BY JOSEPH DANA MILLER
HOW comes it that a power in its unimpeded operations beneficent—namely, the force or forces of combination or co-operation—becomes under certain conditions so injurious to modern industry? Why is a union of two factories or many factories, of two companies or many companies, a signal to the community of anticipated extortion? And why should the development of natural laws—those of combination and co-operation—provoke a public demand for regulation, and those who avail themselves of these operations be deemed amenable to punishment?
We may grant that a perfected combination which should succeed in forestalling any given commodity would be criminal. The law from its very beginnings has so regarded all such attempts. It is conceivable that, under certain conditions, a mere agreement between individuals might perfect a combination clearly within the provision of the law compelling its forcible dissolution. But this is not conceivable under modern conditions where wide distribution of capital and free labor exists. Law, indeed, may create such monopolies, which it may by popular demand be called upon to destroy, undoing with one hand what it has done with the other. State-created monopolies have existed often in history—as notably in the reign of Queen Elizabeth—but because these have been created by direct act they have been exceedingly unpopular. So, in periods of greater public intelligence, and where the people exercise larger powers of government, it became necessary to accomplish the same result by indirect means, by putting into operation some general law under which monopoly could find a shelter, and the secret sources of which could not be so easily traced.
For, contrary to the almost universal opinion, monopoly is weak. It demands protection. And from what does it demand protection? From the all-powerful natural law of competition. The curious Socialist notion that competition leads to monopoly is true only in the sense that monopoly, seeing how powerless it is when threatened by the forces of competition, seeks the protection of such laws as it can secure, or which already exist, for the suppression of competition. And this brings us to the conclusion which is unavoidable that there are no monopolies save law-created monopolies.[1]
If this seem a novel proposition to the reader I will ask him not to grow impatient, for the demonstration will grow upon him as he reflects. It will seem novel, for if true all the laws and statutes for the regulation of combinations are so much waste of time and paper and the hours of legislatures and courts. In the acceptance of such explanation of the trust problem must go the rejection of many proposed remedies, among them the much-lauded one of “publicity.” While publicity is always to be commended and sought for in public or semi-public matters, it does not appear that laws enforcing publicity upon purely private industrial combinations are founded upon equity. Nor is it likely that publicity will assure us the possession of knowledge beyond what we already have through the work of independent investigators. Nor is it probable that enforced publicity will elicit impartial truth. This proposition is of a piece with the punitive theory in the treatment of the problem, a theory which has already led the people far astray. Men shrink instinctively from such stringent regulation, and this is a true index of the moral relation, if we may so speak, of this problem to legislation. But because they will not think clearly they return to the proposition of legal interposition.
Along with the remedy of “publicity” must go all laws, existing or proposed, limiting capitalization or stock watering. Beyond the fact that such laws would often force capitalization below the earning capacity—which is no unfair basis of capitalization—it must be said that the evils of stock watering are largely imaginary. It is true that over-capitalization may conceal from the public the real extent of monopoly profits, and is for this purpose, if for no other, often resorted to. But this of itself ought to constitute no valid reason for drastic legislation. Investors ought to be left free to take their own risks, and speculative ventures ought to be left free to fix their own capitalization, for otherwise perfectly legitimate, if largely speculative, business interests may be made to suffer injuriously to the interests of the community. But laying aside for the time all considerations of this kind, stock watering is only a symptom—a sign that monopolistic powers, and not legitimate business interests, are being capitalized.[2]
High capitalization, it is sometimes said, tends to increase price. It does offer temptation to increase of price, but nothing can put it within the power of combinations to increase price save the forces of monopoly. This power you do not increase or decrease by adding to the numbers of the counters, the considerations governing which are purely those of the stock-gambling fraternity.
National licensing of corporations to do business—a remedy proposed by Mr. Bryan and adopted by President Roosevelt—must also be dismissed. Obviously if the state has endowed corporations and armed them with letters of marque by authority of which they may prey upon commerce, it is the height of absurdity to ignore this feature of the question with talk about licensing them. In a very real sense they are already licensed, for it must be repeated that combinations do not create the monopoly, but merely avail themselves of the monopolistic powers created by society through acts of Government.
Of necessity all such laws must fail. This, it is scarcely necessary to say, has been the universal experience. And from future legislation no more is to be hoped than from past legislation, however well intentioned.
The reason why all this anti-trust legislation is futile is because, having created monopoly privileges, Government has appealed to the natural instincts of all men to seek these opportunities and benefits. Such laws are attempts to give effective form to the public’s foolish anathemas against impulses shared by everybody, and are therefore as futile as the Pope’s bull against the comet. When we understand that these great trusts are monopolies that Government has made, we will realize why it is that Government cannot unmake them by any other process than by removing the causes of their creation.[3] Books prescribing such anti-trust legislation may continue to cumber the libraries of our lawyers, and streams of statutes may continue to pour from the lawmaking bodies of states and Nation, but these will be either positively harmful or wholly harmless, never effective.