ΤΕΝ TEN years ago, the heading "Trusts in England" would have been as great an anomaly as the often-quoted title of an article on "Snakes in Iceland," which read, "There are no snakes in Iceland." For many years the Manchester school of laissez-faire had dominated English political economy. Under free trade, commercial freedom, every one thought, was guaranteed; competition had full play. English economists pointed to the fruits of protection in the trusts organized in the United States, and predicted that these gigantic monopolies would endanger free institutions, and strangle the political as well as the commercial liberties of the republic. With free trade (so they held) there could be no trusts. Trusts could not be organized without high protection and the assistance of powerful railroad corporations; and, even if they were established, they could not exist any length of time, and would never succeed. These views were also held by free-traders and economists in America. Economists must now revise their views, and politicians change their tactics. England no longer enjoys that immunity from monopoly which was the boast of its own economists and the object-lesson of American freetraders. While the position of trusts has not greatly changed in the United States during the past ten years, except to develop on the same lines, a commercial revolution is taking place in England. The country is becoming honeycombed with combinations and trusts; and, what is more and perhaps worse, there is no agitation against the system. No effort is made

to check trusts or control them. Not a word has been said in Parliament on the subject. Newspapers record the news of combinations without much comment, except on the financial or investors' aspect of them. I can trace only two serious review articles on this important development -one superficial and ill-informed; the other by the promoter of some of the combines. The fact is that the new phase of industrial combination is an easy, natural, and perhaps inevitable development of the joint-stock-limited-company system, together with the publicity and checks that accompany it. We have now in England as many varieties of combinations as exist in

the United States. There are-(1) loose understandings for apportioning trade; (2) working agreements between groups of manufacturers for regulating prices; (3) great amalgamations which practically control the markets; (4) local trusts, supreme in their own areas and in their own trades; (5) national monopolies, and (6) international monopolies.

Accepting Professor Ely's definition of a monop. oly as meaning that substantial unity of action on the part of one or more persons engaged in some kind of business which gives exclusive control, more particularly, although not solely, with regard to price," there are now many such in England. The rapid extension of combines " recently is all the more remarkable, because the early efforts at trust-making were failures.

Before describing the various types of industrial combinations that now exist, it will be as well to refer briefly to the joint-stock system under which they are organized.

THE LIMITED-COMPANY OR JOINT-STOCK SYSTEM.

When fairly carried out, the limited company system is good, alike for the trader and the investor. A successful manufacturer, for instance, wants to turn his business into a limited-liability company. Two or three things may induce him to do this. He may be getting old; he may want fresh capital; or, he may want to sell his business without losing an inter · est in it, or even the control of it, simply for the sake of making money. He adds to his capital, or value of his works and property, the value of his good-will. The value of his property must be vouched for by professional valuers, his accounts audited by chartered accountants, to show the net profits for a number of years. puts his price on the business, and says how he will take the value-in securities or cash, or partly in both. The public judge it as an investment, and subscribe or not, as they choose. Much depends on the amount of information given in the prospectus. The public may be offered the majority of the ordinary shares or stock, and in that case would control the business; or, the vender may issue only 4 or 5 per cent. preference shares or mortgage deben

He

tures, and retain all the ordinary stock. In that case he controls the business so long as he is able to pay the interest on the preference shares and debentures; if he fails to do so, they will take possession of the business. The Stock

Exchange limits his holding in preference and debenture stock if he retains most of the ordinary shares. The accounts must be properly audited every year by professional accountants, and the whole system is more or less open. There are, of course, abuses, which arise from overcapitalization, the hiring of guinea pig directors to attract investors, and so on; but the company swindles are generally in connec tion with financial and mining companies, not with industrial concerns. The law has just been amended to meet some of the abuses that had grown up. Hitherto it has been difficult to punish individuals who defrauded the public, and the chief business of some promoters was to float wild-cat schemes one year and wind them up the next.

The joint stock system is very elastic, and gives every facility for combination. It is much simpler for companies to combine than for private firms to join hands. Amalgamations under companies are easily organized on an equitable basis, and there is no limit to the extent to which they can be carried. As will be seen later on, the British combine differs in many ways from the American trust; but the aim is the same, even though the methods taken to reach it may differ.

INFORMAL COMBINES.

