906 REPORT—1890. 
instrument for this purpose is usually some plan for pooling their aggregate 
receipts, and making the gains of each depend on the gains of all, rather than on 
the amount of business it gets for itself. But her e the dilemma shows itself. If 
each establishment is left to its own devices, but has very little to lose by bad 
managemeat, it is not likely long to remain well managed, and anyhow the Trust 
does not gain much of the special economy resulting from production on a very 
large scale. 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 
in closing entirely some of the others. But when once the pooling has begun, the 
combination is on an inclined plane, and every step hurries it on faster towards 
what is virtually complete amalgamation and consolidation. 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 consolidated joint-stock company is that it is 
nominally left open to the several parties contracting to claim their separate 
property after the lapse of a certain number of years, while some are already 
preparing to dissolve and reconstitute themselves formally as joint-stock companies. 
§ 10. This tendency has been helped on by the action of the legislature 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 100 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 100 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 individual 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 competition, 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 part successfully— 
that nothing should be illegal if done by workmen 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 
Sia ners though it has no better claim to universal validity than the opposite 
octrine. 
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 allin a single hand. This doctrine 
has resulted in the prohibition of pooling between railways which were allowed to 
amalgamate, and in the prohibition of combination on the part of a group of 
traders to 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. 
.only through a central office. It fixes the amount of each firm’s produce which may 
be sold, and the price of sale, and each firm gains by every reduction it can make in its — 
own expenses of working. This plan has great elements of strength, and is probably — 
specially suitable for Germany. But it is yet on its trial. ; 
