also make illegal the whole mass of price agreements and trade restrictions, general and local, which are a much more common and characteristic feature of modern business than is generally supposed. Anti-trust statutes have accomplished but little, because they have been aimed at forms rather than at facts, at symptoms rather than at fundamental causes. If there is monopoly, with resulting high and discriminatory prices, the social action needed is the rooting out of the fundamental cause of monopoly, or, in some cases, a frank recognition of the fact of monopoly, coupled with the proper public regulation of prices and services. If evils appear in the undue concentration of financial power, and in the dominance of speculative motives in business management, the social action needed is more stringent control of the methods, purposes, and conditions of corporation organization and corporation management. The corporation problem and the monopoly problem are distinct things. The "trust problem" may mean either one thing or the other. The Sherman anti-trust act of 1890 is a federal law, making "combinations in restraint of trade" criminal, so far as the field of interstate commerce is concerned. It has the defects of the similar enactments of the individual states. It has been used to some extent by the government as a means of breaking up railway combinations, but the results of this application of the Sherman act have been generally considered to be unfortunate. Publicity. There is a general agreement among students of corporation problems that greater publicity as to the details of corporate management is much to be desired, both as an end in itself, and as constituting a basis for the intelligent control of corporations. We may distinguish four kinds of publicity: (1) opening of accounts and records to the inspection of stockholders; (2) opening of accounts and records to the proper administrative officials of the state or federal governments; (3) periodical financial statements to stockholders; (4) periodical financial statements to proper administrative officials. Of these different kinds of publicity the second, third, and fourth are unquestionably desirable. The publicity of railway accounts and the development of uniform railroad accounting under the interstate commerce law has been of great benefit to the public, to investors, and to the railways themselves. In respect to the first kind of publicity mentioned, it can hardly be thought right that every small stockholder should have an unlimited right of access to a corporation's books, especially in competitive undertakings. Federal Control of Corporations. It has been suggested by many writers that the unfortunate effects of the lack of uniform state requirements as to publicity, capitalization, purposes of corporation organization, etc., could be remedied to some extent by federal action. Canal, railway, and bridge companies have in the past been chartered by the federal government, just as national banks are now. It would be legally possible and economically advisable to require at least a federal license from all corporations engaging in interstate commerce. Moderate and just requirements as to publicity, and possibly as to capitalization and other things, might very well be imposed as the price of a federal license. Aside from the present lack of uniformity in state laws, the mere size of modern business corporations and the extent of their operations make it difficult for any individual state or states to control them efficiently. QUESTIONS AND EXERCISES 1. What are the terms under which corporations are chartered in your own state? What "anti-trust" laws are in force there? 2. Explain the various items in the published balance sheet of some industrial corporation. 3. What limitations should be attached to the statement that "a corporation is a fictitious person." 4. Does the word "capital" mean the same thing in accounting and in economics? 5. Report on the history of one of the following: United States Steel Corporation; American Sugar Refining Company; American Tobacco Company; International Harvester Company. REFERENCES BENTLEY, H. C. Corporate Finance and Accounting. CONYNGTON, THOMAS. Corporate Management; and Corporate Organization. FREUND, ERNST. The Legal Nature of Corporations. GREENE, T. L. Corporation Finance. HALLE, E. L. VON. Trusts, or Industrial Combinations and Coalitions in the United States. HORACK, F. E. The Organization and Control of Industrial Corporations. Industrial Commission, Report, Vols. I, II, XIII, XVIII, XIX. (See general index in Vol. XIX under "Combinations," "Corporations," "Capitalization," etc.) JENKS, J. W. The Trust Problem. MEADE, E. S. Trust Finance. MONTAGUE, G. H. Trusts of To-day. MOODY, JOHN. The Truth about the Trusts. RIPLEY, W. Z. (ed.). Trusts, Pools, and Corporations. SPARLING, S. E. Business Organization. WILGUS, H. L. Should there be a Federal Incorporation Law for Commercial Corporations? WOOD, W. A. Modern Business Corporations. PART IV VALUE AND EXCHANGE CHAPTER XI VALUE AND PRICE Ir every family produced all the goods needed to supply the wants of its members, most of the problems which to-day confront economic science would not exist. Most of the world's workers are, however, contributing their services either directly or indirectly (through the production of goods) toward the satisfaction of the wants of others. One's economic well-being to-day depends primarily on two things: the money income which can be got from others in return for one's services or for the use of one's land or capital, and the amount of things that can be bought with this money income. The federal census of 1900 showed that about 93 per cent of the men over twenty years old and about 18 per cent of the women of corresponding age were employed in money-making occupations; and this number does not include those landlords and capitalists whose income was derived entirely from their investments. The work of the housewife and the services of friendship embody utilities, that is, satisfy human wants, just as do money-making activities, but they are not measured in terms of dollars and cents. The production of wealth is in these days mostly "for the market," and wants are satisfied very largely by goods obtained from the market. Most goods get from those who produce them to those who use them only by the processes of exchange. The Meaning and Significance of Value. One of the most fundamental of all economic problems relates to the ratios at which goods are exchanged for one another. These ratios are called exchange values. The exchange value of a good is the tity of other goods that can be obtained for it. Exchange value is often called objective value, and is to be sharply distinguished from subjective value, which, it will be remembered, measures the importance attached by an individual to a particular unit of a commodity. In this chapter the word "value" is to be understood as meaning exchange value. It is evident that the value of a commodity will vary with conditions of time and place, and that at any particular time and place it might be expressed in a number of different ways. A pair of shoes might be exchanged for four bushels of wheat, for two hats, or for other quantities of other commodities. In this sense any one commodity will have not one, but many, exchange values. It is, however, customary to-day to express the values of all commodities in terms of one other commodity, money. Price is exchange value expressed in terms of money. There are 23.22 grains of gold in our monetary unit, the gold dollar. Thus, when we say that a pair of shoes is worth four dollars, we indicate that they have four times the value of 23.22 grains of gold. When the words "value" and "price" are used interchangeably, as will sometimes be the case in this chapter, there is implied the assumption that the value of money is constant- an assumption which, of course, does not entirely correspond with the facts. The process by which the ratios at which goods are exchanged is determined is called "valuation." This word is used in a narrow sense as referring to the fixing of the exchange values of commodities; in a broader sense it includes also the determination of the different rewards received by those who have contributed to the production of these commodities. In this broad sense the problem of valuation is the problem of the distribution of wealth. Imagine the case of a mechanic employed at a particular time in the manufacture of machinery that will be used in a flour mill. The final product of the mechanic's labor- the only product. directly useful in the satisfaction of human wants is the flour, or bread made from the flour. To the making of this final product thousands besides our mechanic - farmers, agricultural laborers, railway officers and employees, other mechanics, and so |