It is significant of the power and extent of our railway systems that these—fifty-seven of them in all—operate, or control, six hundred and eighty-eight subsidiaries, or jointly controlled railway companies, embracing 196,425 miles of road, with an aggregate of outstanding stock of $4,750,325,000, and $8,180,780,000 of bonds, a total for both, at par, of $12,931,154,000. These figures are exclusive of stocks and bonds held in the treasuries of the companies.
Thus nearly ninety per cent of the steam railway mileage of the United States is operated, or controlled, by the fifty-seven systems. The remaining ten per cent of the country’s railway mileage is composed mainly of short, independent and disconnected lines, some of which are run at a loss, and many without reporting any considerable profit.
Railway corporations in this country are therefore, except as to this unimportant ten per cent, a great consolidated force, for the fifty-seven systems that control ninety per cent of the mileage, are equivalent to so many Trusts, and these can join hands in a solid phalanx at any time for any lawful purpose, and practically form one great railway Trust spanning the continent, a gigantic power that but for law would be a monopoly.
So the National corporation problem is largely one of the railways, and it involves the best way for the Federal Government to regulate these, and all the corporations, in the interest of trade, commerce and the people, and to do this without imposing unnecessary restrictions upon their legitimate operations and development.
The corporation problem in this country is still new and unsolved, but it has assumed immense national importance through the growth of the large industrial Trusts during the last twenty years. Before that they were unknown, and they have to a large extent revolutionized business and business methods in the United States.
They resulted from the enormous and rapid increase of our population, industrial activity, industrial development and wealth, and the consequent increase of competition in all branches of trade. Corporations, good, bad and indifferent, sprang up like mushrooms, and then combinations of corporations into larger ones took place, and we had Trusts.
These were organized ostensibly to secure economies in management which, in conjunction with their large capital, would enable them to compete advantageously with smaller concerns in the same lines of business, and give them more or less control of their markets.
But in doing this they of course threw many out of employment, and forced many of their smaller competitors out of business. Consequently the popular sentiment against them at first was very strong and the cry of “Monopoly” was often heard.
It was found however that the rise in prices that had been generally apprehended as a result of the formation of Trusts did not occur, at least not to any disturbing extent. So public hostility to them quieted down, although their struggling and ruined competitors still felt sore over their rivals’ success, all the more so when it was discovered that most of them were making far larger profits than had ever before been made in the same industries. If this had always been done honestly there would have been no reason to complain.
The great industries dominated by Trusts included, besides petroleum and sugar refining, iron and steel working, copper and other metal and mineral mining, India rubber and tobacco manufacturing, distilling, and also many miscellaneous manufactures, in addition to those in other lines than manufacturing. The traders who had occupied these fields of industry before them looked small indeed beside these new corporation giants.