deterrent to monopolistic combinations," its execution would be more productive of harm than of good. True, the "convicted trust," as a punishment for its wrong-doing, would be obliged to face foreign competition with all the attendant losses, but the infliction of the penalty would not stop there. It would be inflicted upon the innocent, independent, non-trust, American competitor

with the same force and effect as it would be visited upon the criminal. The "trust," possessing resources larger than those of its American competitors, would be better able to withstand the competition of foreign rivals and while it might be crippled in its future business life, it might not be destroyed as would possibly be the case with its financially weaker home competitors. The proposed law would, in its execution, not only punish the guilty, but, at the same time, would bankrupt the innocent who should enjoy the protection of the government in their efforts to bring about competition with the "trust," thereby preventing the "trust" from charging exorbitant prices for its product.

A TWOFOLD PROBLEM

That a giant corporation has a "Dr. Jekyll and Mr. Hyde" character, is now fully recognized, and the mission of the student of economics is to devise a plan which will preserve the good and

valuable features of corporate combination and at the same time eliminate the evils existing in corporate organization and corporate management.

Every corporation or consolidation of corporations into one corporate body is not a "trust.” Every aggregation of capital is not a public danger. Corporations are no better and no worse than the individuals who manage them. Some corporations are honest, honorable, and lawabiding, and are entitled to the same protection, support, and encouragement of the laws that are given to the upright individual citizen. The corporate charter is only a cloak covering the men upon whom it rests.

Would it be practicable to destroy corporations, thereby closing the doors of ninety per cent. of our factories, turning out of employment thousands of men, tying up billions of capital, stopping production, creating high prices for the merchandise in existence, and bringing upon our country a panic, the severity and magnitude of which the world has never known? The giant corporation is the logical outcome of the industrial development of the world; and, as such, it may be destroyed in form but not in essence.

It is useless to make our laws more drastic and to try in that way to break up the great combinations now existing and to prevent the formation of others. Business life cannot be forced back to the conditions prevailing half a century ago. No

body of men can legislate us back to the partnership days, or to the individualistic method of doing business any more than they can legislate us back to the stage-coach. The world of industry always marches forward. The combination idea has come to stay, law or no law.

The situation must be faced as it exists in the United States at the present time. Economic conditions must be recognized and industrial movements taken into account, while the underlying principles of commercial life must not be forgotten.

Since many combinations have advanced the prices of the articles they produce or control to so high a figure as to wrong the people, and since stock-watering and selfish ruinous financiering have become the common attributes of corporate management, and since legal secrecy protects the illegal, fraudulent, and unholy dealings of the corporation with the public, it is imperative that this new force which stands merely for the latest stage of industrial growth should be controlled by law.

II

STATE OR FEDERAL CONTROL

STATE CONTROL.-The bidding of the States for the chartering of corporations has created a body of laws which confer great powers on those who are willing to pay a small incorporation tax in exchange for such privileges. So little supervision and control are now exercised by the State governments that corporations are able, through the secrecy which surrounds their actions, to override the law and to some extent to be creatures subject only to the wishes and desires of the corporate

managers.

Mr. James B. Dill, in an address before the Seminary in Economics of Harvard University, March 10, 1903, summarized very clearly one of the grave evils of State control of corporations engaged in interstate trade:

"We find some charter-granting States legislating for the following classes of corporations:

"1. Corporations organized primarily for the purpose of doing business outside the State.

"2. Corporations organized for the purpose of

doing without the State business which is forbidden within the State which created them.

"3. Those formed for the purpose of doing their business as an entity outside the State, being specifically forbidden by their charters from operating or carrying on such business in the State which created them.

4. For the express purpose of doing business in evasion, sometimes in violation, of the law of a State into which they purpose to go and operate." 1

The record of the past few years has vindicated the truth of the statement contained in the Report of the Committee on the Judiciary, referred to the House of Representatives on May 25, 1900:

"If a State has within its limits a gigantic trust or monopoly, while it may and in some cases has limited its powers or annulled its charter, such State is not apt to destroy it by amending or annulling its charter, or imposing restrictions. So long as such monopoly employs thousands of hands, receives and pays out millions of dollars to the people of the State, and pays thousands of dollars in taxes into the State and local treasuries mainly drawn from the people of other States, and withal exerts vast political power, the State is liable to act on the theory, true or false, that the benefits derived from the existence of such monopoly within her borders are far greater than the injury done. The other States whose people feed this giant octopus, the tentacles of which sap

American Journal of Sociology, vol. ix., p. 222.