There are a large number of informal combines in England which give some advantages of monopoly without unity of control or financial association. Thus, the railroad corporations have long ceased to compete as regards rates. It is perfectly well understood, and has been admitted over and over again by railroad men before Parliamentary committees, that the railroad companies combine. They agree in their rates, but compete in facilities, speed, etc. If it were not that the railroad companies are strictly regulated by the Board of Trade, this system of concerted action would be a very serious factor. the railroads represent the most powerful interest in Parliament.

As it is,

Railroad companies do not connive at trustmaking, as in the United States, but they discriminate to some extent. They sometimes reduce their rates according to the quantity of goods sent on their lines, which obviously favors the big concerns.

Similarly, the leading shipping companies have fixed rates for freight, to stop under-cutting,

Some The

competing only in speed and facilities. of them have monopolies of their routes. recent amalgamation of the Castle and Union lines is a case in point, as it establishes a practical monopoly in the service to South Africa.

There are various understandings and agreements in the coal-trade. As the price of coal has risen just now over 30 per cent., it is suggested that there is a national combine, but there is no evidence of it; nor is it necessary, as local combinations serve the same purpose, being protected in their own areas from competition by the cost of freight. In London, all the leading coal merchants combine to fix prices. They decide at the Coal Exchange when prices shall rise or fall. They cannot take any extreme course; otherwise the crowd of small dealers outside the ring would interfere with their business. The London flour-millers have a small association for fixing the prices of top flour which is used by the West-End bakers. Four or five firms have a monopoly of this business, with the object of maintaining prices and equalizing quality.

The leading engineering firms throughout the country entered into a compact, after the last strike, to act together against trade-union labor making unity of action on one point. The Proprietary Articles Trade Association, representing wholesale and retail chemists, is estab lished to prevent cutting in the drug stores. The fire-insurance companies have a ring for regulating rates, one result of which is that public authorities are likely to become their own insurers.

These examples of understandings and agreements do not bear directly on the question of trusts, but are another indication that the competitive system is weakening.

EARLY EFFORTS AT TRUST MAKING.

It is evident that, until a few years ago, England was not ripe for trusts. The early efforts failed either through the overcapitalization of the concerns, opposition from outsiders, or defective management. The Salt Union was a complete failure. So was the Hansard Unionan attempt to combine certain printing firms in London and paper-mills in the country.

The United Alkali Company, formed a few years ago with a capital of $45,500,000, controlled three-fourths of the alkali business; yet for three years it has paid no dividend on the ordinary shares. The £10 shares stand at between 2 and 3. The company has had a working agreement with Brunner, Mond & Co. and Bowman Thompson & Co., so that the whole alkali trade was a monopoly. Brunner Mond

(a remarkably successful firm) and Bowman

Thompson & Co. have now amalgamated. Their capital is $16,652,200; and it is a question, at present, whether they will renew their agreement with the United Alkali or compete with it. An attempt was made in December, 1897, to absorb all the bill-posting advertisement businesses into one national combine; but it was a hopeless failure.

The capital was fixed at $12,250,000, but only a small sum was subscribed. The Bedstead Manufacturers' Association, which has just broken up, was a novel experiment in trust-making. It attempted to carry the workmen with it by giving them the highest wages, and 40 per cent. bonus. The alliance with the workmen lasted for eight years, and the combine was held together by coercing firms with the united forces of capital and labor. The trade has recently become depressed. At a meeting held in the second week of August it was announced that a number of firms had seceded, and the association was practically dissolved. The Bedstead Workmen's Association is now proposing to hold the firms in the alliance to their agreement.

THE TELEPHONE MONOPOLY.

The

The monopoly that has been most prejudicial to public interests-the National Telephone Company is now being undermined. By buying up other companies, the National established a monopoly which fitted its name. The post-office made no effort to curb it, but on the contrary encouraged, or, at any rate, facilitated it. company worked under a license that was to expire in 1911; it had a capital of $35,000,000, which it made no effort to redeem. It was confident either of getting its license renewed or of compelling the post-office to buy its watered capital at par. The evolution of this monopoly is a sordid story-one of the worst features of which is that the postmaster-general, who helped to consolidate it, was soon afterward made a director of the company. The agitation against this monopoly on the part of municipalities became so strong that in 1898 the House of Commons appointed a committee to investigate the question. The result was that last year an act was passed giving municipalities the right to establish telephones, and authorizing the post-office to spend $10,000,000 in creating a competitive system in London. While the post-office strikes at the monopoly at the center, the municipalities will knock holes in it in provincial cities. That is now being done, and the public competitive system will begin to work early next year. Parliament has given the telephone company a lingering instead of a sudden death by extending its license for another fourteen years.

to trusts.

