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charged with being often fraudulent. But in spite of everything European merchants cannot do without the Chinese; they have before them the dilemma of doing business with the Chinese or of doing no business at all.
The prominence that has been given to the Chinese in their relations with European merchants should not distract attention from the other side of their functions, really more important, their dealings with the natives. The position that they have held under the government in the past has assured them the establishment of relations with the people in all parts of the island; every pawn-shop and every opium agency is the nucleus of a little commercial organization. Chinese peddlers vend their wares throughout the country, and Chinese traders pervade the markets where most of the native trading is done. They sell everything that can tempt the native to buy, manufactured wares and ready-made clothing, drugs and chemicals for dyeing, and all sorts of “notions.” Some come to the market with bags of copper coins to buy the native produce, and some do not appear at all, but wait from the early dawn at convenient cross-roads to forestall the market by buying up the articles that are being carried there for sale. The petty trade is not confined to Chinese, but is carried on most successfully by them; the natives seem unable to compete with them on equal terms, and are driven into less remunerative branches of the trade, or become dependent agents.
The Chinese trader is to the native consumer the missionary of the modern economic organization. He brings to the door of the native and presents to him in concrete form the advantages to be gained by entering the organization in producing for exchange. Every imported ware sold by peddler or merchant is a pledge that a native product of equal value is gained for export. The petty trader should have the credit for the total amount produced for export by the individual natives, and for a large proportion of that which is produced by natives under European direction. The writer has no information as to the form in which wages are paid on the plantations; it is possible that the truck system prevails to come extent, and that the laborers are forced to take their pay in the shape of commodities at the proprietor's store. So far as they are paid in money and are allowed to spend it without restriction, they find the real incentive to labor in the wares that are offered them by the trader. On the skill and energy with which he fulfils his functions production for the European market depends.
'De Kali Bezaar te Batavia, De Economist, 1862, Bijblad; Mees, De Indische groothandel en de Chineesche lijnwaadhandel, De Economist, 1884, i. The President of the Java Bank, in his annual report on the state of the market, (Kol. Verslag, 1898, Bijlage MM.), complained of the depression in the import trade as largely a result of the untrustworthiness of the middlemen; failures of the Chinese had not been so numerous in 1897 as in preceding years, but still caused many losses.
The best references for the place taken by the Chinese in the native organization are Poensen, Naar en op de pasar, Mededeelingen van wege het Nederlandsche Zendelinggenootschap, Rotterdam, 1882, 26 : 1-30 ; Beijerman, Jets over de Chineezen in Ned. Ind., ibid., 1885, 29 : 1-25.
An exhaustive study of the labor question in Java would necessitate the treatment of another topic, closely related to it, that of land tenure. The separation of land and labor comes at a comparatively late period in economic development, and has scarcely more than begun in modern Java. But the limit of space imposed upon a review article forbids the consideration in this place of a topic that cannot be adequately discussed without entering upon many details of native organization and Dutch legislation. The writer must content himself with the hope that the article in its present shape will suffice to make clear some of the chief difficulties that the Dutch have encountered in their attempt to establish a system of free contract labor in a tropical country, and some of the methods by which they have attacked these difficulties. If little has been said about the improvement in economic and political conditions effected since the abolition of the culture system, it is not for lack of facts to prove it; the writer takes for granted that proof is unnecessary. It has seemed wiser to emphasize the seriousness of the problems that have confronted the Dutch in their new labor system, and that are still only partly solved. No student of these problems can doubt their gravity. The process of solution must be a slow one, for it must wait upon the growth of the native population, and upon a change in the native character.
But the process, though slow, will be sure, for under the present system the powers of government and the interests and responsibilities of individuals are so distributed that there is the best assurance of a progress unbroken by relapse.
CLIVE DAY. Yale University.
The Work of the Industrial Commission. Whenever a government makes use of a commission as an aid in the solution of a grave industrial problem, four questions naturally arise in estimating its work: (A) as to its personnel and organization; (B) as to its method of work and the form of its report; (C) as to the facts disclosed in its investigation; and (D) as to its conclusions or recommendations.
(A) This commission forms a notable exception to the usual congressional commission in the United States in two particulars: First, it was made up of representatives of the national Congress and of the industrial interests of the country in about equal proportions. This gave the Commission a business-like character, and has served to confine the inquiry to the more specific and practical aspects of the questions before it. Second, it has employed a corps of expert agents and assistants in carrying out the details of its work. this way the Commission gained the confidence of the conservative industrial interests and secured as voluntary witnesses many men whose testimony otherwise must have been compulsory if secured at all and consequently of small value. Again Professor Jenks, from his intimate knowledge of trust methods, was able to so direct the inquiry as to secure much really valuable testimony that would not otherwise have been disclosed.
