INVESTIGATING THE TRUST PROBLEM in 



report of the commission. This factor was emphasized by- 

 President Hadley in an article on the " Formation and Con- 

 trol of Trusts." President Hadley calls attention to the fact 

 that the formation of a large company, placing its shares upon 

 the market, enables its owners to sell their interests to better 

 advantage than they were able to do as independent interests. 

 There seems to be a psychological principle operating which 

 attracts American investors toward the big concern; mere 

 bigness is considered to be a virtue and a small share in a big 

 concern is more highly esteemed than a large share in a small 

 concern; that is, the investor puts a premium upon the value 

 of a large enterprise and the men who have been most active 

 in the formation of the large corporations have discovered 

 this principle and have made use of it for their own profit. 

 Suppose a corporation is formed of several independent con- 

 cerns whose combined value is $10,000,000; let the promoter 

 capitalize it at $20,000,000 in shares of $100 each and sell it 

 out to the public. The history of recent consolidation shows, 

 in general, that he may sell the entire concern for considerable 

 more than he would have been able to obtain if he had capi- 

 talized it simply at its real value, $10,000,000. It is doubtless 

 true that this factor is not a permanent one, and with more 

 experience with the great corporation it will gradually lose 

 its force. At the present time, however, it is a factor that 

 must not be neglected in the summary of the causes at work 

 producing the great corporate consolidations. 



The formation of consolidations in industry has often been 

 treated as an isolated phenomenon in the economic world. 

 This has led to much misapprehension. The forces at work 

 producing the industrial consolidations are the permanent 

 integrating forces that are at work in all society. These forces 

 differ somewhat from the forces at work in the political world, 

 or from those at work in the distinctly social world. They 

 differ, however, not so much in principle as in the specific 

 way in which they operate. The consolidation of industry 

 must be considered as a part of the evolution of society. 

 Society to-day differs from the society of yesterday chiefly 

 in point of organization. Permanent forces are at work in all 

 lines of human activity, organizing men's interests into higher 



