Chapter II - Government Meddling with Big Business

CHAPTER II GOVERNMENT MEDDLING WITH BIG BUSINESS IN 1912 I wrote a short book, "Big Business and Government" -in which I considered, case by case, our local and national government meddling with various large industries; and showed, or predicted, its mischievous futility. I mention the book only to continue those studies down to date, and to show how completely another ten years' experience confirms predictions. First came the story of the so-called "Powder Trust"; the DuPont DeNemours Powder Co. My chapter of 1912 on this great concern, up to that time unmolested by government attack, ended as follows : "Now it has but one genuine competitor in the New York market. Powder (salt petre) sells at $2.60 per keg, which should be fairly profitable; and the tariff keeps out foreigners.-If the protective tariff on explosives were abandoned and the Sherman law were repealed, competition would come quickly and to stay."

Well; the tariff and the Sherman Law were not repealed-the foreigners are still out in the cold. However, President Taft's Attorney General secured that same year (1912) a decree dissolving the DuPont DeNemours Company, as a combination in restraint of trade, into three competing groups of factories, respectively called DuPont DeN emours, Hercules, and Atlas Powder companies-each of which later took in several competitors. Government here did [ 4 ] Government Meddling with Big Business its best in the way of "Trust Busting." Now what were the consequences to the rich devils who created the Trust, to the trade _generally, and to prices of powder to the public? Here is the answer. Nothing whatever was accomplished, as far as the recotds show; except to load lawyers' bills both on the Trust and the U. S. Treasury. The shares of the old DuPont DeNemours Company, par value $45,500,000, were worth at market values of 1912 $44,7°0,000. Those of the three new companies into which it was broken up, par value $161,638,000, are now worth, at market of May, 1922, $152,026,000.

Meantime, the new DuPont DeNemours Company has paid since 1915 in dividends an aggregate of 251 per cent., and the Hercules and Atlas have paid 8 per cent. dividends annually on their shares from the be ginning. Certainly the breakup did not hurt the rich devils much ; though it effectually proved that their political power was purely imaginary. What effect, then, did the dissolution have upon the trade, upon competition? It actually created three large and powerful combinations, each with numerous producing plants scattered at strategic distributing points through the country, where for merly one controlled them all. Evidently, the com petition of the three amongst themselves, if genuine and vigorous, should have kept prices down to a level so low as to discourage the building of new indepen dent competing plants-necessarily smaller and weaker at the outset than these formidable old giants.

But what has been the case? The answer is that there are to-day no fewer than 35 outside competing manufacturers; many of them local, but say half of them possible competitors in the New York region, where in 1912 were but one or two. Doubtless they thus multiplied under the stimulus of enormous war [ 5 ] Too Much Government-Too Much Taxation prices for explosives. But what earthly difference could the government attack upon, and breakup of, the old .DuPont Company possibly have made either in war-prices or new competition, unless to depress the fonner and thus discourage the latter ? Yet the market record shows that it did neither one nor the other; but was absolutely barren and futile! Lastly, what effect did the government suit vs. the DuPont Company have on prices to the public for whose protection from robbery by a trust the whole attack was engineered-let us hope in good faith? Using the price of ordinary blasting (soda) powder as typical of the fluctuations of all explosives in the market, here is what actually happened: Soda powder sold, f. o. b. factory, as follows: 1909 $1.20 1912 $1.2 5 19 13 $1.2 5 1914 $1.25 1915 $1.30 1916 $1.35 1917 $1.85 1918 $2.15 1919 $1.85 1920 $2.45 1921 $2.25 1922 $2.10 Can the reader detect with a microscope the least reaction favorable to the consumer, by reason of the breakup of 1912; or indeed any movement of prices whatever, but those dictated by the law of supply arid demand?

If he cannot (as I cannot), can he then see any use whatever in the government war on the DuPont Company? The most conspicuous single phenomenon of the trade in explosives since 1912 certainly was the enormous efficiency displayed by that old company and its children, the Hercules and Atlas, in helping to win the World War. If President Wilson's Attorney General had later weakened these great concerns as planned, what could they or the United States have done, in comparison with what they did do, to smash the German war machine? The Attorney [ 6 ] Government Meddling with Big Business General will hardly point, in reply, to his Govern ... ment's useless expenditure of over $100,000,000 upon the "Nitro" and "Muscle Shoals" projects; neither of which ever produced a pound of anything wherewith to blast the Kaiser! It was indeed lucky for his Government that its effort to cripple the power of the great DuPont Company failed so completely! Not only did it and its offspring supply explosives, but it developed the numerous byproducts so closely connected with the recovery of nitrates from coal distillation; among them many much-needed aniline dyes. Thanks notably to the DuPonts, among others, we are not far from independence of German dyemakers.

