William Ghent - Our Benevolent Feudalism

The list contains records of 183 corporations, with 2029 active and 174 idle plants, an average of 11 active plants each. The actual capital invested in these corporations, exclusive of that for 56 of the idle plants, was $1,458,522,573, and the authorized capitalization was $3,607,539,200. These combinations employed 24,585 salaried officers and clerks, and an average of 399,192 wage-earners. The 1047 officers received an average of $6,825.28 yearly and the wage-earners, $487.32. There were 40 combinations in iron and steel, with 447 plants; 28 in liquor and beverages, with 219 plants; 21 in food and allied products, with 273 plants; 15 in clay, glass, and stone products, with 180 plants, and 14 in chemicals, with 248 plants. The gross value of the manufactured product of these combinations, as given by the census, was $1,661,295,364. Excluding hand trades, government establishments, educational, eleemosynary, and penal workshops, and shops with a product of less than $500, this total represented 14 per cent of the value of the manufactured product for the whole country.

The spring of 1900 was, however, but the mid-morning of the combination movement. Only 63 of these companies had been formed previous to 1897, while more than 50 per cent of them were formed during the eighteen months from January 1, 1899, to June 30, 1900. Since then the movement has swept forward like a great tide. The consolidations of manufacturing companies for the first five months of 1901 alone probably exceeded $2,000,000,000 in capitalization. The great steel “trust” (to use the popular term), an $88,000,000 tin-can trust, still other trusts in tobacco machinery, carpets, coal and coke, witch-hazel, glass lamps and electric glass fittings, ship-building, cotton duck, agricultural implements, and watches, had their birth during this period. More recently came the steel-castings trust, subordinate to the steel corporation, a recombination in tobacco, and very lately a new ship-building combination, a $120,000,000 harvester trust, and a cotton compress trust. The capital invested in manufacturing combinations is now probably two and one-half times what it was in May, 1900; and it is a reasonable guess that nearly one-third of the manufactured product of the country, outside of the petty trades, comes from the combinations.

Of the magnitude of some of these concerns the average mind can form but an inadequate idea. The figures expressing it are comparable with those of star distances, which must be transmuted into light-years to make them conceivable. A New York newspaper has recently made some computations on the great steel trust, which help to bring home to us a realization of its size and power. Its yearly net profits are now double the amount of the total revenues of the United States Government in the year Lincoln was elected. Its wage-roll carries on an average of the round year over 158,000 names – an army of employees larger by 45,000 than serves the National Government in every branch of its civil service, classified and unclassified, except only fourth-class postmasters. Its wage-payments for last year aggregated nearly $113,000,000, more by $13,000,000 than the huge annual city budget of Greater New York. Its annual production of steel is 10,000,000 tons, 67 per cent of the total production of the country; and its freight payments for the year 1901 amounted to more than $54,000,000.

During the same period financial, commercial, mining, and transportation trusts have also had their splendid inning. We read of an accident-insurance trust with a capitalization of $50,000,000, the great shipping trust, the $120,000,000 jobbing hardware trust, the Interurban Street Railway stock-holding combination, the beef trust, a $50,000,000 lead merger, a recombination in copper, and a universal oil trust. Moody’s Manual of Corporation Securities for 1902 gives a list of 82 industrial and mercantile consolidations effected between January 1, 1899, and September 1, 1902, each of which is capitalized at $10,000,000 or more, the whole aggregating a capitalization of $4,318,005,646. Thirty-nine of these, with $1,232,947,790 authorized capital, were formed during 1899; 7 with $186,110,400 capital, in 1900; 20 with $2,141,197,456 capital in 1901, and 16 with $757,750,000 capital during the first eight months of 1902. The list is admittedly incomplete. “It embraces only the so-called gigantic combinations which have been forming in the past three and one-half years. A complete list, without regard to date of formation, and including both large and small,” says this authority, “would probably aggregate 850 different-going combinations, and would easily foot up over $9,000,000,000 of capitalization. Including railroad consolidations, such a list would make a total of over $15,000,000,000 outstanding capitalization.” As for the railroads, the formation of the Northern Securities Company, the recent assimilation of the Louisville and Nashville, and the “reorganization” of the Rock Island show the same drift. Five men, according to a recent statement of Interstate Commerce Commissioner J. A. Prouty, control all the railroads of the country; and Mr. John W. Gates, a financier who may be supposed to know something on that head, has more recently declared, according to a newspaper interview, that two men are really in control. “I believe that the time is not far distant,” declared Professor Francis L. Patton, former head of Princeton University, in a recent address before the Presbyterian Social Union of Chicago, “when there will not be a thing that we eat, drink, or wear that will not be made by a trust.” He might have gone farther and fared as well; for the theatrical trust determines what dramas we shall witness; the pulp trust, the typefounders’ trust, the news trust, and the school-book trust exert a most direct bearing on what we read and what our reading costs us; and finally the undertakers’ trust determines the style and cost of our burial.

The tendencies make not only for combination in specific trades, but for unification – for complete integration of all capital which is susceptible of organization. Capitalistic atoms of low valency – to use a term from chemistry, – such as those invested in some of the hand trades, custom and repairing and the like – may continue their course, but those of a high valency are sooner or later brought into association. From this fundamental grouping comes integration, the concentration of the material units which go to make up an aggregate. The lesser gravitates to the larger. It needs no modern Newton to proclaim that in finance, commerce, and industry, as in the physical world, all bodies attract one another in direct proportion to their mass. Distance provides a limitation, it is true, to the action of this law in the physical world; but less so in the economic world, for such is the perfection of our means of communication that they provide a more transmissible medium to capital than is the pervading ether to light and gravitation.

The separate trade trusts are not sufficient unto themselves, but move steadily toward unification. A glance at the directorates of the leading combinations shows many names repeated through a long list of varied industries. The combinations themselves reach out and acquire new interests, often distinct from their primary interests. In Pennsylvania coal is mined and railroads are operated by practically the same companies, and in Colorado and West Virginia nearly as complete an identity is discovered. The steel corporation owns coal lands, limestone quarries, railroads, and docks; it is allied with the great Atlantic shipping trust; it is related, not distantly, to the Standard Oil Company; and the beginnings of a public opinion trust are indicated, for already its chief magnate has acquired several newspapers and a prominent magazine. Bishop Potter’s prediction, it would seem, is in fair way of fulfilment. “We must fully realize,” he said to the Yale students last April, “the danger that mind as well as matter will be at some time in the future capitalized, and that the real thinking and planning for the many will be done by a mere handful.” Beet and cane sugar are soon to be joined, we read; paper and lumber, if not already wedded, are at least on excellent terms. Oil and gas on the one hand, coal and iron on the other, have a “common understanding,” and each of them holds morganatic relations with one or more of the railroads. All the great combinations recognize a growing community of interest; they tend more and more to a potential, if not an actual, coalescence; and in the face of popular agitation, legislative aggressiveness, or the formal demands of labor, they develop a unity of purpose and method. Their support is thrown, in general, to the same candidates for governors, senators, judges, and tax assessors. In brief, they tend to the formation of a state within a state, and their individual members to the creation of an industrial and political hierarchy.