The question of most interest to the ordinary person is: Do trusts raise prices? To this the Encyclopaedia Britannica answers: “Experience seems to show, beyond question, that whenever the combinations are powerful enough to secure a monopolistic control it has usually been the policy to increase the prices above those which obtained during the period of competition preceding the formation of the combination.” Besides this increased price, the evils of combinations are: loss to investors through promotion and speculation by directors; loss to wage-earners, corruption of legislatures, and the suppression of independent activity.
The most obvious remedies are “more rigid laws with reference to the methods of incorporation and to the responsibility of directors to stockholders and to the public,” greater publicity and closer government inspection, and the abolition of special favours granted by government and shipping companies.
Government Control
For American legislation in regard to trusts see the article Interstate Commerce (Vol. 14, p. 711), equivalent to 10 pages of this Guide, by Prof. Frank A. Fetter, formerly of Cornell and now of Princeton University. This article shows the constitutional basis for action by the Federal government and the power given to Congress to regulate commerce among the several states; and it describes the Interstate Commerce Act of 1887, amended in 1903 by the Elkins Act, and the Sherman Anti-Trust Act of 1890. See also in the article United States, the section History, §§ 353, 357, 396 (pp. 725, 726, 733 of Vol. 27).
But although there have been great changes in the relation of government to the individual in his private and business life, the extent of practical government control is still much less than many theorists would like to see. It is true that in many countries of Europe railways are owned and operated by the state—see p. 826 of Vol. 22, in the article Railways. See also the article New Zealand and the summary of conditions there (p. 307, Vol. 25), in part as follows:
The government owns not only the railways, but two-thirds of the whole land, letting it on long leases. It sets a limit to large estates. It levies a progressive income-tax and land tax. It has a labour department, strict factory acts and a law of compulsory arbitration in labour disputes (1895). There are old-age pensions (1898), government insurance of life (1871) and against fire (1905). Women have the suffrage, and, partly in consequence, the restriction of the liquor traffic is severe. There is a protective tariff, and Oriental labour is excluded. The success of the experiment is not yet beyond doubt; compulsory arbitration, for example, did not work with perfect smoothness, and was amended in 1908.... It is fair to add that the experiment is probably on too small a scale to show what might happen in larger countries. New Zealand has only 100,000 sq. m. of territory and about one million of inhabitants, mainly rural and of picked quality. The conditions of combined isolation and security are not easily obtained elsewhere. The action of the state has been in the great majority of instances rather regulative than constructive.
Socialism, etc.
But in general governments have extended their control more or less along the conventional lines of law and legislative theory, and have not undertaken ownership and operation—even in New Zealand, as we have just seen, public action being “rather regulative than constructive.” See the general article Socialism (Vol. 25, p. 310) and biographies of those connected with the Socialist movement, such as Marx, Lassalle, Robert Owen, Rodbertus, Bebel, Liebknecht, Jaures, Ballance, William Morris, Edward Bellamy, and Henry George. On communism, see the article on that subject, the biographies of Owen, Saint-Simon, Fourier, Cabet, etc., and descriptions of the more important American communistic experiments in the articles on Brook Farm, Shakers, Amana, Nauvoo, Harmony, Oneida Community, Hopedale, etc. For communism merely as a business scheme see the article Co-operation (Vol. 7, p. 82) and the biographies of Raiffeisen and Schulze-Delitzsch.
Finance
We have now run through the more strikingly novel public questions of the day, and we come next to questions which have been long discussed and longer recognized as being within the sphere of government. The one of these that is most intimately connected with the economic problems we have just been discussing is the subject of public finance and revenue. On this read the articles Finance (Vol. 10, p. 374), Taxation (Vol. 26, p. 458), and National Debt (Vol. 19, p. 266); and, on American public finance, see Vol. 27, p. 654; on Congressional legislation and finance, p. 661 of the same volume; for a general and statistical treatment of American finance, the sections headed Finance in each article dealing with a state of the Union, the articles Gold (Vol. 12, p. 192), Silver (Vol. 25, p. 112), and Bimetallism (Vol. 3, p. 946), and the biographies of Robert Morris (Vol. 18, p. 871), Alexander Hamilton (Vol. 12, p. 880), and Jay Cooke (Vol. 7, p. 73).