THE GOOD AND THE BAD OF TRUSTS 127 



such a measure to be necessary for protection against mono- 

 poly. Here, then, we find no natural law working resistlessly 

 towards combination, but a man made device which can be 

 regulated as public policy may dictate. 



Again, we are told that a trust can produce more cheaply 

 than separate concerns, because all the plants utilized can 

 be run at their full capacity; whereas, under competition, 

 many establishments can be kept in operation but a part of 

 the time. Two observations may be made concerning this 

 claim. First, the extent of the economies thus realized is 

 grossly exaggerated. The whiskey combination furnishes the 

 stock illustration employed to enforce this argument; and we 

 are told that this trust was able to close all but twelve out 

 of the eighty constituent plants, and yet produce almost the 

 same quantity of spirits that formerly had been put upon the 

 market. But the distilling industry is a highly exceptional 

 case. For twenty five years prior to the formation of the 

 trust the federal tax upon whiskey had been so manipulated 

 by the distillers as to call into the industry enormously exces- 

 sive investments of capital. Competition, of itself, would 

 never have produced conditions even remotely resembling 

 those that prevailed in this business from 1865 to 1887. 

 The sugar refining industry is another stock illustration, 

 but here, it is conceded, the tariff had given an undue stimulus 

 to investments ; and the same thing is true, probably, of many, 

 if not most, of the trusts that have been able to close up a 

 considerable number of plants. In general, it may be denied 

 that, whenever governmental interference has not produced 

 unhealthy and abnormal conditions, competition has led to 

 such absurdly excessive investments as is commonly assumed. 

 We must concede, however, that under normal conditions 

 some reduction can be made in the number of plants required 

 to supply the market at ordinary times; but this does not 

 dispose of the matter. If a trust is to be prepared for sup- 

 plying the market promptly in times of rapidly increasing 

 demand, it is necessary that some surplus productive capacity 

 must exist in periods of stationary or decreasing demand ; for 

 as believers in the tendency to monopoly often remind us, 

 many months, or even one or two years, are required for 



