1908. ] PATTERSON—THE PROBLEM OF THE TRUSTS. 17 
separated mines and factories within the limits of combined con- 
trol. Machinery has increased the rapidity, while diminishing the 
cost, of manufacture and enlarged the possibility of output. In retail 
trade department stores have absorbed small shops. It is therefore 
not surprising that industrial organizations should have been, and 
should be, formed in number and upon a scale larger than ever 
before to compete, not only for the trade of their own cities and 
States, but also for the trade of the country, and in many instances 
for the trade of foreign countries. 
Competition in manufacture and trading, when uncontrolled, is 
wasteful. It results in reducing the selling price of goods below 
the minimum necessary to give the producer a fair profit ; in over- 
production in excess of the market demand ; in an increase of dis- 
bursements unconnected with production or distribution, and con- 
nected only with the conduct of competition ; in unnecessary cost 
of transportation of the raw material to distant points of manufac- 
ture, when that raw material could be more economically manufac- 
tured nearer to its point of supply ; and in the unnecessary cost of 
the transportation of manufactured products to distant markets, 
when those markets could be more economically supplied from 
nearer points of manufacture." Uncontrolled competition also 
results, in the case of weaker competitors, in lowering the standard 
of production and in placing upon the market inferior grades of 
goods. 
To meet these results of uncontrolled competition, there came 
into existence pools or agreements between competitors to secure 
the maintenance of prices by restrictions upon output, or by limita- 
tions of sales. Such agreements are clearly contracts in restraint of 
trade, and as such non-enforceable in law,’ and being without legal 
sanction were, like treaties between sovereign states, broken when 
either party fancied that its interests would be subserved by their 
abrogation. Intelligent business men then saw that the expanding 
trade of the country could not be conducted upon lines which, to 
quote the words of Mr. Schawb,? are built upon ‘‘ the restriction of 
trade, the increase of prices and the throttling of competition.’’ 
They saw also that in manufacture the maximum of efficiency at 
1 The Trust Problem, Prof. J. W. Jenks, 1902. 
2M. R.C. Co. uv. B. C. Co., 68 Penna. 173; Cummings v, U. B. S. Co., 164 
New York, 401 ; Cohen v, B. & J. E. Co., 166 N. Y. 292. 
3 Speech to The Bankers’ Club, Chicago, 21st December, Igol. 
PROC, AMER. PHILOS. 800. XLII. 172. B. PRINTED MAY 8, 1908. 
