THE Southland Times PUBLISHED EVERY MORNING. Luceo Non Uro. SATURDAY, OCTOBER 3rd, 1903. MORGAN'S STEEL TRUST.

Southland Times, Issue 19167, 3 October 1903, Page 2

THE Southland Times PUBLISHED EVERY MORNING. Luceo Non Uro. S A T UR DAY, OCTOBER 3rd, 1903. MORGAN'S STEEL TRUST.

There is no subject connected with modern industry upon which moro misapprehension prevails than those gigantic industrial aggregations known as trusts and combines. The idea prevalent among a certain Section cif people and encouraged by certain politicians for their own ends is that trusts are necessarily and inherently evil and maleficent, and apparent support is given to this idea in this colony by the fact that the only combine of which we hav<j had experience here has resulted in a rise in the price of one of tho staple articles of food. Before, however, it

can be concluded thut this or nU,y other similar rise in prices is unjustified, it must be shown clearly that the combine in question has made exorbitant profits, and if this can be proved, then since the exorbitant profits arc extorted liy unjust means from helpless consumers, that particular combine m a y be branded as maleficent. We are not awajre, however, that this proof has been offered in the case of any combine operating in this colony, and, indeed, (ho counter assertion made is that tho combine was rendered necessary in self-protection against 'the ruinous competition which w a s resulting in a whole industry being carried on at a loss. As bearing on the question of trusts generally, and on the critical position in which, as our telegrams daily inform us, Mr Morgan at present finds himself, a n account of tho colossal Morgan Steel Trust and the circumstances of its career will be of some interest. The magazines nnd reviews have for some time past been full of discussions on this gigantic corporation, and it is admitted by most writers that the trust movement is one of the permanent effects of modern political and economic causes, and that whatever may bo the fate of this or that particular undertaking, the rise of the corporations worked on the trust principle is the natural and inevitable outcome of tho conditions now existing.

The story of the Morgan Steol Trust is the story of the American iron industry. It is tho climax of

repeated effort 9 made by American manufacturers to find some form of combination which would establish an economic equivalence between demand and .supply. Every known method of combination, pooling, .and handling had .been tried and found wanting, and while some of them enabled manufacturers to secure fair profits for a while, their success was usually short-lived. i&e conviction had, been growing that nothing short of a consolidation of interests as comprehensive as possible would meet the needs of the situation. It was about live years ago that the period of large consolidations began, ol which ten are oow /iiitner consolidated in the United States Steel Corporation of Pierpont Morgan, the aggregate capitalisation being 1100 roillicn dollars or about 220 million pounds sterling. The last company to ccine into the Morgan combine, and the one on whose allegiance the whole undertaking depended, was tho Carnegie Company, which mined about one (junrter of the iron of thu country and turned out about tho same proportion of the finished product. Pating back to 1864-, this organisation had a history of its own When it began to develop under the guidance of Carnegie, it gradually annexed one after another of tho industries ancillary to the nnking of steel — shipping, railroads, coal, coke, limestone, i'tc— and for these purposes some twenty-six or t wen ty-si'ven separate companies were organised, in each of which tho parent company retained a controlling interest. This process of delegation of powers lasted till 18.-J2, when, owing to tho magnitude >mrl variety of tho interests concerned, it was decided, "for tho sako of harmony," to unite all branches into the Carnegie Steel Company, with a nominal capita') of 25 million dollars. Here we have a" novel proof of tho inevitability of tho Trust movement, thy amalgamation under one management of a number of federated companies for the purpose of puro administration- The distinguishing feature of the Morgan Steel Cbmbino is that it is a self-contained trust, controlling the whole of the industry from the extraction of the raw material to the sale of the finished article. The importance of tho acquisition of tho sources of raw material is not a new discovery on the part of Morgan and his colleagues ; it is the scale on which they set to work that makes their action unique. In the matter of transportation, tho corporation stands in an equally strong position. Not only does It ottjq its pre fleet on the lakes and its

ore railways for its mines ; but it has powerful influence over the great j railway systems, and possesses its , own Atlantic fleet. A vital principle < of modern business is the reduction 1 of cost, and in thia relation, it has ' been proved gradually by experience that high wages are in the long run more economical than low wages. It ' is sometimes argued that when capital is not merely federated into an association, but consolidated into a ' corporation, it will be irresistible, and that the tendency then will bo not only to extract profits from organisation, but to enhance them by reducing wages. This, however, appears to be a superricia 1 deduction'; for whatever power may Ho with trusts to crush its workpeople in a Htruggle, the question immediately presents itself whether it would bo to the advantage of capitul to exert its power in this direction. Sinco the profits o f an undertaking depend largely on the efficiency of labour, and the efficiency of a workman is closely connected with the .amount oi his weekly earnings, there is an ol> vioua limit below which wages cannot be economically reduced. Further, it ig to be noted that owing to the increasing use of complicated and expensive labour-saving machinery, the standard of efficiency is steadily rising. Experience shows that tho tendency of trusts in dealing with labour has been to break up the unions Qind to keep wages high. Trusts are all in favour of a high tariff, and the strongest argument advanced is that Riich is rendered necessary tiy the fact that Ihoy have to pay higher wages than prevail in competing countries. Trusts also depend la'gt> ly on political pawer, and in a land of universal suffrage their desire to use coercion is necessarily limited by the danger of their workmen going against them at the polls. Tho leading trust directors charge labour unions with seeking to limit tho output, trying to control the- works, especially by appointing foremen, and with insisting on the same wages being paid to all men irrespective of their capacity. British trades union oflicials. however, disclaim all hostility to machinery and any intention to limit tho output, and they assert that American workpeople are driven to an extent that would not be tolerated in a British country- Tho influence of a trust on prices is regulated by what may be regarded as the first, principle of modern industry — to keep the factories in full and constant employment. Labour-saving machinery is expensive, and tho lixed charges of production arc so largo that the last pound must be extracted to secure adequate returns. Much has been written on tho ovor-capital-isation of trusts in general olid of the Morgan Steel Trust in particular. Whatever the correct ostimuto may /be, it is an interesting coincidence that the money market both at Home and in America is at present in a depressed state. Consols aro now quoted at an extremely low figure, and it is evident that securities are being realised on an extensive scale. The Daily Mail's New York correspondent, writing a short time ago on the American financial crisis, declared that the chief elements visible in the situation were the 10 peatcd embarrassments of the roCent-ly-fonned trusts, the difficult position of the bunks, and the very precarious situaticn of syndicates and individuals who committed tllouiselvos too far in new enterprises through tho use of credit. Another embarrassing element in the market was stated to be the inability to procure foreign capital, and the reason given is the reckless borrowing of the Morgan group in 1901 a nd 1902. Denunciation of the organisers of the big trusts has naturally made the public unwilling to touch their securities. Yesterday's cables reported that a Partial panic had taken place on the New York Stock Exchange, which, with the assistance of Pierpont Morgan, wa3 successfully stemmed. Ii would appear that Andrew Carnegie has become the chief power in the Steel Trust. As will be remembered, ho retired with £-10,000,000 to his credit, when the Carnegie Steel Company was absorbed by Morgan's Steel Trust. Cables now report ivm as holding all the first mortgage bonds on the Trust's shares. If tho American wheat yield is a good one this year, it is confidently expected that tho hard-pressed institutions will quickly recover.