monest use had come to be controlled by a number of organisations which seemed to be able to fix prices without regard to competition. Two or three of the largest and most conspicuous had assumed the peculiar juridical form, to be described later, known as a "Trust." The word at once seized upon the popular imagination; it soon drove out all rivals from everyday speech, such as "Combine"; and it has continued to be commonly used for all capitalistic combinations of a supposed monopolistic tendency, whether they take that peculiar legal form or no. The discovery of their existence led to a great outcry. A popular demand arose that the several governments of the States and of the Union should enforce what the lawyers declared to be the principles of the common law with regard to conspiracy in restraint of trade; and that, if this proved insufficient, new legislation should be enacted distinctly declaring the formation of such combinations a criminal offence. Anti-Trust laws were passed by some twelve or more State legislatures; and in 1890 by the United States Congress itself with regard to inter-state commerce, which alone falls within its powers.

In the commercial crisis of 1893 more than one of the so-called "Trusts" came to grief; and the dull and stagnant years which followed were not propitious to large enterprises. Moreover, the Venezuelan Message, the Silver campaign, and more recently the Cuban question, culminating in the war with Spain, gave people other things to think about. But now, in the new wave of business confidence which is passing over the country, there is a fresh movement on the part of capitalists engaged in industry towards far-reaching, all-embracing combinations. Telegraphic reports tell us on this side of the water that hardly a day passes without the formation of some new "Trust"; and yet it is undoubtedly the case that, in the original and exact sense of the word, there is not to-day a single "Trust" in America.

For the "Trust," properly so-called, was nothing but an easy legal mechanism for arriving at an end which could equally well, though with somewhat more difficulty, be achieved by other means. It was the invention in 1882, so it is said, of the presiding genius of the greatest of all the organisations, the Standard Oil Trust, viz., Mr. Rockefeller; and it was simply this. The shareholders of a number of joint-stock companies all handed over their stock, and with it their voting powers, to a small board of trustees, receiving in return certificates representing the amount deposited. Externally each company, or "corporation," retained its independent constitution; but hence

forth its management was in the hands of the trustees, who acted nominally on behalf of the shareholders of that particular company, but really directed the operations of all the establishments according to a general plan.

In spite of the ability of "corporation lawyers," and the extreme deliberation with which the State Attorneys and AttorneysGeneral set about enforcing the law, it was soon apparent that this particular form of organisation could not be maintained. It was held by the courts, that even on the principles of the common law, the several bodies of shareholders were acting ultra vires in handing over to trustees powers which, in the intention of their charters of incorporation, they were to exercise themselves. Besides, it might save the managers of the undertakings some annoyance to bow before the storm; and, accordingly, one after another of the great combinations declared that they had abandoned their "Trust," that the several companies had regained their old independence, and that the public had nothing further to fear. But, economically, the situation in the case of most of the larger combinations is substantially unchanged; where changed at all, it is only in the direction of consolidation and amalgamation. In the case of the Standard Oil there has been no "Trust" since 1892; but the nine persons who once directed operations as trustees now do precisely the same in virtue of the fact that one or other of them has, somehow or other, become the owner of a majority of shares in every one of the nominally independent companies. In other cases, notably that of the Sugar Trust, there has been an actual amalgamation of the constituent corporations in one enormous new company. In another instance, that of the Steel Rail Pool, -not so close-knit an arrangement as a "Trust," but aiming at the same end—the break-up of the pool, to which the new legislation in some measure contributed, has enabled one of its members, Mr. Carnegie, to swallow up or destroy many of his old Pennsylvania associates, and to dominate, though not yet to monopolise, the market by an alliance with Mr. Rockefeller, who controls the mining region of Lake Superior. That is to say, the attempt to enforce the supposed common law and the invention of new penalties in obedience to popular outcry have resulted in making it impossible for a number of companies or individuals to enter into formal contracts of certain particular kinds to restrict production and fix prices. They cannot prevent either a private

1 It is now (May) being stated in the American journals one day and denied the next, that a "consolidation" of "the entire iron and steel trade" in the United States has lately been effected by the diplomacy of the Carnegie Company.

conversation among a number of gentlemen, or a voluntary amalgamation of businesses, or a victory of a large producer over a smaller one through the mere preponderance of capital resources. What we have to look at, therefore, in the United States is not a particular form of association, but all such capitalistic monopolies, -or (where the control of supply does not amount to a monopoly) all such market-dominations, as are able so far to govern supply as to have the power of fixing prices without any immediate fear of competition, either domestic or (thanks to the tariff wall) foreign. The mere external shape of the capitalistic edifice is of very small importance.