MANIA FOR AMALGAMATIONS.

During the last three years, there has been a prolific crop of amalgamations-half-way houses Private and proprietary banks are being absorbed out of existence. Barclay's Bank has taken over 24 similar undertakings. Parr's Bank has absorbed about as many, and Lloyd's Bank has swallowed up 38 other banking-houses, and is still seeking others to devour. Lloyd's has 309 branches and a paid up capital of $13,Its current 280,000. and deposit accounts amount to $227,500,000. Only one joint-stock bank does a larger business now than this. One of the proprietors of a bank which had been established two hundred years, and which had sunk its historic name in Lloyd's, informed me that one cause of the amalgamation was that the public preferred banks that published balance-sheetsas, of course, all joint-stock banks are obliged to do. The few ancient banks that now remain have old family connections which keep them going, and some of them are so exclusive that they will not open business accounts.

A few years ago, when the "boom" was on, a number of amalgamations were effected in the The firms engaged in carrying coal by sea have cycle trade. They are not now very successful. recently amalgamated; but, in fact, the ordinary amalgamation of two or more firms in the same line of business is an every-day occurrence, which calls for no comment.

ENGINEERING AND SHIPBUILDING COMBINATIONS.

The

There is one kind of amalgamation taking place that deserves special note. Great mining, iron, engineering, and shipbuilding firms have come together. Instead of having between the raw material and the completed ship or engi neering work the intermediary profits of the iron-ore miner, the coal-miner, the ironmaster, the steel-maker, the iron-founder, the forger, the marine-engine builder, and so forth,-all these middlemen are got rid of, and the whole business placed, as it were, under one roof. Vickers, Son & Maxim Company is a case in point. This company, an amalgamation of several, can now turn out a battleship, from beginning to finish, without any outside assistance. Another notable union was that carried out by the great engineering house of Sir W. G. Armstrong Mitchell & Co. and Sir Joseph Whitworth & Co. in 1897. Their capital is $23,550,000, and last year they paid 15 per cent. with a bonus of 5 per cent. This company supplies all kinds of armor; but they have not their own shipbuilding yards yet, although this development is to come. The firms of Robert Napier &

Sons, shipbuilders, and Broadmore & Co., steel and armor plate makers, have united, and are now a self-contained concern. A similar alliance has been made between Messrs. Brown, engineers, of Sheffield, and the Clyde Shipbuilding and Engineering Company. It is hardly necessary to point out some of the advantages of this unity of action; as, while a ship is in the stocks, boilermaker, marine engineer, gunmounters, etc., are under the same control as the shipfitter. There is no delay, no friction through contractors, and everything conduces to harmonious action and unanimity of purpose.

There is a union similar to some of the above which goes farther, as the amalgamated firms. have a monopoly of the steamship routes after they have built the ships. In this case the companies still go under different names. The Frederick Leyland Shipping Company and the Wilson, Furness & Leyland lines are united. The Furness company controls Edward Withy & Co., shipbuilders. Furness, Westgarth & Co., engineers, and William Allan, M.P., engineer, are in the same ring; so are the Manchester liners, the Tee's Side Bridge & Engineering Company, while it stretches across the Atlantic and forms a union with the Chesapeake & Ohio Steamship Company.

I will now give a few examples of recently formed combines, and will lead up from the smaller, which are in some cases equivalent to local trusts, to the larger, which are absolute monopolies.

SOME RECENT COMBINES.

THE BRADFORD DYERS' ASSOCIATION. Formed in December, 1897. Capital $22,500,000. This combination absorbed 22 businesses, practically controlling all the trade in the neighborhood of Bradford. The original capital has been increased by $3,750,000. Since it was established it has absorbed six other companies, making a total of 28. Its first report showed a profit of $2,025,000, which paid a dividend of 10 per cent. for the first 15 months on the ordinary shares. YORKSHIRE DYEWARE AND CHEMICAL COMPANY, LTD. Formed in May, 1900. The object of this combination, including about a dozen firms, is to have a common plan of action, but to leave each business as a distinct branch with its individuality. Capital $1,100,000, half of which is 6-per-cent. cumulative preference shares. Only sufficient was offered to the public to comply with the Stock Exchange regulations, in order to get a quotation in the lists. The directors take 10 per cent. before the ordinary shareholders receive any, so that they could have raised much money if they had wanted it.

