tinguishing its rivals. When this art is learned, less careful legal control by society will be needed, since it will be found that in the long run it is the policy that will pay the combination as well as benefit society.

Even as regards the special discriminating favors that are mentioned by those who believe that there is no such thing as capitalistic monopoly, it might readily enough be claimed that these very special favors are secured only by virtue of the power of large capital. However, that would be a technical claim which need not be made.

Possibly the chief influence in the long run in promoting combinations of capital, as well as their most far-reaching effect in the earlier days of the Trusts, was the element of personal ambition which is fostered by monopoly. There can be no doubt that, in the case of the larger industrial combinations, the belief on the part of the managers that a virtual monopoly could be secured was a powerful element toward bringing about their formation. The pride of power, and the pleasure which comes from the exercise of great power, are in themselves exceedingly attractive to strong men. As one with political aspirations will sacrifice much and take many risks for the sake of securing political preferment in order that he may in this way rule his fellows, so a successful organizer of business derives keen satisfaction from feeling that he alone is practically directing the destinies of a great people, so far as his one line of business is concerned. Mr. Havemeyer said that his ambition was to refine the sugar of the American people. Mr. Gates asserted that it was the ambition of the organizers of the American Steel and Wire

Company to control the wire output of the world. One cannot say that these ambitions are not as worthy as those of politicians, and as natural. No one can question that these elements of personal satisfaction and pride are most powerful factors in all lines of social intercourse, and this pride could not be gratified in business short of the belief on the part of these men that they can secure a practical monopoly. This ambition will not be gratified by the control of merely a very large business. Napoleon was not content to be the head of a great state. His ambition would brook no rival. May not the ambition of a sugar king or a petroleum magnate well be of like imperial nature, though in a more restricted field? And yet, in the case of Napoleon and possibly of other potentates of later date the event showed that ambition had overleaped itself. Likewise the chief successes of later years have seemed to rest with those who have been content with less than world domination and who have been ready to accept merely strong leadership.

Connected with this belief in the power and desirability of great leadership, if not monopoly, within the home market is belief in the ability of the great combination to enter new, and especially foreign markets. Much more capital is required to introduce into a foreign market a special product than would be required for the extension of the sale of that product within one's home country. The power of great capital thus enables the combination to extend its trade as could otherwise not be done, although this power by no means necessarily implies monopoly. The American Tobacco Company, followed by its successor in that

field, the British-American Tobacco Co., developed a great market in Japan, later assumed by the Japanese Government, in India, China, and throughout the Far East. In some instances even, it is said, it was forced practically to create the taste for tobacco and to break down religious scruples in order to introduce its product. One may question the value to those peoples of this "educated taste"; one cannot question the skill and power needed to accomplish the result. The Standard Oil Company, the International Harvester Company, the United States Steel Corporation, have pushed their products into practically all the markets of the world, in some cases even winning control of European domestic markets against the violent opposition of legislators as well as business rivals. In no case could these industries have so expanded without the possession of very large capital; and this ability to manage the foreign market in conjunction with the home market, is beyond doubt an advantage of the large organization which the small competitor does not possess. It remains to be seen whether coöperation for work in the foreign field among smaller competitors at home, which is so ardently advocated in some quarters, can successfully enter the foreign field in competition with the great combinations. It may perhaps be safely assumed that such coöperation will not succeed unless it is close enough to secure completely unified permanent management. In that event it becomes an industrial combination or a Trust. The possession of a secure foreign market gives the large manufacturer still further power in handling the home market so that it strengthens his industrial leadership.

Granting, then, all that can be said with reference to the special advantages that come from legal monopolies and from natural monopolies, it still seems reasonable to believe that without them what must, under the present usage of terms, be called monopoly, does, through the power of capital, exist, temporarily, at least. Apparently it may exist permanently, exerting, if it wishes, some of the power exercised by other monopolies, and needing like them the restraining hand of the State through courts and legislatures to prevent abuse. Experience has shown, however, that monopoly's wiser plan is not to attempt to abuse its power, but to be content with industrial and market leadership. The term "capitalistic monopoly" has been given to this kind of business organization. For the present it seems well to make use of that term, keeping in mind the strict limitations of the powers of such organizations.

CHAPTER VI

PROMOTER AND FINANCIER

F SEVERAL different firms or corporations are to combine into one, or if a large corporation is

I

to be organized, it is ordinarily true that some individual must undertake the task of carrying on the negotiations among the different establishments or individuals concerned, of providing a plan of organization, and of persuading the different individual owners that it is to their advantage to enter into the combination on the terms suggested. This persuasive optimist who can succeed in convincing each that it is for his interest to join the organization is the promoter.

In the organization of many of our later industrial combinations, the large pay of the promoter has come directly or indirectly through the issuance of watered stock. To see fully the common practices in connection with such work, we may profitably sketch the more usual processes and forms of organization of corporations.

As some of the terms* used in this chapter are some

*A bond is an interest bearing certificate of debt issued usually by a corporation, municipality, or government. Bonds may either be registered, transferable only on the books of the company, or unregistered, when both interest coupons and the bond itself are payable to the holder or bearer.

Stock is capital represented by a given number of shares of a corporate company, usually, but not always, of a fixed nominal value per share.

Original capital is known as common stock and dividends on it are subordinate to those on preferred stock. Preferred stock has usually a preference over the common stock in that a fixed rate of interest must be paid on it before the common