American business principles.

President Schwab, of

the United States Steel Corporation, told the American Industrial Commission :

"It is quite true that export prices are made at a very much lower rate than those here; but there is no one who has been a manufacturer for any length of time who will deny that the reason he sold, even at a loss, was to run his works full and steady. We would rather be sure of running our works full at a known loss than not to run them at all."

...

(6) Markets.-Something has already been said about the inability of the trusts to control markets, partly owing to their general lack of control over raw materials, partly owing to the impossibility of influencing great social or political movements. A famine in India, a rebellion in China, are out of our sphere; and the textile amalgamations, with all their millions, have had to suffer from the loss of trade which such events cause. Yet they are really stronger than the separate firms. If they make losses, they are parcelled out among thousands of shareholders, and the combination can go on, so long as it can pay its debenture-holders and avoid a debit balance, when its individual constituents would have been driven into bankruptcy. To this, of course, there is a limit, as the Yorkshire Woolcombers found. Their case, however, is a very peculiar one. The sharp rise in merinos from 21d. per pound in 1898 to 33 d. in 1899 stifled demand, and was followed by an equally sharp fall to 191d. in 1900. But manufacturers were suspicious, and the heavy influx of crossbred wools shorn from sheep raised chiefly for their mutton thoroughly disorganized the market. The Australian drought caused the price of fine wools to rise, but coarse cross-breds fell from 121⁄2d. in 1899 to 6hd. in 1901. At last, with the wet summer of last

year, manufacturers found the opportunity of turning to account the cheap cross-bred wools, causing an increase in price of from 40 to 55 per cent. The future of the wool trade seems to depend upon the extent to which these cheap wools can be utilized, but the Woolcombers have not been able to profit so far by the change in trade, because, according to Mr. Ayrton, the top-makers in the Association have not been loyal, but have sent their wools to be combed by outside firms.

Hostile tariffs have done great injury to the Bradford trades and to the United Alkali Company; but here, again, a combination with a large working capital has an advantage, for it can set up works inside a foreign country, and profit by the tariff. Thus, for example, J. & P. Coats have mills in the United States, the Fine Cotton Spinners have a branch in France, the Wall Paper Manufacturers have recently bought an interest in a German company.

Lastly, when we come to consider the best means of fighting foreign competition in the home and in neutral markets, we find a prevalent conviction that the only effective means is combination among homeproducers. To this idea we owe the spread of the movement in the iron and steel industries; and the Imperial Tobacco Company was the direct answer to the assault of the American Tobacco Trust. The result in both cases is convincing. The English company finally won in the tobacco war because it showed that it was able and ready to carry the fight into the enemy's territory. The Wall Paper Manufacturers, again, by their economies in production, have put their home markets beyond reach of attack. And the Associated Cement Manufacturers, though they could not keep up market rates to a paying level against the mass of cement thrown on the market at cut-throat prices by

German firms suffering from over-production at home, still were strong enough to cut their losses by limiting their output and maintaining their own prices.

The future of the trusts as business organizations depends entirely on the manner in which they solve the problem of management. With good management they ought to be able, according to every indication of to-day, to dominate the home market in all large industries, and to make effective headway against foreign competition. But the end of the tobacco war, as well as the formation of the Atlantic shipping combine, shows us that commercial strife may produce a new portent, the international trust. Whether this will make for international solidarity and the millenium, or whether it means the creation of great industrial monopolies outside of and overshadowing mere political organizations, is a question we cannot at present solve. The development will require careful watching, and, if the latter alternative proves the correct one, probably drastic treatment. Sir Robert Giffen would lull us to comfortable slumber by the dictum that there is nothing to fear from trusts in this country. It may be so, but maybe also, "when the sleeper wakes" he will find it different.

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