The Giant Trust of the Future.

New Zealand Graphic, Volume XLV, Issue 6, 10 August 1910, Page 42

The Giant Trust of the Future.

By

EARL MAYO.

6 / F LL over the United States to-day y [ the foundations are being laid J J f° r a trust such vastly greater magnitude than any industrial combination now in existence /that the greatest of these will seem of (puny dimensions beside it. The United States Steel Corporation, through its leadership of one of the most important of modern industries, ranks as the most notable manufacturing company in the country. But if all the steel producers •Were united in a single combination, it .tvould not be worth comparison with this future trust of which the first faint beginnings now appear, for the reason that ifche latter will dominate all lines of manufacture. If all the railways were brought /together into a single control, it would ’bi! a development of tremendous significance. but less significant than this future (combination, which is even more surelj* ion the way. for the latter will dominate transportation. • The men whose votes are making possible this overshadowing monopoly are in many instances the very men whose eloquent denunciations rend the air as ifchey attack Standard Oil or other (/‘trusts” whose strength happens to bulk large, in the public eye at the moment. Of course they do not realise the precise ’’’effect of the course to which they lend •themselves. Even the num who are laying the ground work for the great monopoly of the future, in many cases as an Incident to other business activities, are to a degree unconscious of its possibilities. The combination itself is inevitable unless the American people change the policy which they have followed in the past with reference to their common possessions. 4'l. The two primary factors in our industrial existence are land and power; land to produce food, the materials for clothing and shelter, and to yield up useful metals and minerals; power to work up the raw products of the land into various forms for the convenient use of mankind. Transportation is sometimes included as n third element of equal importance, but modern transportation depends upon power artilicially produced, and consequently is subordinate to it. There is no prospect of a monopoly of land in America. Both the laws and the social organisation discourage it. But how about the other main factor in modern industry? I low about the control of the sources of power, its production and distribution? Is there any likelihood of a future power monopoly which, by virtue of its overmastering position, will be able to dwarf all other monopolies? At the present time, as nearly as statistics of the subject can tell us, about 30 million horse power is in use in the United States. Of this amount seveneighths, or about 26 million horse-power, is the product of steam-engines— in other words, is derived from coal. Of the remainder three million horse-power is developed by water motors and somewhat loss than one million by gas and oil engines. There is nothing very startling in this showing. Coal, supplying the energy to drive steam engines or dynamos, is by all odds the most important factor in

our production of power. iA man w'hd wants to buy a steam-engine or a dynamo has no difficulty in so doing. Every ounce of power developed by the burning of coal, gas or oil means by so much a lessening of available resources. By no known means can mines or oil-wells be replenished once they are exhausted. The use of gas and oil for

power purposes cannot be extended greatly because of the limitations of the supply and the demands upon it for illuminating purposes. The production of coal in 1907 was 450,000,000 tons. The production doubles approximately every ten years. That rate of progression has been maintained pretty steadily since the beginning of the industry. Obviously it cannot go on indefinitely until the supply is exhausted. Rapidly-increasing prices will act as a constant brake on the tendency to use more coal. While it is difficult, therefore, to determine when the nation’s coal supply will be entirely used up (that is, the bituminous supply; anthracite will be exhausted in 60 or 70 years at the present rate of use), it is possible to name with reasonable accuracy a date beyond which the increase in the use of coal cannot continue. Men of expert knowledge have fixed upon 150 years as the outside limit of the period of increasing consumption. The prospect would be alarming if there were in sight no substitute for coal as a source of power. Fortunately there is a substitute in plain sight. It exists in the water-courses of the country, the agency chiefly’ relied upon to turn the wheels of such factories a* existed before the era of the steam-engine. Neglected during the ascendency of steam, it has come into renewed and increasing importance with the rapidly-growing use of electricity for power purposes. The discoveries in electricity, particularly the development of long-distance transmission of electrical power, have removed the one obstacle to the general utilisation of water-power that previously existed. This obstacle was found in the fart that the location of water-courses affording power possibilities were not always satisfactory locations for industrial establishments Now that the power of the waterfall in the form of electricity’ can be taken to the factory, wherever the latter be placed, this objection is overcome. Water power is destined to be the force to replace coal for three reasons: First, it is the only substitute available. The other reasons, all hough negligible before the imperative* force of the preceding one, are that it is economical and adaptable, and that it does not become exhausted with use. As water is the only substitute for coal within sight, it becomes interesting to take stock of the volume of power which streams can yield. There are various ways of estimating this. The annual fall of rain upon the surface of the United States is about two hundred billion cubic fc(*t, a figure which sounds (ronsideraldy impressive. This 'rainfall ultimately’ will be the source of all power, just as it is now one of the vital resources without which land would bo worthless and life upon it impossible. If all the energy of the falling water throughout the country could be utilised

