INDUSTRIAL CONDITIONS LEADING TO FORMA TION or TRUSTS. The Trusts are a late develop ment, since, until late in the nineteenth century, industrial conditions were not favorable for their formation. In earlier times organizations pos sessing monopolistic power were either created by law or secured their power through the pos session of some natural advantage, such as the exclusive possession of certain natural resources, as mines, etc., or through the advantage which comes from the exclusive occupancy of positions of advantage in doing their work—railroads, telegraphs, etc. In the modern Trust we often find combined with the advantages of great capital and perfected business organization also some of these natural advantages, but they are not the essence of the Trust advantage. The chief causes, from the industrial point of view, which have led to the organization of Trusts, are: (1) The existence of competition which was practically ruinous in its nature, brought about in part by the ease of intercourse between persons in different localities, and by the diffi culty of withdrawing readily capital once in vested in fixed plants. Such competition almost of necessity at times will become so fierce that all parties concerned will fail of making any profit. (2) The possibility of saving industrially
many of the wastes which come from the corn petitive system, provided the interests of the various competitors are harmonized. Without discussing in detail these wastes of competition, there may properly be mentioned the salaries of traveling salesmen, the expense of keeping up expensive show windows, the cost• of competitive advertising, the loss from undue extension of credits, the loss of custom which comes from carrying only a partial instead of a complete stock, the loss from the payment of cross freights, the loss from running manufacturing plants to only part of their capacity or part of the time. There may be mentioned also as a gain from combination the saving from standardizing the machinery and from prevention of the waste of time due to stopping and changing machinery, the saving from the most efficient organization of laborers and from managing all plants in an enterprise by the most skillful men instead of having part of them directed by men of meager ability• the certainty of a regular supply of raw material, and the most efficient use of by products.