The Bell Telephone System. As I noted in my study of this great organization, in 1912, its states manship-to use a word befitting its record-has been extraordinary. It is justly regarded by stu dents of such things as the model public-service cor poration of the whole world. It is hard to speak of it without almost extravagant praise. Its policy and performance have been an open book for all men to read for fully twenty years. Its Annual Reports are treatises on monopoly and public service that might be textbooks in our colleges. Its avowed purpose and consistent practice have been to bring the telephone facilities of the United States, as fast and as far as lawfully possible, into one fiscal and operative control; in order to give the broadest and best service at the lowest cost; always consistent, however, with, such dividends on its shar'es and re serves for replacements, as will insure their high and stable market value; with easy sale of the constant issues of new securities required by its rapid growth.

The average gross receipts per telephone came to the very reasonable sum of $4°.5° for the year [ 7 ] Too Much Government-Too Much Taxation 1917. Its shares have paid 8 per cent. for years and now sell for about 129. They have never been "watered," and at the end of 1920 had reached the huge total of $512,000,000. The bonds on the system then totaled $546,000,000; the whole $1,058,000,000 of stock and bonds having been paid for in cash or its equivalent. The plant was worth $1,216,000,000 and served 11,796,000 stations, han dling nearly 31,000,000 messages daily. No more staggering proof of the cheapness and value of the service rendered could he asked for than the mere record of this colossal growth; far, far surpassing that of government-owned systems abroad, and including as compiled by the Company, on January I, 1913, about sixty-four per cent. of all the telephones in the world. This record particularly impresses me, because 1 myself had happened to be in active charge of the business at Chicago during its first eight years. When 1 took hold in 1879, 1 was instructed to obtain sub scriptions for the stock of a Chicago telephone ex change company capitalized at $loo,oOQ-instruc tions very soon countermanded. Meantime,·1 had succeeded in getting the desired subscriptions on a prospectus written by myself, in which 1 said it was conservative to figure on enrolling at least 1,000 telephone subscribers in the course of time, at $5.00 per month per telephone. But before 1 left the busi ness, in 1887, there were in Chicago over 8,000 sub scribers averaging about $10.00 per month; while in 1920 ther~ were 700,000 telephones connected, aver aging only a little over $4.00 per month. What government ever did anything for its people compar able to the above in the way of telephone service?

Evidently that prospectus of 1879 was not exag gerated; and since then my prediction of 1912 that [ 8 ] Governmen.tMeddling with Big Business future telephone competition would not hurt has proved entirely correct. The Bell system grows and grows. Independent exchanges, though several thou sand strong, .do not develop greatly, nor seriously rival the great Bell system as a broad national utility. Neither has any very general popular hos tility to the Bell expansion arisen, nor has it shown the least political. power. All the same, the Wilson Administration seized upon the war emergency to procure from Congress an Act under which it took over the telephones, tele graphs, and cables in 1918, for no reason apparent to the looker on-certainly as far as the telephone was concerned-other than politics; that is to say, to add another huge unit to that colossal bureaucracy, which was perhaps a political ideal, perhaps a war measure, perhaps a party game, of those in power at Washington. .

Fortunately for the Bell stockholders, the war ended, and the unmistakable revolt of the country against overgrowth of bureaucracy stopped the whole Administration programme. All wires were returned to their owners by order of Congress, July 31,1919. The net effect upon the telephone stock holders meantime had not been very great; as their dividends were practically guaranteed. As to the business, Postmaster General Burleson, much to his credit, was acute enough to realize its masterly and unselfish management up to the moment of govern ment control, and to leave it practically undisturbed. No changein executives or in methods was made by Mr. Burleson. Such deterioration as there was in service was akin to and much the same as the war deterioration experienced in all service, public or private-which even yet continues-by reason of loss of morale among wage-workers. Telephone [91 .