it would amount to three hundred million horse-power. Tfhir*, of course, is impossible in the present scale of knowledge and invention, and this figure for present purposes is wholly theoretical. According to the most careful estimate ♦hat has been made, the volume of water power immediately available is 30,000,000 horse-power, or just about sufficient for the present mechanical needs of the country. By the extensive development of streams through the use of dams and reservoirs it is calculated that this amount might be increased ultimately to one hundred and fifty million horsepower.

We have, then, the two figures of thirty million and one hundred and fifty million horse-power, the former being the water-power available, and tin* latter that which will be made available ultimately by the adoption of measures for conserving the flow of streams and waterfalls.

Let us assume for the moment that the power represented by the former of these two figures is brought under the control of a single combination of brains and capital. What a magnificent domain its directors will rule over! Every light that illuminates street or dwelling, (*very yard of cloth that is woven, every factory wheel that turns, every furnace that glows, will yield them tribute. They need not fear the competition of coal, for its price will be steadily rising as it becomes more and more scarce and as the difficulty’ of mining it increases. Even the possible development of other waterpower will not affect them, for the cost of such power, developed under relatively unfavourable conditions, will be so much greater as to afford them a safe and handsome margin of profit. They will occupy the richest, most secure and most

imperial industrial kingdom ever erected. It is not in human nature to possess this sort, of command and to refrain from its exercise. Holding the mastery of the industries of the land within their control, they Will see to it that these insura te with their authority. It is industries reward them on a 'Stale rommenthe cost of every single operation entering into every form of industrial activity will be greatly increased. Who will foot the enormous bills of the power trust? You and I and our neighbours who arc so cheerfully giving

away the invaluable ownership of oufl waterfalls and streams. We are all con] Burners of power, and with every year} that passes we become more and mor6 dependent upon it. The electric current) that lights our homes, the ear than whirls us through the city’ street, out, morning paper thrown off by a press, our shoes and clothes, and thef wheels of our watches, the elevators that! whisk us up and down towering sky 4 scrapers, the kitchen appliances that prepare our meals—everything that we use, from the product of the greatest establishment to the electric flatiron witlil which the laundress makes our linen 1 presentable—all represent the expenditure of power. If the manufacturer ofj hairpins or the manufacturer of electrio light finds that he must pay more foil his power he will charge more for his 4 product, and we, the consumers, who; are encouraging the process of monopolistic control of the only available soured of power, will pay the toll in a thousand added expenditures. Great plants for the conversion of the! energy of falling water into the of electricity and its transformation from this form into boots and shoes and) breakfast foods and printed pages have been erected at Niagara, and in scores o£ other favoured spots. Not only this, but all over the country, wherever waterfalls or sharp descents make it easy tof utilise the power of streams, enterprising business men have organised companies and acquired exclusive rights to develop this power. Nine-tenths of these concessions have' not been developed. Many of them have! been obtained for speculative purposes. It has been easy to secure- such grantsPractically’ no expense has been involved! beyond that of taking out a charter and

purchasing or holding by option a small amount of land. Congress, or the State Government, in casts where - the latter has exercised control, has b: on only’ too willing to give concessions and to make repeated extensions of the period for unde r tak i ng dev el (> pm en t. Lt happens that California is one of the richest of all the States in the Union in its water power resources. It is estimated that the streams flowing down the western slopes of the Sierras in the northern parts of the State capable of developing five million horse*

