INVESTIGATING THE TRUST PROBLEM 117 



competition. All these systems have been used to build up 

 and maintain monopoly prices. 



The influence of the factor system has undoubtedly been 

 too much emphasized. The testimony before the commission 

 shows that while the factor system may aid the trusts in 

 maintaining prices slightly above the competitive level, it is 

 very seldom able to secure a permanent increase in price. 

 Nevertheless, its use may supplement the great forces that 

 have been called in to aid the great consolidations in their 

 attempt to gain supremacy within their own domain. 



In every line of industry one fact of utmost importance 

 stands out clear and bold, that is, the vitality of competition. 

 In the sugar industry, in the iron and steel industry, in the 

 tobacco industry, in the rope and twine industry, in the 

 asphalt industry, in fact everywhere, competition, notwith- 

 standing consolidation, is a factor that the modern business 

 man may neglect only at his peril. The rapidity with which 

 capital has been accumulated within the last few years, the 

 abundance of talent in the administrative work of the corpo- 

 ration, make it impossible to crush competition except by de- 

 pending upon the lowest cost of production. Railwa}^ dis- 

 criminations may favor consolidation, the tariff and patent 

 monopolies may contribute to their support; still wherever, 

 for any length of time, any one of the corporations has at- 

 tempted to maintain prices above the competitive level, the 

 inevitable result has been the attraction of new capital and 

 brains. The modern corporations, therefore, have gradually 

 been forced to realize that safety lies only in securing the 

 lowest cost of production and maintaining prices at a level 

 which will not attract new capital into the industry. The 

 sugar trust has found this in the competition with the Ar- 

 buckles. The steel corporation meets competition at every 

 point, and even the Standard Oil company has a powerful 

 competitor. The course of events seems to be everywhere the 

 same. The trusts when formed usually consolidate about 90 

 per cent of a given industry. Under these conditions it is 

 not difficult to keep up prices for a time. 



The high rate of prices attracts new capital; soon the 

 trust controls not 90 per cent but 70 per cent or even 60 per 



