Page:Cambridge Modern History Volume 7.djvu/751

-1902] Capitalist Combinations and Trusts. 719 motive in the earlier period; and its results are best seen in the case of railroads. The disorganisation resulting from over-building and the uncontrolled competition of bankrupt roads, which had to meet no fixed charges, led to "pools" and traffic agreements which aimed at establishing some degree of harmony in rates and policy. These, however, seldom endured ; and the legislation prohibiting "pools'" hastened the movement of consolidation, till at the present time a large proportion of the mileage of the country is consolidated in a few vast systems. Further- more, under the dominating influence of a small group of financiers, a new policy has been enforced among the different systems which has been termed the policy of "harmony of interest"; and, for the time being, the rate wars of the trunk lines have nearly ceased. This is evidently in one sense a tendency to monopoly ; but it cannot be denied that even under the new system competition among the trunk lines is vigorously pursued, while a stability of railroad business has been secured that is of great benefit to commercial interests. If all industrial combinations had been formed under the same conditions, they would represent an important step toward the reform of that system of disorganised and speculative production which has been a primary cause of modern commercial crises, and has justified one of the chief charges of socialistic critics against capitalistic industry. It is not denied that to a certain degree many of the industrial combi- nations have this character ; but it is only in a certain degree. On the whole, other causes have been more potent in the formation of so-called "Trusts'" than the necessity of escaping from ruinous competition. The first is the desire to escape from any competition at all, that is, the desire for monopoly. No mere effort to maintain normal trade con- ditions could explain the brutal and sometimes unlawful methods which have not infrequently been adopted to crush out every incipient effort at rivalry after the organisation has been firmly established. To cut down prices within the special market reached by the rival while raising them elsewhere, to institute "boycotts," and to secure discriminating rates from public carriers, these are not steps in the direction of industrial reform. The primary aim of the most conspicuous Trusts has been to secure command of the market through the power which great capital affords to outlast the individual competitor in the unequal struggle. Another cause of Trust-building, especially at the beginning of the more recent movement, has been the desire to make speculative profits out of securities. The promoters of these organisations have frequently been outsiders, who persuaded a certain number of companies to combine in order to secure a large block of stock for their services in financing the new organisation. The practice of organising companies to manu- facture certificates of stock rather than commodities was known long before the trust problem arose; but the new tendency afforded a fine opportunity to carry this out on a large scale. In some cases the owners CH. XXII.