margin between cost and selling price just as low as he can."1

It is freely stated that a trust can sell at a loss in order to ruin a competitor. But if its operations are extended, can it sell at a loss in every market in order to annihilate a competitor everywhere? Its losses would be in proportion to the amount of its business. Not only do the trusts fail to suppress competition on the market, they make it the motive force of their internal economy. When Mr. Hadley says that there is very little difference between the administration of trusts and of public affairs, he makes a mistake of fact. In the first place, there is only one policy in the trust, to increase business in order to increase profits. Now a government or a municipality are occupied with other aims. There are the political interests of influential supporters to satisfy, as well as party rivalries, which have to be taken into account, and which frequently force an administration, however intelligent it may be or however good its intentions, to take precisely the opposite course to that which would be necessary in order to attain its object. This is a fundamental distinction. And no State has yet succeeded in establishing a method of promotion in its services which entirely ensures the predominance of the most capable and excites the emulation of all. Trusts, on the other hand, are organised on a competitive basis. In the United States Steel Corporation, each of the concerns is autonomous, and the directors are frequently animated by a spirit of particularism, each striving to do better business than the others. If they have to hand over particular products of their manufacture to a concern belonging to the same trust, so far from making a present of it, they insist on selling it at the best possible price. The trust is in fact a federation of companies, its committee of

1 United States Industrial Commission, vol. xiii., p. 107.

management constituting a clearing house for the mutual exchange of information.

There is thus no comparison with the compressed and centralised administration existing in a government monopoly. The following points should be noted:

:

(1). The trust is an artificial concentration, resulting from financial combinations, and only rendered possible, in almost every case, by the existence of a protective tariff. (2). Substantial firms are only induced to come into the trusts by the offer of excessive premiums.

(3). The capitalisation of the trusts, which is
to some extent artificial, is far from repre-
senting the proportion of the wealth of the
United States attributed to it by M. Paul
Lafargue.

(4). The over-capitalisation of the trusts is
limited by the competition of the market.
(5). The price of their products is limited by
the prices of their competitors, for no
single trust has acquired a complete
monopoly.

(6). The principle upon which the trusts are
organised is the competition of their com-
ponent organisations.

(7). For these reasons there is no similarity between trusts and State or municipal monopolies.

I have only examined trusts from the point of view of Marx' theory of the concentration of capital. They do not confirm it.

We may admit the existence of preferential rates, such as those obtained by the Standard Oil Company from the railway companies, but this only proves that the company has committed acts which can be successfully attacked by a legislation of an individualistic and not a communistic type.

THE

BOOK V

DISTRIBUTION OF

INDUSTRIES

MARX' THEORY AND THE CONCENTRATION OF INDUSTRIES

KARL MARX and Engels said, in the "Communist Manifesto" of 1847, which Socialists acclaim as the beginning of a new era, "the whole of society increasingly divides itself into two hostile camps, into two directly opposed classes, the bourgeoisie and the proletariat.

$18. The middle classes of former times, small employers, business people, and persons of independent means, artisans and peasants--all fall into the ranks of the proletariat. Their small capital succumbs when brought into contact with the great capitalists.

$25. The progress of industry throws considerable sections of the dominant class into the ranks of the proletariat, and at least threatens their existence.

$31. The modern workman, instead of raising himself by the progress of industry, sinks more and more below the level of his own class.

In short, industry and capital become increasingly concentrated in a few hands, while the numbers of the proletariat continually increase, wages decrease, and the hours of labour grow longer. The last assertion has already been refuted; I now proceed to examine whether the phenomenon of the concentration of industry and of capital announced by the "Communist Manifesto" manifests itself in the United States, in France and in Belgium. I have already cited the figures for Germany given by Bernstein according to the industrial census of 1895.

If three establishments, each of them employing one hundred workmen, only form one establishment at the expiration of ten years, we have a concentration, but if each of them continues to exist and to employ a third or a fourth as many workmen again while doing twice the amount of business, this is not concentration but development and expansion of industry.