1903.] PATTERSON—THE PROBLEM OF THE TRUSTS. 21 
It is asserted by no less eminent an authority than the distinguished 
lawyer who is now the Attorney General of the United States* that 
the necessary effect of ‘‘ over-capitalization ’’ is to unduly lower the 
wages of labor and to unduly increase the prices of the product by 
imposing upon the managers of the corporation the obligation of 
paying dividends upon the improper excess of capitalization. This 
view does not seem to be reasonable, for it would obviously be the 
effort of the managers at all times to keep down the expenses of 
operation, to make as many sales as possible, and to realize as large 
prices as possible, without reference to the interest or dividends to 
be earned or paid, if for no other reason than that of demonstrating 
the ability of the managers, and this effort would neither increase 
nor diminish because of the greater or less size of the capitalization. 
Indeed the only possible influence of a large capitalization upon 
the prices of the product of the over-capitalized corporation would 
be in some cases to cause a lowering of such prices, because of the 
necessity of making realizing sales. 
Complaint is made that competing corporations, in order to 
destroy competition, discriminate in their prices. But competi- 
tion is industrial warfare. The seller seeks the highest price that 
he can obtain ; the buyer pays as little as he possibly can. When 
competition is actively conducted, the seller attains his ends, not 
only by underselling in order to effect a particular sale, but also by 
carrying his underselling to the extreme limit of driving his com- 
petitors out of business and securing for himself complete control 
of the market. This is done, as Lord Justice Bowen said,’ from 
‘the instinct of self-advancement and self-protection, which is the 
very incentive of all trade.’’ . . . . ‘*To say that a man is to trade 
freely, but that he is to stop short at any act which is designed to 
attract business to his own shop, would be a strange and impossible 
counsel of perfection,’’ and to attempt to prohibit it ‘‘ would prob- 
ably be as hopeless an endeavor as the experiment of King 
Canute.’’ You cannot have a real competition which does not 
compete. Successful commerce buys in the cheapest and sells in the 
dearest market. Is it proposed that there shall be a general legisla- 
tive regulation of prices, and if so, what would that amount to? 
Among the evils charged against the ‘‘ Trusts’’ are an alleged 
1Speech of Hon. P. C. Knox, Pittsburg, 14 Oct., 1902. 
2 Mogul S. S. Co. v. McGregor, 23 Q. B. Div. 598; [1892], C. A. 43. 
