September i8, 1890] 



NATURE 



495 



For this a partial remedy can sometimes be found in throwing as 

 much of its work as possible on to those establishments which 

 are best situated, have the best and most recent appliances and 

 the ablest management, and, perhaps, closing entirely some of 

 the others. But when once the pooling has begun, the combina- 

 tion is on an inclined plane, and every step hurries it on faster 

 towards what is virtually complete amalgamation and consolida- 

 tion. The recent history of trusts shows a constant tendency to 

 give a more and more absolute power to the central executive 

 and to reduce the heads of the separate establishments more and 

 more nearly to the position of branch managers. In some cases 

 the only substantial difference between such a trust and a con- 

 solidated joint-stock company is that it is nominally left open to 

 the several parties contracting to claim their separate property 

 afier the lapse of a certain number of years, while some are 

 already preparing to dissolve and reconstitute themselves formally 

 as joint stock companies. 



This tendency has been helped on by the action of the legis- 

 lature and the law courts, and since this action can be traced 

 back in some measure to the imperfect analysis of competition 

 in the older economic writings, it has a special interest for us 

 here. There seems to have been set up a false antithesis between 

 competition and combination. For instance, if lOO workmen 

 agreed to act together, as far as possible, in bargaining for the 

 sale of their labour, they were denounced as combining to limit 

 freedom, even when they did not interfere in any way with the 

 liberty of other workmen, but merely deprived the employers of 

 the freedom of making bargains with the lOO workmen, one by 

 one. But the employer himself was allowed to unite in his own 

 hands the power of hiring a hundred or twenty hundred men, and 

 if he had not enough capital of his own he might take others into 

 private, if not into public, partnership with him. Now, no trades 

 union was likely to be as compact a combination, governed by 

 as single a purpose, as a public or private firm, still less as an in- 

 dividual large employer ; and therefore, there was not only a 

 class injustice, but also a logical confusion, in prohibiting com- 

 binations among workmen, on the ground that free competition 

 was a good, and that combination, being opposed to free com- 

 petition, was, for that reason, an evil. 



It was an additional grievance to the workmen that employers 

 had all manner of facilities for combination, of which they made 

 full use, as is vigorously urged by Adam Smith, to whom the 

 working classes owe more than they know. And it was this 

 social injustice, rather than the logical inconsistency of economists 

 and legislators, that led workmen to claim — and for the greater 

 |iart successfully — that nothing should be illegal if done by work- 

 men in combination which would not be illegal if done by any 

 one of them separately — a principle which works well practically 

 in the particular case of workmen's combinations if applied with 

 moderation ; though it has no better claim to universal validity 

 than the opposite doctrine. 



But at present it is with the latter that we are concerned — the 

 doctrine, namely, that a use of the rights of property which 

 would be "combination in restraint of competition" if the 

 ownership of the property were in many hands, is only a free 

 use of the forms of competition when the property is all in a 

 single hand. This doctrine has resulted in prohibitions of pool- 

 ing between railways which were allowed to amalgamate, and in 

 the prohibition of combination on the part of a group of traders 

 10 coerce others to act with them, or to drive others out of the 

 trade, though all the while no attempt was made to hinder a 

 single very wealthy firm from obtaining the despotic control of 

 a market by similar means. 



But to the economists of to-day the whole question appears 

 both more complex and more important than it seemed to their 

 predecessors, so they are inquiring in detail how far it is true 

 that the looser forms of combination are specially dangerous 

 in spite of their weakness, and even to some extent because of 

 their weakness ; how far the greater stability and publicity, and 

 sense of responsibility and slowness of growth, of a single con- 

 solidated firm make it less likely to extend its operations over a 

 very wide area, and less likely to make a flagrantly bad use of 

 its power ; and, lastly, how far it may be expedient to prohibit 

 actions on the part of loose combinations, while similar actions 

 on the part of individuals and private firms are allowed to pass 

 in silence, because no prohibition against them could be 

 effectual. 