Too Much Government-Too Much Taxation construction and repair work also were held back by war pressure upon factory facilities; the Government could do little to relieve it. Cost and prices of telephone service went up under Federal control about twenty per cent.; the latter, however, not more than would have been imperative to cover rising wages, etc., if the Telephone Company had remained in possession of the plant; and not nearly as soon. The Government therefore failed to earn the compen sation guaranteed the Telephone Company, on the basis of its former earnings, by about a million dollars a month. Not long before the property was returned by the Government to private operation, to overcome this loss, the Government advanced telephone rates; by which the Telephone Company benefited when it took control again, for the last five months of 1919. In fine, the stockholders lost nothing; the Govern ment lost some 12 million dollars; the public pays more for service; and the employees draw more for wages. These last increases probably would have come, anyway.

But-as in the case of the DuPont Powder Co. -just what good was accomplished by the Govern ment's breaking into the telephone business; and losing some millions of the taxpayers' money, without any other visible effect? Even politically, the play was a first-class blunder; for it had no possible excuse. The Western Union Telegraph Company. The American Telephone & Telegraph Company-us ually called "The Bell Telephone"-had bought a controlling interest in the stock of the Western Union Telegraph Company during 1910. The late Theo dore N. Vail, then president of the Bell Company, publicly announced its policy in making the purchase substantially as follows: "One telegraph and tele phone system working together under one control, [ 10] Government Meddling with Big Business on the broad lines of the. greatest benefit to the public." He proceeded to co-operate the two prop erties with general popular approval and great financial success. New and improved services were introduced; and the Telegraph Company's gross revenues rose in three years 45 per cent., largely by reason of increased use of the lines. The telephone was used as a feeder and distributor of telegraph ser vice, to the great convenience of the public.

Nevertheless, in 1913, the Wilson Administration -for no very evident reason but that general dis trust of the workings of actually free big business, which the President had intimated in his essay called "The New Freedom"-was about to attack the relations of the two companies in the courts. The Bell Company with characteristic breadth and statesmanship voluntarily, if reluctantly, sold its Western Union shares at a considerable loss; and did other things desired by the Administration, in the way of giving both to competing telephone and telegraph companies the right of service over its own lines for their patrons. The Western Union shares were distributed in the open market, so as to end all connection with the Bell interests. Later on, however, in 1918, again without other apparent reason than politics, the Wilson Administra tion took over the Western Union, with all other telegraph and telephone companies, pending the war.

As far as the Department· of Commerce reports the results of these. government interferences in the telegraph business (Statistical Abstract, 1920, Table 221) the effect of the first dissolving of the Bell af filiation hardly showed in 1914. In 1915, 1916, and 1917, the Western Union, which had left Bell Tele phone control in better physical and financial con dition than for years before, prospered hugely, like rII ] Too Much Government-Too Much Taxation all other big business in the country, by war activity and rise of rates. But in 1918, when the Government took over the wires, wages and expenses jumped so much faster still that earnings by $9,5°0,000 greater than for 1917 yielded $4,5°0,000 less profit. West ern Union earnings and stock values fluctuated as follows: 104,000,000 41,700,000 45,800,000 46,300,000 51,200,000 61,9° 0,000 77,000,000 54,300,000 55,300,000 120,000,000 Year Old ownership 1907 Bell ownership . 1912 Do 1913 Divorced ownership 1914.

Do ~ar 1915Do Earn.. 1916 Do ings 1917 , 'f.ages 1918 Gov t Op n & Rates. 1919 Do Increase4 1920 Ret'd to own's Bad times 1921 Do Net ;, 5,675,181 5,674,000 4,572,000 6,7°9,000 11,503,000 14,894,000 .15,697,000 :12,297,000 13,639,000 14,635,000 -11,269,000 Gross Price of Stock 7° 79 65 59 73 9582 86 87 85 85 Under government operation, however, service to the public ran down fast; hundreds of local tele graph offices were closed; deliveries were made by telephone, or very tardily by messenger. The average price of telegrams had long before risen from its minimum of 30.1 cents in 1898 to 38.8 in 191l and in the next three years rose to over 50 cents, though largely because of general introduction of longer messages, the so-called Day and Night Letters. After the divorce from the Telephone Com pany in 1914, during the war prices gradually ad... vanced to average 58 cents in 1917, 59 cents in 1918 and 1919; and under the Government, to an average of 73 cents in 1920; since falling to 70 cents.

