So we come to the close of the recital of the most salient events which gave rise to the greatest issue save that of independence, and later, of slavery, with which the American people have ever stood face to face.
Contemporaneous with the growth of the question of imperialism, and allied to it, another great issue arose,—the problem of the trusts.
A “trust” may be defined as an industrial combination of such huge proportions as to enable it not only arbitrarily to fix the price of the finished product in which it deals, through the stifling of competition, but frequently to determine alone the price of the raw material it uses and to fix the rate of wages of those whom it employs. Of these great and dangerous combinations there were formed, during the years 1897 to 1900, a number exceeding all those already in existence. That this was permitted to be done with the Sherman anti-trust law on the Federal statute books has puzzled many. Its explanation may be found in the following candid admission made by Dr. Albert Shaw in the Review of Reviews for February, 1897:
“The great sound-money campaign of 1896 was carried on by money contributed by corporations—money voted by the directors out of the funds held by them in trust for the stockholders. Nobody, probably, would even care to deny that this is literally the truth.”
When the “great sound money campaign” was concluded, it was but fair, of course, that those who had given so lavishly should be allowed to replenish their depleted coffers. And so neither anti-trust laws, supreme court decisions, nor the cry of protest rising from the people was allowed to stand in the way of those generous corporations to whom President McKinley owed so much.
In the last six months of 1898 the movement toward centralization that meant monopoly was most alarmingly pronounced. During this time there were filed articles of incorporation by more than one hundred companies of abnormal capitalization. The most important trusts were:
| CAPITAL | |
|---|---|
| Gas trusts | $ 432,771,000 |
| Steel and iron | 347,650,000 |
| Coal combines | 161,000,000 |
| Oil trusts | 153,000,000 |
| Flour trust | 150,000,000 |
| Electrical combinations | 139,327,000 |
| Sugar | 115,000,000 |
| Cigarettes and tobacco | 108,500,000 |
| Alcoholic | 67,300,000 |
| Telephone | 56,700,000 |
| Miscellaneous | 1,349,250,000 |
| ——————— | |
| $2,717,768,000 |
Among those classed as “miscellaneous” were trusts in leather, starch, lumber, rubber, dressed beef, lead, knit goods, window glass, crockery, furniture, crackers, sheet copper, paper, acids and chemicals, wall paper, typewriters, axes, bolts and nuts, salt, saws, rope, twine, thread, stock yards, matches, refrigerators, potteries, marbles, packing and provisions.
After the formation of each trust the first step was almost invariably to limit production by shutting down a portion of the mills controlled by the combination, thus reducing the number of wage earners. And almost as invariably the next step was to increase prices. By thus reducing expenses and increasing receipts the result was, though much of the trust property had been put in at an enormously inflated valuation, the watered stock yet earned exceedingly large dividends. The evil was not only that these unnatural dividends were earned at the expense of the laborer and the consumer, but that concentration of profits was leading to congestion of capital in certain sections of the country at the expense of other sections.
The great friend and helper of the trust-promoter was, of course, the high protective tariff. Without the tariff, to shut out competition from abroad, it would be impossible for the domestic concerns to form a close corporation and arbitrarily to fix prices. But Congress, instead of attempting to remedy the evil by lowering the tariff, deliberately raised it, being particularly careful to see that the percentage on trust-controlled goods was made sufficiently high to render foreign competition impossible. This led the Philadelphia Ledger, a Republican newspaper, to remark: