Ethics of Democracy

Part 4, Economic Tendencies
Chap. 4, The Trend of the Trust

A great change is going on all over the civilized world similar to that infeudation which, in Europe, during the rise of the feudal system, converted free proprietors into vassals, and brought all society into subordination to a hierarchy of wealth and privilege. Whether the new aristocracy is hereditary or not makes little difference. Chance alone may determine who will get the few prizes of a lottery. But it is not the less certain that the vast majority of all who take part in it must draw blanks. The forces of the new era have not yet had time to make status hereditary, but we may clearly see that when the industrial organization compels a thousand workmen to take service under one master, the proportion of masters to men will be but as one to a thousand, though the one may come from the ranks of the thousand. "Master"! We don't like the word. It is not American! But what is the use of objecting to the word when we have the thing?

- HENRY GEORGE, in Social Problems Ch. V.

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The Ethics of Democracy

by Louis F. Post

Part 4, Economic Tendencies
Chapter 4, The Trend of the Trust

IN the preceding chapter trusts are classified in three categories: trusts without legal privileges, trusts that own legal privileges, and trusts that own no legal privileges directly but sublet such privileges from trusts that do own them. Trusts without legal privileges are described as weakest of all, and as fated from their inception to perish; those that sublet legal privileges, as likely to rise and fall in subordination to the legally privileged trusts on which they are dependent; and those that own legal privileges, as doomed unless they establish themselves firmly upon such legal privileges as are fundamental - the conclusion being that "in the end no trusts will be left to rule in the economic field save those which have their feet upon the ground." Proceeding from this conclusion, let us first ask ourselves to what extent business can be thus securely monopolized by trusts.

The control of trusts by trusts - in other words, the merging of many trusts into one trust, much as many kinds of business have been merged each into its appropriate trust - is clearly among the possibilities of trust development. Such a tendency has already become actually manifest.

Two competing railroad systems, for instance, each made up of what were originally independent roads, are in essence if not in name, two independent trusts. In time one of these systems falls under the control of the same interests that control the other. They might be operated as independent properties, preserving the form while destroying the substance of competitive operation, but for a Supreme Court decision against "pooling," which may make it necessary, or at least expedient, to abandon even the form of competitive operation. If so, one would be operated avowedly as a branch of the other. In either event the two systems would be but one system; the two trusts would be consolidated.

Nor need we look to railroading alone for such examples. Telegraphy, telephoning, electric power and light supply, gas works, and the like, are all tending to consolidation. First there are franchises to different corporations in a community; then comes consolidation of franchises, until one corporation - essentially a trust - owns them all. And that stage is followed by a consolidation of these interests in different communities under a central control - a central trust.

As to trusts generally - the "industrials," as their stock is called in the "street" - their evolution is similar. Competing establishments in a given line of business, consolidate and form a trust. Their object, which may be in part to secure economy in production, is in other and perhaps greater part to stop competition. Except as these combinations are buttressed with great legal privileges, they are, as already indicated, in danger from the constant pressure of competition, actual or potential, which tends to produce disintegration. For competition is a vital social principle. Its operation may be obstructed by minor monopolies, but its force cannot be quite neutralized by anything short of perfect and complete monopoly. Consequently, until a trust or a series of trusts secures complete control of all the natural resources which its operations require, it feels the force of competitive influences. When one line of business, therefore, consolidates into one trust, and other more or less related lines consolidate into other trusts, these various trusts are by the same impulse that prompted them to form original trusts, prompted to form a trust of trusts. They thus consolidate under one control not only all the establishments in each line of business, but all the trusts in the different related lines of business, including the trusts that own the natural sources of supply.

This would make that trust of trusts invincible within its own sphere. Its feet would be upon the ground. Yet it might still be embarrassed by its dependence upon others for subsidiary products. In that case it would come into collision with the trust of trusts that had its feet upon the ground as to those products. Then a struggle would ensue, the result of which would be consolidation of these trusts of trusts.

Suppose, for illustration (and the illustration is by no means strained), that the steel manufacturing business were by processes of consolidation brought under the control of a trust which dominated the business, merely as a steel business, from beginning to end - owning everything from finished product back to ore mines. That trust of trusts would have its feet upon the ground. But it must use coal; and here, let us say, is a trust of trusts which dominates the coal business, from delivery at your cellar door back to the mines from which coal is dug. That trust, too, has its feet upon the ground. In such a case the interests of these two trusts would collide, and out of the collision the steel trust and the coal trust would emerge as one.

That illustrates the trend of trusts. Following them from their beginnings, we find a tendency first to the consolidation of businesses of the same kind into trusts for those kinds of business respectively; then to the consolidation of trusts in kindred lines; then to the consolidation of those trusts as they come into collision with one another; and so on, each trust gaining power over its rivals as it secures a broader and firmer foothold upon the ground.

Unhindered by fundamental reform, the organization of trusts and their absorption into trusts of trusts would eventuate in the ownership of all business by some gigantic trust, which would get its power as Antaeus got his, by keeping in touch with the earth. Owning the earth, it would own men; and owning men, it would own all that they produce, from the simplest food to the most marvelous machinery. The middle class would disappear, and only two classes would remain - beneficiaries of the trusts and their favorites on the one hand, and impoverished and dependent hirelings and beggars for work on the other.

To this triumph of the trust, socialists look forward with satisfaction. They see in it the opportunity of the people to take possession not only of the earth but of the artificial instruments of production also, by dethroning the few trusts or the single trust that may acquire this vast ownership. They are satisfied because in this trend they discover signs of the evolution of common ownership of the mechanism of production and distribution. But in the trust phenomena there is little real cause for satisfaction. As the evolution of the trust proceeds, trust employes become in greater and greater degree mere voting machines, registering at the polls not their own convictions, but their employers' commands. This condition, only worse, would be universal should the development of trusts proceed even approximately to the point indicated above as possible. And when the time came to dethrone the trusts, the trusts themselves - through armies of dependent voters - and not the convictions or the interests of the people, would decide the issue. It might be that the trusts would decide in favor of their own dethronement. But if they did, they themselves would fix the terms; and we may rest assured that the dethronement would be but nominal. All land and all machinery might by their consent be turned over to a government; but it would be at a price which the trusts would dictate, and to a government which they would continue to control.

It is not by waiting until trusts own everything and then taking it from them, neither by trusting to their destroying their own power by overproduction, that the industrial question must be met. If the evils of the trust are to be overcome and its dangers avoided, the people must possess themselves in time of the strategic point toward which the trust is advancing. Since the trust cannot survive without, Antaeus-like, getting its feet upon the ground, it is to be destroyed only as Antaeus was, by keeping it entirely off the ground.

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