THE TRUST PROBLEM RESTUDIED 65
In the second place, the wreck of a trust does not deter the "promoters" from continuing their efforts to "organize" the industry. Indeed, the beautiful theory that trusts are created to economize, cheapen production, and foster trade, cannot easily be reconciled with the notorious fact that financiers, who know nothing about manufactures or trade, are primarily responsible for the greater number of the existing trusts. The outside pro- moter cares nothing for the industry he "organizes." His inter- est ceases when he has received his fat commission and has "unloaded" his shares of stock on the public. He is then ready for further adventures in fields and pastures new. There are, undoubtedly, captains of industry among us who create oppor- tunities and wealth, find new outlets, and benefit both capital and labor. But there are also buccaneers of industry, and there is a general impression that the latter have had too much to do with this business of trust formation. 1 Had it been left to the manufacturers themselves, to the play of no other motive than economy or superior efficiency, the process of industrial trans- trust usually at double its value, taking half cash (subscribed by a confident public) and the balance in shares; the cash portion of the purchase price representing more than the value of the business sold, so that the value of the shares is, in fact, imma- terial."
1 President James J. Hill said in a recent speech that many combinations had been created " not for the purpose of manufacturing any public commodity in the first place, but for the purpose of selling sheaves of printed securities, which represent nothing more than good will and prospective profits to the promoters." Commenting on this remark, the New York Journal of Commerce, a conservative, intelligent trade newspaper, wrote : "A recent computation of the securities of a score of industrials showed that what purported on their face to be worth nearly a billion and a quarter dollars were not worth half a billion dollars according to the quotations of the market. It is impossible to say how much loss is represented here ; many of these securities were floated at much below their face. But there have been very considerable losses in the shrinkage of these securities which represent pure inflation, and there must be much greater losses when there comes a period of bad business. The decline of stocks acts sympathetically in depressing other stocks, and losses in dealings in stocks affect the means of investment and confidence in even the best of securities. For these reasons we have from the first greatly regretted the creation of these securities, but for -which most of the combinations would probably not have been formed, as nearly every effort to form a combination on the basis of the existing capitalization of the concerns to be combined was abandoned." In view of such testimony as this we are entitled to ask for a bill of particulars from anyone who talks glibly about the wonderful " economies " of the trusts.