It is a sign of the times that the American Senate passed, on 

 April 8 last, a Bill of Senator Sharman's, of which the second 

 Section begins thus : " Every person who shall monopolise, or 



NO. 1090, VOL. 42] 



attempt to monopolise, or conspire with any other person or 

 persons to monopolise, any part of the trade or commerce 

 among the several States, or with foreign nations, shall be 

 deemed guilty of a misdemeanour." This clause is interesting to 

 the constitutional lawyer on account of the skill with which it 

 avoids any interference by the central authority with the internal 

 affairs of the separate States ; and though, partly for this reason, 

 it is perhaps intended to be the expression of a sentiment that 

 may help to guide public opinion, rather than an enactment 

 which will bear much direct fruit, yet it is of great interest to 

 the economist as showing a tendency to extend to the action of 

 individuals a form of public criticism which has hitherto been 

 almost confined to the action of combinations. 



To return, then, to the tendency of trusts towards consoli- 

 dation. It is probable that the special legislative influences by 

 which it has been promoted may be lessened, but that other 

 causes will remain sufficiently strong to make a combination, 

 which has once got so far as any sort of permanent pooling, 

 tend almost irresistibly towards the more compact unity of a 

 joint stock company. If this be so, the new movement will go 

 more nearly on old lines than at one time seemed probable ; and 

 the question will still be the old one of the struggle for victory 

 on the one hand between large firms and small firms, and on the 

 other between departments of the Government, imperial or 

 local, and private firms. I will then pass to consider the 

 modern aspects of this question, ever old and ever new, but 

 never more new and never more urgent than to-day. 



To begin with, it is now universally recognized that there is a 

 great increase in the number and importance of a class of 

 industries, which are often called monopolies, but which are 

 perhaps better described as indivisible industries. Such are the 

 industries that supply gas or water in any given area, for only 

 one such company in any district can be given leave to pull up 

 the streets. Almost on the same footing are railways, tram- 

 ways, electricity supply companies, and many others. Now, 

 though there are some little differences of opinion among us as 

 to the scale on which the owners of such undertakings when in 

 private hands should be compensated for interference with what 

 they had thought their vested rights, we are all agreed that such 

 right of interference must be absolute, and the economists of to- 

 day are eagerly inquiring what form it is most expedient for this 

 interference to take. And here differences of opinion show 

 themselves. The advantages of a bureaucratic government 

 appeal strongly to some classes of minds, among whom are to 

 be included many German economists and a few of the younger 

 American economists who have been much under German in- 

 fluence. But those in whom the Anglo-Saxon spirit is strongest, 

 would prefer that such undertakings, though always under 

 public control, and sometimes even in public ownership, should 

 whenever possible be worked and managed by private corpora- 

 tions. We (for I would here include myself) believe that 

 bureaucratic management is less suitable for Anglo-Saxons than 

 for other races who are more patient and more easily contented, 

 more submissive and less full of initiative, who like to take 

 things easily and to spread their work out rather thinly over 

 long hours. An Englishman's or an American's life would in- 

 volve too much strain to make them happy, while the English- 

 man would fret under the constraints and the small economies of 

 their lives. Without therefore expressing any opinion as to the 

 advantages of the public management of indivisible undertakings 

 ori the Continent, the greater part of the younger English and 

 American economists are, I think, inclined to oppose it for 

 England and America. We are not sure that we could exchange 

 our own industrial virtues for those of the Continent if we 

 wished to, and we are not sure that we do wish it. And though 

 we recognize that the management of a vast undertaking by a 

 public company has many of the characteristics of bureaucratic 

 management, yet we think the former is distinctly the better 

 suited for developing those faculties by which the Anglo-Saxon 

 race has won its position in the world. We believe that a 

 private company which stands to gain something by vigorous 

 and efficient management by promptness in inventing, as well as 

 in adopting and perfecting improvements in processes and 

 organization, will do much more for progress than a public 

 department. 



Again, inferior as is a public company to a small private firm 

 in its power and opportunities of finding out which among its 

 employes have originating and constructive ability, a public de- 

 partment has much less still. And lastly it is more liable to 

 have the efficiency of its management interfered with for the 