Now it is very clear, in the first place, that such monopolies or market-dominations in the United States are no merely temporary and ephemeral phenomena. Of course a good many attempts to secure such power have broken down sooner or later, and ruined their promoters; but, on the whole, there is a distinct tendency towards the extension either of combination or of more or less complete amalgamation of interests to more and more branches of industry, as well as toward the growing solidification of that increasing number of combinations which manage to survive. The development is, however, a good deal slower-it has more complexity, and also more inevitableness, so to speak, in its movement-than the public commonly suppose. A case in which a number of businesses, really competing against one another for a considerable period, are suddenly brought into a successful combination by the business genius of one mansuch a case, I will venture to say, is almost unknown. Almost every one of the large combinations has behind it a significant history of fifteen, twenty, or even thirty years' duration; a history first of flourishing business, then of cut-throat competition, and then of depression, and finally of recuperation, and so on da capo ; a history of alliances and understandings and agreements, made time after time, and renewed afresh after each failure. The newspapers report just now that Mr. Pierpont Morgan has secured the assent of the English stockholders of the Reading Railroad to a combination of all the eastern railroads owning coal-mines. But if he secures his object, it will be but the outcome of a tendency in anthracite coal mining which began to show itself as Jong ago as 1872, and of a series of attempts which have come. nearer and nearer to success as the years have gone on. The student of the operation of the force of self-interest under modern conditions of production on a large scale can find no more instructive reading than the series of monographs which American

economists and their pupils have devoted to the history of a number of the monopolised industries.

In the next place, the "Trusts" must not be looked upon as altogether exceptional or as sharply distinguished from the rest of the operations of the American business world. There is, indeed, a vast amount of direct competition of the most old-fashioned type still to be found in the country. Putting on one side the small industries and those that have not yet passed into the factory or mill form, there are still whole departments of manufacture in which, at any rate on the surface, there appears little tendency towards combination, e.g. the whole group of textiles.1 Nevertheless the movement towards some mitigation of the influence of competition in the determination of price is very widespread in American industry. It is one of the chief directions in which the force of self-interest, which but recently made only for individualist competition, is now making itself felt; and it takes a hundred forms, varying in durability and thoroughness. The "Trusts" represent but the culmination of this movement; and to isolate them, as is so often done, from the general economic environment, is to give a thoroughly false idea of their real significance.

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This last consideration has a direct bearing on the question of the "origin" or causes" of the "Trust" movement. There are economists who, not content with pointing out the part which competition has hitherto played and still plays, exhibit a sort of jealous regard for its future vitality; and these are very much inclined to argue away the significance of American "Trusts," and to attribute them to peculiar local political conditions. Thus one recent French observer concludes, to his own satisfaction, that "Trusts " have arisen in the United States because the Government of that country has" either done too little or too much"; too little, in the control of railways, so enabling, e.g., the Standard Oil people to crush their rivals by securing preferential rates; too much, by the adoption of a protective policy which has sheltered, e.g., the Sugar Trust and the Steel Rail Pool, from foreign competition. His implication is, that monopolies will not arise where the Government hits the happy mean, and never strays from the narrow path. This is cold comfort, if true.

The argument as to protection has, prima facie, a good deal

1 This is no longer true of all branches of the group. According to the New York Commercial Bulletin for April 25, the United States Worsted Company, recently incorporated, has "options on about thirty-five worsted yarn mills, which will absolutely control the worsted yarn industry of the country."

to be said for it. It is confirmed by the circumstance that precisely those combinations which have recently in Europe attracted the most attention-curiously enough, in two of the same industries as in America-the iron and sugar combinations in AustriaHungary, have likewise been protected by a high tariff. Evidently protection has often been an important favouring and accelerating condition. But as a fundamental explanation it cannot, I am sure, satisfy any one who is acquainted with what I have ventured to call "the economic atmosphere" of the United States.

It is a commonplace-but none the less true on that account -that the "great industry" of modern times, so long as it is carried on under conditions of individualist competition, has certain inevitable consequences of the gravest character. When a number of separate undertakings, not only without concert, but on the contrary in rivalry one with another, are engaged in supplying commodities or services to a market difficult completely to survey and subject to fluctuation, then there are bound to be, from time to time, periods of over-production, with its consequences in depression of trade, diminution of employment, suspension of production, and destruction of capital. Crises may, it is true, be Occasioned by bad harvests, by international complications, by unsatisfactory conditions of currency, and even by stock-jobbing; but, even if all these causes could be removed, crises would still be produced, as it were automatically, by the "normal" working of the competitive system. It is also now generally recognised-American economists treating of the Railroad problem have been among the first to point out-that this tendency to periodical crises, due to a want of coincidence between supply and demand, has been reinforced by the increasing use of fixed capital. Time was that when the profits were out, the business would die. But undertakings employing a large amount of fixed capital, of which the value would be seriously impaired or even destroyed by a period of disuse, do not now go out of the field of competition when they cease to obtain what the economists used to call “the average rate of profit." They usually remain in operation for years after, and reduce their charges, if necessary to obtain business, so long as they can earn anything, however little, above prime cost, and obtain any contribution whatever towards their fixed charges. And thus competition becomes more and more acute; the agony of rate wars and "cut prices" more protracted; the ill effects more widespread, and the recovery more slow.

All this is illustrated on a vast scale in the United States. Fifty years ago England was "the classic home of the great in