power of electric energy. It happens Also that California is deficient in coal. s’he industrial progress of the State must depend upon the utilisation of waterpower. The value of the water-power is enhanced by the high price of coal, and Jlhe energy of a mountain stream is valjioct by California’s engineers at 200 dollars a year for each horse-power. This makes the power of these Sierra waterJcbprses worth the trilling figure of 1,000,1)00,000 dollars a year. This is a sum worth having, the more so if it may be had for the asking, and there have not (been lacking mon of sufficient acumen to jask for it. Consequently California has Reached the second stage on the road to Jthe creation of a giant power trust while (many other States are still in the first stage.

Already some 250,000 horse-power is being developed from the rivers of northjprn California, and is being used in driving trolley-cars, in mining, and in turning the wheels of factories. Some of the (most remarkable achievements in the jong-distanee transmission of electric (power are to be found in this Pacific (State. Water-power development has proved highly profitable, and InC promoition of power companies has won fortunes for men who were early in the field. As a consequence of this profitable activity there has been in the past few years n great rush to secure power concessions. (Some few of these were sought with a yiew to actual development by those who '(obtained the grants. Others represent forehanded efforts on the part of existing companies to shut off the possibility of competition. The great majority are speculative enterprises, pure and simple. .Concessions are obtained and are kept alivq for the purpose of selling cut at a (big profit. The opportunity for big profits from such sales will come when companies already engaged in selling power want to increase their production or to prevent rivals from coining into the field, just as has happened many times over in every part of the country with street <jar franchises or other forms of public (property handed to enterprising corporation builders on a silver platter. It is good business for the concession holders and company promoters! It is good policy bn the part of the American public to encourage this tendency to the unregulated- command of their most valuable natural resource?

Perhaps this threatened concentration •of water-power ownership is not really’ thrfeatened, a t all. .Possibly the . .future power trust is only a myth. If the control of valuable-water-powers is given freely and without . restrictions to anybody who asks for it, won’t , this in it* self insure competition? If there is a multitude of concession-holders, won’t this very fact protect the interests of the general public, who, of necessity, must be power ecu timers? The experience of California contains the answer to these questions.

The significant fact for us is that almost four-fifths of the water-power that can be developed commercially in California has passed irrevocably from the ownership of the public to the ownership of corporations. Tha policy that permits this inevitably leads to the creation of monopoly, to placing

the public interests last instead of foremost. The meat of the cocoanut is al! found in the one word perpetual. The grants that have been made every year are permanent. They run endlessly. They are outright gifts. Moreover, they are gifts that will make their corporation holders richer and their original owner.;, .the people, poorer with each passing year. Every ton of coal that is taken out of American mines increases the value of every ounce of energy in every waterfall in the country. The strength of the monopolistic control of the future power resources of the country, which is inevitable. if the present policy is continued, rests upon this one feature of permanent control. Have we any right to give away public property, which is certain to increase in value with every year,

which involves the future absolute control of every industry in th? country, which belongs as much, or mt re, to generations of Americans as yet unborn us to ub of the present generation? There is another way. Among the great needs of the country are the improvement of navigable waterways, re-

forestation to provide for a future supply ot timber, prevent floods and preserve the flow of streams, irrigation to bring fertility to arid lands, the conservation of the power of water-courses by dams, canals and reservoirs. These projects call for enormous expenditures. Most of the money required, or at least a very great part of it, can be obtained by exacting reasonable compensation for the use of our tremendously valuable waterpower privileges. At the same time the interests of future generations can be protected by limiting the life of such grants. This is the way any one of us would manage the matter if it concerned his private possessions. Is it impossible to apply ordinary business sense to the management of property that we hold in common? It is not often that we have the opportunity to deal with a trust in its earliest formative stages. Most industrial combinations are full fledged before they receive any particular attention. Nor is it often that the coming of a trust can be foreseen so far in advance as in this case, or that the means of dealing with it to the benefit of all are so absolutely in t’ne hands of the people’s lawmakers.