GLASGOW COAL AND IRON COMBINE.

Formed in May, 1900. This is a combination under the name of John Dunlop & Co. (1900), Ltd., with a capital of $2,750,000. It combines coal-mines, iron

works, and chemical works for utilizing waste gases from the furnaces of the iron-works, steel-works, etc., in the neighborhood of Glasgow. The venders took $2,500,000 for the business-all of it except $665,000 in cash, leaving only $250.000 as the working capital of the businesses, which had been worked at a growing profit. THE UNITED INDIGO AND CHEMICAL COMPANY, LTD. Formed in November, 1899. An amalgamation of eight indigo manufacturers' firms. Capital $1,250,000half in 6-per-cent. cumulative preference shares.

UNITED COLLIERIES.

Formed in 1899. A combination of the collieries in the neighborhood of Glasgow. Most of them already limited-liability companies.

BRADFORD COAL MERCHANTS' AND CONSUMERS' ASSOCIATION, LTD.

Formed in July, 1899. This combine controls 90 per cent. of the steam-coal trade, and a great proportion of the household-coal trade in the city of Bradford, which, with its suburbs, has a population of about 250,000. Capital $1,250,000, $500,000 of which is 5-per-cent. cumulative preference shares. Purchase price, $998, 250. The amount of working capital left, after the purchase-money had been paid, was $700,000. This company is allied with other combinations.

THE BORAX MONOPOLY.

Formed in July, 1899. The Borax Consolidated, as it is called, aims at the control of this industry. Capital of $16,000,000. It owns works in Chile, Peru, California, and England. Its profits for the twelve months ending September last amounted to $1,306,880, and it was announced that the company was buying up further properties to consolidate its monopoly.

FLAX MACHINERY COMBINE.

Formed in July, 1900. A union of the largest manufacturers of machinery for preparing flax, hemp, and jute, having businesses in Leeds and Belfast. Capital $6,000,000, purchase-price $5,500,000, payable partly in cash and in shares. Average yearly profits, $411,240.

THE YORKSHIRE INDIGO, SCARLET, AND COLOR
DYERS, LTD.

Formed in July, 1900. This combination represents almost all the dyeing businesses in Yorkshire, and is homogeneous, inasmuch as it will supply its own dye materials through the businesses which it amalgamates. Some of the firms have been established over 150 years. The capital is $3,000,000, of which one-half is 41⁄2 per-cent. first-mortgage debenture stock. The purchase-price was $2,167,390. The promoters took onethird of the issued capital.

YORKSHIRE SOAP-MAKERS' ASSOCIATION.

Formed in May, 1900. A combination of twelve Yorkshire businesses engaged in the manufacture of soap and packing cotton waste. Capital $2,000,000, purchase-price $1,252,340.

YORKSHIRE WOOL-COMBERS.

Formed in October, 1899. Practically all the woolcombers in Yorkshire. They are called an "association"-a favorite term for the combines. ("Unions" have earned a bad name and nothing else.) Thirtyeight firms are absorbed. Capital $11,000,000. There

was a rush to subscribe, and the capital required was applied for several times over; but the result is disappointing. The promised profits have not been earned. The deferred shares get nothing for the first year. The directors say that the falling off is due to the lack of wool for combing, consequent on the depression in the worsted trade. And now depression in the worsted trade is to be met by a combine for that industry, which will no doubt work in with the wool-combers.

BRITISH OIL AND CAKE MILLS.

Formed in 1899. Capital $11,250,000, divided into three equal parts as ordinary, 5-per-cent. preference shares, and 4%-per-cent. debenture stock. The promoters took $3,500,000 in cash, $2,635,000 in securities, and $615,000 in securities or cash.

VELVET AND CORD DYERS' COMBINE.

Formed in April, 1899. Known as the English Velvet and Cord Dyers' Association, Ltd. This is the only large combine that asked no money from the public. It is a union of 22 firms, which raised their own capital. Previous to combination, most of them yielded little profit. They now reap 5 per cent.