(B) The preliminary reports on Trusts and Industrial Combinations, which appeared March 1, 1900, indicates the method of work adopted by the Commission and the form the reports are to take. This report consists of (1) the testimony in full, (2) a topical digest of the evidence, (3) a review of the main facts brought to light by the investigation, (4) a critical examination of the effect of trusts on prices, and (5) the recommendations of the Commission. The testimony consists of nearly twelve hundred pages of solid brevier. It contains the testimony of sixty-two witnesses regarding eleven of the typical combinations. The relative amount of space devoted to each group of industrials investigated is indicated in the following table:
No. pages of digest. No. pages of testimony. The sugar combinations....
136 The whiskey combinations.
128 The standard oil combinations.... 80
540 The iron and steel combinations.. 41
The review of the evidence sums up the essential facts of the testimony in convenient form for the reader whose time is limited. The digest of the testimony is perhaps the distinctive feature of the report. It was prepared by Professor E. Dana Durand of the Leland Stanford Junior University, one of the expert agents of the Commission, and bears the marks of the trained economist. In this digest the facts disclosed by the investigation are carefully arranged under appropriate heads and sub-heads, accompanied by constant reference to the pages in the volume of testimony where such facts or opinions are stated in full. For instance, under the American Tin Plate Company we find the following topics: I. Description of the business; II. Organization and capitalization; III. Excessive competition as cause of combination; IV. Control of plants and output by the combination; V. Effect of combination on prices and quality of goods; VI. Relative economy and advantage of manufacture by combination; VII. Effect of combination on labor; VIII. The tariff and the tin-plate industry. By this review and digest the Commission, under the leadership of the expert agents, has not only made the results of its work readily accessible to the public but has set a fashion which future commissions will do well to follow. The statistical tables of prices accompanied by charts, with a critical analysis by Professor Jenks, are of large permanent value. Professor Jenks shows in a strictly scientific way the relation of the combinations to prices in the case of sugar, whiskey, petroleum, tin-plate, and iron and steel.
(C) The witnesses examined by the Commission represented both the opponents and the friends of the trusts as well as those who had no direct interest either way. Hence the testimony is often conflicting and sometimes contradictory. Still substantial agreement appears on the following points: (1) Competition is the chief cause of combination; (2) discrimination in freight rates, if not one of the chief causes as many believe, is certainly one of the worst evils connected with the problem ; (3) the capitalization, including both preferred and common stock, varies from two to three times the real value of the plants and patents in the case of the conservative industrials, while in the case of those "otherwise situated" the capitalization bears little relation to the actual assets; (4) the large combinations have a slight advantage both as buyers and sellers. This advantage, however, even in the case of those combinations which control a large percentage of the output, is much less than generally supposed. The regulator of prices, it is
admitted by both the friends and the opponents of the trusts, is the probability of competitors entering the field if the attempt is made to force prices much above the competitive level. Still the fact that the large combinations usually make the prices and the smaller concerns follow in their quotations indicates clearly that within certain rather narrow limits the trusts do have the power of arbitrarily fixing the prices, both of the products they sell and the commodities they buy. (5) It is generally admitted that the trusts have the power of lowering prices in certain localities or to certain individuals and that they make use of this power when they consider it necessary to crush out their smaller rivals; (6) the large combinations, whenever the protective tariff permits, sell in foreign markets at a less price than in the home market; this is done, it is claimed, in order to gain a foothold and extend our foreign trade; (7) the trusts have generally affected unfavorably the high salaried men, lessening their number and decreasing the rate of their compensation; of the wage-earning class proper, while in some cases the number is less, the remainder have profited by higher wages and steadier employment.
(D) The keynote to the recommendations of the Commission appears in their conclusion that “experience proves that industrial combinations have become fixtures in our industrial life. Their power for evil should be destroyed and their means for good preserved.” To this end the Commission recommends :
First, increased publicity on the part of the promoters and organizers of those industrial combinations which look to the public to purchase or deal in their stocks or securities.
Second, increased responsibility on the part of the directors to be enforced through publicity; this publicity in the case of the larger corporations—the so-called trusts—to consist of a properly audited report published annually, showing in reasonable detail their assets and liabilities, with profit and loss; such report and audit under oath to be subject to government inspection.
Third, increased power for the Interstate Commerce Commission, authorizing that body to prescribe the methods of keeping accounts of the railroads, to inspect and audit such accounts, to prescribe classification of freight articles, and to make rules and regulations for freight transportation, throughout the United States.
In presenting this preliminary report on March 1, the Commission states that "the urgent demand for information leads us to submit what we have in hand at this time." Since no provision has