Once again it seems clear to the student that no perceptible benefit to anybody came from govern"' ment operation; nor, if we can judge from the tele[ 12} Too Much Government-Too Much Taxation The U. S. Steel Corporation. Next in my 1912 review came the so-called "Steel Trust"-the great est of all corporations. It was all along an obvious mark for perfectly useless government attack; though the facts invited almost sure defeat and huge waste of the taxpayers' money; with advantage to nobody on earth except the lawyers hired by the Attorney General. It is worth while to quote here my study of 1912 in support of this last remark: "As everyone knows, the Steel Corporation has been managed for the most part with extraordinary breadth and skill. It was freely prophesied at first by the wise men in the trade that, having bought out most of the brainy men who had built up its constituent units, it would fall to pieces of its own bulk and weight. On the contrary, its present organization, largely of new men, is wonderfully effective. But it is handicapped by its very size. Its capitalization is so huge, and its trade so great, that though entirely able to do business at starvation prices it cannot afford to do so. As I write, for instance (December 5, 191 I), it is more than doubtful whether it is earning divi dends on its common stock at present low-record prices.

It has averaged at the prices which have heretofore pre vailed a profit of about 15 per cent. on its gross turnover; too large a profit for security. Competition was bound to develop and increase, as it has already done, it seems to me. Though abundantly able to smash its weaker com petitors by cutting prices, yet for the sake of its common stock dividends, and also probably for political reasons, it has not cared until now to do so. Consequently, it has for years held up the umbrella of moderately remunerative, steady prices over its competitors and customers alike, minimizing both the extremes of rise and fall. This steadying of price has been immensely profitable to the Corporation itself, but yet more so to its constantly more numerous and powerful competitors. Jones & Laughlin, [ 14 ] Government Meddling with Big Business Cambria, Lackawanna, Bethlehem, Republic and other big concerns, have increased their trade relatively far faster than has the Steel Corporation;so that, though it also has greatly grown, its proportion of the trade is steadily de creasing.

"Of late the Independents have crowded the Corporation out from under its own umbrella, which it has consequently closed, and all are out in the wet; a metaphorical way of saying that the Trust has stopped maintaining prices, while the others got the business, and is now out after its share of the orders at cut prices, with excellent results to itself and the trade. If the Independents were not so big, it would now be in order for them, like the Independ ent Tobacco men, to set up a howl that Congress must lay the heavy hand of Government upon the Steel magnates and stop their'infernal price-cutting. Meantime, we hear no more of the much-denounced Gary Dinners. "Such are the results at home. Abroad, if we may believe an English authority, who writes in the Decem ber, 191 I, Atlantic Monthly ('A British View of the United States Steel Corporation,' T. Good), its over-capital ization and consequent enforced high wages and manu facturing costs have shut it and the United States gener ally out of the foreign market for steel, which has gone to English and German manufacturers, as shown by the following table: TONNAGE OF STEEL SHIPPED TO OTHER COUNTRIES United States 1,154,000 1,535,000 England 3,213,000 4,594,000 Germany 838,000 4,868,000 Mr. Good points to our successful start upon invasion of foreign markets in 1898 as an indication of what might have been done later but for the Steel Trust; and says that cost of pig iron and rails in the United States was far [ 15 ] Too Much Government-Too Much Taxation below foreign cost in 1898, but since has risen from $5.00 to $8.00 per ton here, while substantially unchanged there. Consequently, he says, with idle capacity here, nearly sufficient to supply the whole foreign demand, we take but an eighth of it; and he prophesies that the Trust will not be able to earn its common stock dividends.

"Well, we shall see. Costs are said to be still as low or lower here than abroad, and the Trust is again aggres sively after export trade. Prices, too, are said to be lower here than abroad, so that it is not necessary to sell there cheaper than at home; a process always provoking political attacks on our tariff-protected Trusts. The time seems ripe to drop protection like a worn-out garment, and leave our husky steel industry to take care of itself at home and abroad. The volume of trade resulting to the Steel Cor poration would, I imagine, take care of its Common Dividends, even at the low prices for metal necessarily thereby established for all time. For the Common Shares are no longer 'watered'; but have been thickened up with undivided earnings, and boiled down by concentration of enormous resources into a good substantial porridge, use ful to sustain financial and industrial life.

