CONCENTRATION OF INDUSTRY 51 



trusts in specialties or luxuries which thrive on a patent or a 

 private reputation, or because they have organized a limited 

 market. Chewing gum, playing cards, and certain sorts of 

 biscuits and confectionery serve for modern instances in 

 America. But the real issue of American capitalism is to be 

 fought round the gigantic impersonalities of the great corpo- 

 rations in the staple manufactures, the railroads, the mining 

 industry, and in finance. To clear the ground we may brush 

 aside the legal technicalities connected with the term "trust." 

 The fictitious corporation constituted by a number of business 

 concerns entrusting their control to trustees, pooling their 

 profits and distributing them in accordance with the value of 

 trust certificates based on a previous valuation of the several 

 concerns, was declared illegal in the case of the Standard Oil 

 trust, and is no longer adopted as a method of monopoly by 

 manufacturing firms; though a variant of this trust in the 

 shape of a corporation formed to hold securities in other cor- 

 porations has just been broken in the railroad world by the 

 judgment of the United States District court in pronouncing 

 illegal the Northern Securities corporation. What we are 

 concerned with is not the form but the substance of the power 

 of these corporations which have destroyed or abridged free 

 competition in important industries. We first need to ascer- 

 tain the origin and economic bases of this power wielded by 

 the oil and sugar trusts, the steel corporation, the great trans- 

 continental railroads, and the banking and insurance com- 

 panies which are the financial replica of this gigantic power. 



We must note the important part played by machinery in 

 this growth of capitalism. The development of complex 

 machinery in the substitution of mechanical for human power 

 is indeed the essence of capitalism, for it involves the relative 

 increase in the part played by capital as compared with labor. 

 Now America has been conspicuous for carrying the applica- 

 tion of labor saving machinery farther and faster than any 

 other country. Absorbed until two generations ago chiefly in 

 exploring and opening up the vast natural resources which a 

 series of territorial accessions placed in their hands, and im- 

 peded later by the havoc and disorder of the civil war, America 

 was late in betaking herself seriously to modern methods of 



