquished, as is done later.

M

CHAPTER IV

FAVORS TO INDUSTRIAL COMBINATIONS

ANY writers and thinkers on the subject of industrial combinations are of the opinion that they are usually brought into existence by special favors, either of the Government or of other corporations such as the railroads, and that, at any rate, whatever monopolistic power they possess is secured in this way. It is even the contention of some that unless the industries themselves are natural monopolies, such as railways and the telegraphs, or unless they are granted some special legal privileges, such as patents or copyrights, it is impossible for them to secure monopolistic power without some special favors shown them.

The protective tariff is probably most frequently cited in the United States as a special favor to an industry that brings into existence monopolies. The dictum of Mr. Havemeyer, the former President of the American Sugar Refining Company, in his testimony before the United States Industrial Commission, that "the mother of all Trusts is the customs tariff law," has found ready acceptance by large numbers of thoughtful people. Mr. Havemeyer's contention is that a high tariff, by making the protected industry very profitable, will tempt much capital into that special field. In many cases, the establishments, on account of the high profits, will be placed carelessly in unfavorable loca

tions. In other instances, for the same reason, men who are not skilled in the industry will be ready to engage in it. The promise of high profits having thus tempted many rivals into the field, the pressure from this home competition becomes severe, and investors feel themselves cheated of their anticipated profits. With the profits thus in sight, or even perhaps with the memory of large profits in the immediate past to stimulate them, they more readily combine, not primarily for the sake of reducing expenses, but rather for the purpose of reaping from consumers a large reward through monopolistic high prices. It is beyond question true that several of our largest combinations have been formed in industries protected to a considerable extent against the pressure of foreign competition by the high protective tariff. Indeed, Mr. Havemeyer himself acknowledged that, had the sugar industry at the time of the formation of the Trust not been so protected that there was promise of a high profit without foreign competition, he would not have risked his property in the combination, which of necessity included also many of those establishments less favorably situated for cheap production.

The situation is, however, not so exceptional as is often thought. Even in unprotected industries in which the United States has an advantage, the same principle of high profits in the earlier days, lower profits from the pressure of competition, and the consequent temptation to combination exists. If one considers what the effect would probably be of the removal of the protective tariff in an industry in which a combination exists, one can readily see that, while the public

might be benefited, the result would hardly be the prevention of monopoly. If the combination, as is ordinarily assumed, were stronger than the few independent competitors still in existence in the country, the first effect of the removal of the tariff would be the ruin of the independent producers. Provided the industry were dependent entirely upon the tariff for its existence, the removal of the tariff would of course kill the Trust, but would at the same time kill the entire industry. The question of the wisdom of supporting an industry by the tariff is not here raised. It might be wise to kill a certain industry, but it should be borne in mind that those who advocate the removal of the tariff for the sake of destroying the Trusts do not ordinarily contemplate such an outcome. The removal of the tariff, whether the industry were dependent upon it or not, would certainly destroy the rivals of the Trust before the Trust itself would go out of existence. In either case, however, the consumers would, beyond question, for the time being, enjoy lower prices.

It is also true that the removal of the tariff in many instances by strengthening the competition from foreigners would simply bring about an international combination. There has long existed in a form more or less disguised an international thread combination. Chairman Gates of the American Steel and Wire Company testified before the Industrial Commission that, during the summer of 1899, while abroad, he had several meetings with German wire manufacturers, who are also combined, for the purpose of seeing if it were not possible and advisable to form an international combination for the manufacture of wire, since

the Germans were the most serious competitors of the Americans. The plan suggested was for the two countries to divide the world's markets in accordance with a fixed percentage, and to agree upon an increase in price. The difference of opinion as to the percentage of the markets which should be allowed to the AmericansMr. Gates demanding fifty, while the Germans were willing to grant at the outside not more than forty-five -and further differences of opinion regarding the increase in price-he being content with an increase of $10 per ton, the Germans wishing to secure one of $30 -finally made him distrustful, and resulted in the breaking off of the negotiations. The mere fact, however, that two powerful, even virtually monopolistic, combinations in two leading countries could in this way have progressed so far in negotiation, makes it perfectly evident that the pressure which might be brought to bear by the removal of tariff obstructions, or, in other circumstances, by the imposition of tariff burdens, might readily result in an international combination of some form.

Even without such pressure international combinations or at least combinations international in scope and dealing with foreign governments regarding terms have been long in existence. Nearly all of the larger manufacturers have now their agents abroad; sales of iron and its products, of tobacco, of harvesting machinery, of petroleum, are made continually in most foreign countries; and it has not been at all difficult to enter upon negotiations for combination. It is true that some years ago the great copper syndicate of Paris, which seemed for the time to control substan

« AnteriorContinuar »