THE GOOD AND THE BAD OF TRUSTS 137 



our new remedy for industrial depression will merely intensify 

 the evils which it was designed to cure. 



Not only is it doubtful whether monopoly is a wise 

 method of regulating industry, but it is certain that the evils 

 of competition are greatly exaggerated in some cases, while 

 in others they are due to unhealthful conditions for which 

 an interference with industrial freedom is responsible. Men- 

 tion has already been made of the distilling industry, which 

 has served as a typical example of the evils of competition 

 and the benefits of combination. Here all will admit that 

 excessive investment was due to the unwise action of con- 

 gress in changing the rate of taxation in such a manner as to 

 benefit the distillers, and to lax enforcement of the revenue 

 laws, which enabled those who evaded the exciseman to real- 

 ize a profit of several hundred per cent. In this case, depres- 

 sion was not due to mere competition; and, moreover, the 

 formation of pools, and finally a trust, served merely to call 

 more capital into the industry and to intensify the evils. 



In many other industries where trusts have been formed, 

 the excessive investment of which writers complain was 

 caused by the undue stimulus given by high protective duties 

 and by the restriction of foreign competition. Upon over- 

 investments caused by increases in the tariff, enough has been 

 said in a previous paragraph; but the second topic requires 

 further explanation. The iron and steel industries are the 

 best illustration of the periodic fluctuations of prices, of 

 which the believers in trusts complain; and Professor Taussig 

 has recently demonstrated that these phenomena are greatly 

 intensified by the operation of our tariff. He shows that in 

 times of rising prices the restriction of importation has thrown 

 upon domestic producers nearly the whole work of supplying 

 the expanding market. Since new plants cannot be erected 

 in a short time, prices increase enormously before domestic 

 production equals the demand. These high prices cause ex- 

 cessive investment, and hasten a reaction which results in a 

 consequent period of depression. During the recent "boom" 

 in the iron markets of the world, English prices rose from 

 $9.80 to $16.70 per ton for one grade of pig iron, and from 

 $11.70 to $18.60 for another, an increase of 70 per cent for 