VELVET-CUTTING COMBINE.

Formed in March, 1900. Velvet-cutting is presumably not a large industry. The united velvet-cutters represent four firms, capital $1,500,000.

CALICO PRINTERS' COMBINE.

Formed in December, 1899. This is one of the boldest and biggest of undertakings. No fewer than 60 firms have combined, with the huge capital of $46,000,000. More than two-thirds of this capital was issued, but all except $10,666,660 was retained as purchasemoney. The flotation was too favorable, and there is now a "slump." More works have been bought, but a monopoly has not been secured. In the meantime, we read paragraphs like this, which will have a familiar look to Americans: "In consequence of depression in the calico-printing trade, the combine has closed its works at Stalybridge and Hayfield, and thrown 500 operatives out of work."

FINE-COTTON SPINNERS AND DOUBLERS.

Formed in May, 1898. Capital $30,000,000. Thirtyone firms amalgamated. It pays 10 per cent., and is doing well. It belongs to the group in which the Coats Thread Trust hold interests, and probably is controlled by that gigantic international combine.

COAL AND IRON COMBINE.

Formed in July, 1900. The Doulais Iron Company, Guest Keen & Co., colliery owners, quarry owners, ironmasters, etc., and the Patent Nut and Bolt Company, iron and steel manufacturers, etc. Amalgamated capital $20,000,000. This combine owns an ironore company in Spain.

LIME AND CEMENT COMBINE.

Formed in July, 1900. This combine embraces all the lime and cement and brick works in Bedfordshire. Capital $2,000,000. The venders retained all the ordinary shares, offering the public only part of the preference shares and debenture stock.

NATIONAL AND INTERNATIONAL TRUSTS.

None of the above companies are national; they have only local or limited monopolies. We now come to gigantic corporations which have an absolute monopoly in their own fields.

PORTLAND CEMENT TRUST.

Floated as recently as the middle of July, the Associated Portland Cement Manufacturers, Ltd., enbrace 30 firms, and have working arrangements for three years with four others. Some of the constituent companies were already amalgamations of others. They have 90 per cent. of the business in the country, and the remaining 10 per cent. must necessarily combine or disappear. Capital $40,000,000, partly ordinary cumulative 51⁄2-per-cent. preference shares, and firstmortgage debenture stock (44 per cent.). Several millions were left unissued in the meantime. The venders took one-third. A large amount was obtained before the issue, and the public was asked for the balance,-about $16,000,000,-which was promptly sup plied. The combine has 19 directors and 14 managing directors. These gentlemen were, of course, the heads of the absorbed concerns. New machinery has been put down, and the combine promises well as a commercial concern.

NATIONAL WALL-PAPER TRUST.

Formed in March, 1900. All the manufacturers of wall-paper form one trust. The principal dealers have signed an agreement not to deal outside the trustcalled the Wall-Paper Manufacturers, Ltd.-for seven years. The capital is $16,000,000, and less than half the amount was issued, so that the control remains in the hands of the promoters. From an industrial point of view, this trust is in the strongest position of any combination in the country. Unlike others, it has no fear of foreign competition. French, German, and American goods have no sale in England-as width, length, style, and everything differs. For that matter, so far as America is concerned, the British trust is making an agreement with the American trust in the same line. There is a large export trade in English-made wallpaper. Competition in the home trade was so keen that many houses became insolvent. The smaller mills were at once closed on the formation of the trust. Prices were raised, but better goods are produced. The services of "drummers" were dispensed with, and the market is better controlled. Formerly firms produced inferior "job lines" of goods, partly for competitive purposes, partly to keep their mills going. That has been stopped. Production is not only equalized, but specialized. Instead of one mill producing goods of various kinds and qualities, every mill has now its special line. The trust is protected against the danger of strikes, as most of the labor employed is unskilled and unorganized. To begin with, many workmen were discharged; but those who remained obtained regular employment and better wages. This trust promises to be one of the most successful yet established.

THE BLEACHERS' TRUST.

Formed in July, 1900. The Bleachers' Association, Ltd., is the latest and one of the biggest things in trusts that England has produced. It has a capital of $41,050,000, 49 directors, and is an amalgamation of 53 firms.