THE WEAK PLACES IN "TRUSTS."
E see some hope that the rather absurd panic which American capitalists have recently produced in the British public, and indeed in the public of all Europe, is at last passing away. It really seemed for a few weeks as if Englishmen believed that Americans had discovered some new secret for trading with success, and would in a year or two strip them, and with them all other Europeans, entirely of their commerce. Partly owing to the success of great copartnerships like the Standard Oil Company and the Steel Trust, a success dependent upon artificial condi- tions due to the American craze about Protection, and partly to the wails of sensational journals, a kind of horror seized the European mind, Americans were credited with limitless resources and boundless recklessness in throwing them away, and the gravest men began to believe that the Austrian -Chancellor was right, and that the "American peril" would prove a terrible reality. Europe might go hungry while American billionaires put up onyx staircases. An event of no great importance in itself has this week in part dissipated the delusion. A great American " Combine " endeavoured to obtain a monopoly of the wholesale trade in tobacco, and after a brief struggle with the British importers, who combined against it, was compelled by its losses to accept terms of peace which leave the British still masters in their own field. It was perceived at once that Americans, however wealthy and however bold, did not always win in a trading campaign, and confidence was restored almost as quickly as it had disappeared. Then it was announced that the great 8h.iPPing "Combine," which was to purchase all British shipping and destroy at a blow all British maritime prosperity, had attracted the attention of the British Government, had been faced, and had been foiled. The all-powerful Mr. Pierpont Morgan, who could "buy any- thing," from a State or a Royal palace to a rare volume, B lyank from a contest with a capitalist far greater than Ilimself---namely, the British Treasury—and accepted terms. which leave the British liners in British hands, and. If we read the agreement aright, make it his interest to work with rather than against the British people. In- deed, we doubt if he ever desired to work against them. The cloud of despondency was lifted, and we may, we think, trust that whatever the future may have in store. British capitalists and industrials will meet emergencies with some confidence in their own resources and their own enterprise and brain-power. They will have both to think and to exert themseves ; but they are not opposed by industrial Genii with magical means, but by men like themselves, with nothing special in their favour except that, being accustomed to deal with the transactions of a. very large continent, they get the habit of planning enterprise upon a very large scale. Even that scale may be exaggerated in the popular mind, for though American millionaires, having no permanent interests or ambitions except money-making, grow richer than our own, we also have the habit and power of combination. If we called the Midland or the Great Western a "Trust," we should perceive that we also can create and manage successfully " gigantic " businesses.
The truth is that there are two or three weak places in the vast American speculations of to-day. One but little noticed, which was pointed out to us some years ago by one of the earlier millionaires, is that they rather overtax the brain-power available for their management. It is very hard even for a State to obtain a succession of great statesmen, and these vast businesses demand as much mental capacity and more sedulous and harassing atten- tion. Their owners have therefore to pay enormous sumo for competent management, sums often ten times those paid to statesmen, and are liable even then to pick the wrong men, while they themselves become constantly victims to nervous and cardiac disorders. They do not last like the statesmen, and owing to difficulties of health they do not gain, as the statesmen do, the full benefit of their experience. "Money worries" are very harassing, but no fortune will keep a man in full mental strength if a doctor has to see him twice a day. As the generation of founders dies out this difficulty will be felt more and more, for remember, though you can hire business ability as well as other forms of intellect or knowledge, you cannot hire the courage which will risk ruin to employers in order to make a coup. Another weak place is that a Trust must be held in shares, that the only way to establish a monopoly by sheer force of capital is to incur, or at all events risk, loss at first, as it is said—we do not vouch for the legend— that the American Tobacco Combine has done, and that share- holders, however big, soon grow weary of losses the end of which they do not clearly see. Even rich individuals weary of baffled hopes and demands the limit of which is not. fixed, and shareholders are not either specially far- sighted or sustained by the pride of dictatorship. Conti- nental observers say—for instance, M. de Witte, no mean authority, has said—that under the American system dividends are secured by the Tariff, and the managers of American Trusts have a free hand outside the States ; but the argument surely displays some ignorance of human nature. What kind of shareholder is that who, when twenty per cent. might be divided, is content to see fifteen of it thrown away in speculation ? Re would rather take the odd fifteen and speculate for himself. He limits waste, and to establish a monopoly by sheer bribing power or by resolve to undersell requires that waste at first shall be without limits. And the third weak place is the bitter hostility that monopolies have created ever since the days when the prophet Isaiah denounced those who "lay field to field till there be no place" for the poor. The profit of monopoly can only come either from raising prices or stopping the fall which competition would produce, and the former result, at least, is resented with a bitterness compounded of suffering, broken hopes of free careers in the trade monopolised, and of the widely spread hatred to the very rich. The Americans have no instinctive Socialism ; they admire millionaires, and they are pene- trated with the Protectionist fallacies yet it is doubtful whether disgust with Trusts will not undermine the Tariff. No Government in Europe can long resist severe pressure from below, and the means of restricting the action of, and therefore of impeding the profits sought from, great combi- nations of capital will ultimately be discovered.
It is said that this surpasses human ingenuity, even Mr. Roosevelt, with so many able men behind him, having failed to propose a method for regulating Trusts. We admit fully the difficulty of distinguishing between the great Trust and the great trader ; but we do not believe that when a nation once feels itself hurt by a monopoly it will fail to discover means of recovering its liberty. Dread of the dentist's chair disappears when the tooth Wass. One means which, though, to our mind it is distinctly un- scientific, will be immensely popular, is that of subsidising rivals to the monopolist who offends. Another, on behalf of which even moderate Socialists write ardently, is that of transferring the trade to the State, a proposal which has been carried out on the Continent as regards railway transit, and would be seriously put forward even in England if all coal-mines fell under a Trust's control. A third is direct penal legislation against monopolists on the principle which inspired our old statutes against " regraters " ; and a fourth is to compel all great " Combines " when suspected by Legislatures of being injurious to the people to admit directors appointed by the State. This is done already in principle as regards rail- ways everywhere in Europe, and has been done directly and avowedly by ourselves in regulating Indian railway affairs, and it would soon extinguish any monopolist action hostile to the interests of the community. It must be remembered that no European Government is fettered by the Constitu- tional difficulties which hamper Mr. Boosevelt,—our own Government least of all. Our own Parliament, once aware of a dangerous monopoly, say, for instance, of corn, or meat, or salt, or coal, or even tobacco—for though tobacco is not a necessary, it is the innocent sedative which the people choose to lave—would have absolute power to take any preventive measure it pleased, and if pressed by its constituents would not, if we understand our people, be greatly hampered by economic scruples. It has recognised differential taxation already in the exemptions from the Income-tax. We do not believe, therefore, that monopolists will prove as dangerous to independent traders as is com- monly imagined, while we do believe that should such im- probable contingencies occur Parliament will have the strength and find the means to deal with them. The danger is rather of over-roughness than of too much lenity.
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