The Problem of Industrial Monopoly 1

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narrower or wider sense) even as applied to ft single enter prise that has grown to be monopolistic. A "trust" in the legal sense of a form of organization, and "combinations" as above defined, might have no monopoly power whatever; whereas a monopoly may be possessed by an individual owner (e. g., of a patent right, railroad, or water-works plant) or by a single corporation that has simply grown monopolistic without the trust form of organization or without combina tion.

The chief problem is monopoly, however attained. In accord with growing and now dominant usage, it is well to observe the following meanings in our discussion. Combina tion is a term referring particularly to one method by which monopolies are formed. Trust, in the now popular sense, is best limited to an industrial, primarily manufacturing, en terprise or group of enterprises, with some degree of monop oly power due to a group of favoring technical, financial, and economic conditions. The trust may consist of a single establishment; or of a group of establishments separately operated, but united in a "pool" to divide output, territory, or earnings; or of such a group held together by a holding company or combined into one corporation. Public utility is the name of an enterprise having a "special franchise" giv ing the use of streets and highways and the right of eminent domain, and includes, in the broad sense, railroads and local utilities, such as street railways, gas, water, and electric light plants.

§ 9. Methods of forming combinations. Combinations of previously independent enterprises may be more or less com plete and are made by different methods. Four major meth ods are: (1) The pool, by which the enterprises continue to be sepa rately operated, but divide the traffic (or output), or the earnings, or the territory, in prearranged proportions.

(2) The trust, in a legal sense (as defined in § 8).

(3) The holding company, a corporation with the sole pur pose of holding the shares of stock, or a controlling number of them, in various corporations otherwise nominally inde pendent.

(4) Consolidation into one company.

At least five minor methods may be distinguished ; these are here numbered continuously with the preceding four: (5) Lease by one company of the plants of one or more other companies.

(6) Ownership of stock by one corporation in another cor poration, sufficient to give substantial influence over its pol icy, if not absolute control.

(7) Ownership of stock, by the same individual or group of individuals, in two or more competing companies, to such an extent as appreciably to unify the policies of the compet ing companies.

(8) Interlocking directorates, that is, boards of competing companies containing one or more of the same persons as directors.

(9) Gentlemen's agreements, mere friendly informal con ferences and understandings as to common policies.

§ 10. Growth of combinations after 1880. Undoubtedly, industry before 1860 had some elements of monopoly. Mo nopoly constituted part of the banking problem ; it began to be evident in the railroads almost at once, and it rapidly in creased as street railways and other public utilities were con structed. But after 1880 occurred the formation in larger numbers of industrial enterprises which appeared to exercise some monopoly power. In the years between 1890 and 1900 this movement was still more rapid. Consolidation took place on a great scale in railroads and in manufactures. Much of this has been of such a kind that it does not appear at all in the figures showing the number of establishments and of employees. In the data regarding this movement given by different authorities many discrepancies appear, as there is no generally accepted rule by which to determine the selec tion of the companies to be included in the lists. One finan cial authority gave the following figures' regarding the in dustrial companies reorganized into larger units in the United States between 1860 and 1899, not including combinations in such businesses as banking,, shipping, and railroad transporta tion. Some of the enterprises here included have much and others probably have little or no monopolistic power.

§ 11.

The great period of trust formation. The number of trusts organized and the capital represented by this move ment in the last of these decades were seven times as great as in the thirty years preceding. The figures by years for the decade 1890-1899 are as follows: The influence of great prosperity shows in the large number of combinations ; but in 1893 the number was less, although the total nominal capital (stocks and bonds) was still the greatest it had ever been in any year. Then came the period of de pression, 1894-97, when both the numbers and the capital were comparatively small. Then from 1898 to 1901 followed I Compiled from data given by the "Journal of Commerce and Com. mercial Bulletin," reprinted in the "Commercial Year Book," Vol. V, 1900, pp. 504-569.