i 2 8 CHARLES J. BULLOCK 



the construction of new plants. When this fact is taken 

 into account, the case will stand as follows: except where 

 the action of government has produced abnormal condi- 

 tions, the capacity of competing establishments does not 

 exceed the requirements of the market to any such degree 

 as is commonly assumed; even a trust must provide for 

 periods of expanding trade, and this fact diminishes mate- 

 rially the margin for saving by avoiding the burden of idle 

 factories; even then, not all rival establishments suffer seri- 

 ously from inability to find continuous employment for their 

 plants, so that probably the advantages secured by the trust 

 are of consequence only when the least fortunate or least 

 efficient independent concerns are made the basis of com- 

 parison. In those cases, however, where abnormal conditions 

 have been created by the operation of our tax laws, we need 

 entertain no surprise at the appearance of consolidated com- 

 panies. But in the future, it may be asserted, this particular 

 force will not prevent rival companies from competing for a 

 share of an increasing trade. 



The last three economies relate to advantage in buying 

 materials or selling products. It is urged that a combination 

 can purchase its raw materials more cheaply than separate 

 concerns. This would probably be interesting news to many 

 large companies not connected with trusts, and Professor Ely 

 is undoubtedly right in remarking that all ability in bargaining 

 is not controlled by combinations. No one doubts that a 

 large company can often secure better terms than a small 

 establishment ; but it is not so clear that every trust can secure 

 supplies more cheaply than large independent enterprises, 

 unless it is true that all combinations can arbitrarily depress 

 the prices of the materials which they consume. Undoubt- 

 edly, this has been done by some of the trusts, although 

 their partisans deny it; but such a saving represents no 

 social gain, and sometimes it may be possible for would be 

 competitors to profit by the depressed condition of the market 

 for raw materials. We do not need to deny that any com- 

 bination can gain an advantage in the purchase of supplies, 

 in order to support the contention that no general advantage 

 accrues to the trusts from this source. On this point a 



