206 ANNUAL REPORT OF THE Off. Doc. 



by the aggregation and combination of capital in the form of a 

 trust, was not possible, except in those cases where the product of 

 the trust was some natural resource, like anthracite coal or oil, and 

 the trust might secure practically all the product. 



But even in these cases, ability to substitute something else for 

 the product monopolized, that it to say, that fear of competition 

 which is quite as efficaceous as competition itself, will keep down 

 the price of the product to a point which will return to the capital, 

 no more than a fair compensation. When the copper trust raised 

 the price of copper until it returned more than a fair margin of 

 profit on the capital invested, another copper trust was formed, and 

 the monopoly in copper was straightway destroyed. I rather in- 

 cline, therefore, to the views of that class of economists who believe 

 that when the incidental evils, such as discrimination, secrecy, 

 over-capitalization, boycotts, etc., have been provided against, the 

 question of monopoly will not be a serious problem of the trust. 



Now, there are certain evils, incident to aggregated capital, 

 whether it be in the form of large partnerships, joint stock compa- 

 nies, corporations, or trusts. 



And among these evils are, (1) The ability of the large shipper to 

 secure a discriminating rate, or what amounts to a discriminating 

 rate of transportation; (2) The ability of the large dealer to tem- 

 porarily discriminate in prices until local competition is driven out, 

 and to boycott rivals by offering an extra profit to customers who 

 will handle nothing but the trust product; and (3) the absolute se- 

 crecy which shrouds the books and acts of the corporation or trust; 

 and (-1) the practice of over-capitalization, or "watering stock." 



I am not one of those who believe in legislating against natural 

 laws, and I believe that the laws of trade are quite as irresistible 

 and quite as much above the commands of a legislative enactment, 

 as the laws which govern the motions of the planets. 



But the incidental evils which I have called to your attention, as 

 likely to accompany the formation of trusts, are not laws of trade, 

 but perversions of the law, invented and carried out by men for their 

 own selfish ends. 



Many of these evils, if not all of them, may pro])erly be made the 

 subjects of legislation, and an enforcement of wise laws, passed in 

 this behalf, will, in my judgment, do away with them to such an 

 extent at least that they shall cease to be threatening. 



If I am correct in the views which I have expressed to you, then 

 the truth about trusts is found somewhat close to the assertion of 

 John Stuart Mill that "when markets are large and a large opening 

 for exportation, large systems of business are effective. Large es- 

 tablishments are substituted for small ones. This change from 

 small to large is wholly beneficial. It may have some drawbacks. 



