rations. Intending investors would in many cases by such study be prevented from putting their money into corporations organized evidently for purposes of speculation, or for the special advantage of the directors and officers against the interests of the shareholders.

So, too, if more attention were paid to this feature of corporation organization and management, there would soon be some decided improvements in our corporation laws.

Of course these statements regarding Trusts apply to all large corporations, but the opportunities for speculation against the interests of the shareholders and of the public are so much greater in the case of the very large corporations, which have some monopolistic power, that the offence becomes almost of a different kind.

9

CHAPTER VIII

PRICES

If in any industrial combination the economies which are made by saving the wastes of competition can be secured, it is evident that, if the managers of the combination wish, it is possible, without the profits being lessened, to put prices of the finished product below former competitive rates; or, on the other hand, to put prices for raw material above those common before. Or again, if, as a result of the combination, there comes an increased output from the demands of the export trade or from an added demand that might come from lowered cost, the price paid for raw material might through either of these influences be raised somewhat. What may be done if a certain degree of monopoly can be held, has already been discussed at considerable length in the chapter on Monopoly. What may be done is, however, but one consideration. It is, perhaps, of more importance at the present date to

show what has been done, in order that we may be better able to judge the present industrial situation, to note possible changes in the future, and to see what measures of legislation, if any, may be needed in order to adapt these combinations to our present industrial conditions. It will, perhaps, be best to give as careful a statistical representation as possible of the prices over a series of years in several lines of industry where the statistics can be gathered, and thus to test the effects of the industrial

combinations upon prices. While the effects can thus be shown here upon only a few articles, it is believed that they are sufficiently typical, so that they represent fairly well the actual effects of combination up to date. Similar studies of many other articles show, in the main, the same general results. From a theoretical discussion we can judge, perhaps, somewhat more accurately what the effect is likely to be in the future.*

The actual effects of the industrial combinations upon prices form certainly one of the best

* The remainder of this chapter has been reprinted, with some changes and additions, from the chapter written by the author for the United States Industrial Commission, and printed in their Preliminary Report on Trusts, Vol. I., Part I., pp. 39-57.

tests of their usefulness or disadvantage to society. The popular impression seems to be that these combinations very greatly increase prices to the consumers. On the other hand, the Trust managers and their advocates are in the habit of claiming that, owing to economies of management, the Trusts lower prices to consumers, while at the same time they increase the wages of their employés.

It is, of course, comparatively easy by the selection of statistics at certain chosen periods to show either of these results. It has, in consequence, seemed wisest to secure as far as possible average monthly prices of the leading raw materials and finished products of several of the larger combinations for a series of years, and to plat these on charts in such a way that the relations at all times between the two can be most readily seen. Wherever it has been practicable, European prices have been compared with American, in order that the influence of the Trust itself might more clearly be brought out. The differential or margin "between the price of the raw materials and that of the finished product should show, other things equal, the cost of manufacture plus the profit. Un