"The moral of the story of this Trust, the greatest of all corporations, is that great size, instead of being proof against competition, merely demands and develops a larger scale of warfare; that inflated capitalization cannot command inflated prices, but on the contrary is a heavy handicap in price warfare, being necessarily and at all times a temptation to hold up the umbrella of artificially high prices, to the holder's own detriment and the benefit of competitors." The above excerpt commenced with the words "as everyone knows." The Steel Corporation is so big that its operations are necessarily common talk. "The city that is set ona hill cannot be hid," says the Bible. Especially must just wh(lt it was doing have been known to the Taft Administration, which [ 16] Government Meddling with Big Business started suit against the "Steel Trust" at the end of October, 191 I. For the Roosevelt Administration, in the person of Jas. R. Garfield, Commissioner of the then new Department of Corporations (an instru ment of the "Roosevelt Policies") had spent some two years, from 1905 on, in investigating the Steel Corporation, and had reported to the President that he found nothing wrong. In 1907 Roosevelt him self was consulted in advance, and with Dutch common sense approved the buying of the Tennessee Coal and Iron Co. by the Steel Corporation-in order to save a great New York Trust Company, and resulting disaster, during the panic of that year. By and by President Taft came in; and his Commissioner of Corporations, Herbert Knox Smith, who suc ceeded Garfield and inherited this investigation, finished it, and reported to Mr. Taft, criticising mainly two things~ to wit: original over-ca pital ization, and the "Hill ore-leases." Mr. Smith's Report was not put in, however, until after the Democratic majority of the House of Representa tives at Washington had ordered a Gongressional in vestigation of that Republican pet, the Steel Trust presumably as ammunition for the coming Presi dential campaign. The investigating (or Stanley) Committee reported to Congress during August, 19lZ-just in time for the elections-the majority (Democratic) report damning the Corporation and all its works, with J. P. Morgan, Gary, et al. as R~pub..

lican robbers of the people~ Meantime, a Republican administration partly spiked this Democratic gun by bringing suit to dissolve the Corporation. More over, the entire investigation was somewhat dis credited by the assertion of one David Lamar, known as the "Wolf of Wall Street," that he had himself originally drawn the Stanley Resolution for an in-' [ 17 ] Too Much Government-Too Much Taxation vestigation, in order to club the Morgan interests, and had procured its introduction by Stanley! Altogether it was a very pretty mess. Suit was commenced by the Attorney General early in 1912, and dragged along till 1915, when the District Court in a notable decision denied the prayer of the Government for dissolution of the Corporation, and completely absolved it from the charge of monopoly or restraint of trade. Of course the Attorney General appealed, and the appeal was argued, and reargued, in I917-for the Wilson Administration had come in, and the tax payers paid all costs; but the Steel Corporation was just then so useful, and its breakup would have had consequences so disastrous, during the Great War, that the Attorney General asked for a postponement of the appeal, against the efforts of the Corporation to hasten decision. So it was not until the war was over, in 1920, that in final decision the Supreme Court said, "We are unable tosee that the public interest will be served by yielding to the contention of the Gov ernment respecting the dissolution of the Company, or the separation from it of some of its subsidiaries; and we do see in a contrary conclusion a risk of in-jury to the public interest, including a material dis turbance of, and it may be a serious detriment to, the foreign trade."

The government lawyers made Qne dying kick asking the Supreme Court for a rehearing, which was refused; and the great case was irretrievably lost, as well-informed folk were sure it would be. Look back now at my words of 1912. A rank outsider like myself knew as a matter of common knowledge that here was no monopoly or breach of the Sherman Law. The Taft Administration knew it far better than I did. Nothing under the sun but a political [ 18 ] Government Meddling with Big Business "gallery play" induced President Taft to waste the taxpayers' money in worse than useless litigation. If he had not commenced the suit in 191I, President Wilson certainly would have done it later, when it seemed good politics, with the same foreknowledge of its futility. (Note the Wilson Administration prosecutions for" profiteering," just before the cam paign of 1920.) Meantime (to wit, in the years following 1915), when the Steel Corporation, fortified by the decision of the lower court, might develop its business with some confidence-did it use its restored freedom to monopolize or restrain trade, or rob the people by raising prices? No; the vast upheaval of the war shows the Corporation constantly holding back and steadying the upward rush of prices, and putting its great resources whole-heartedly at the service of the very government which was seeking to destroy it.

Precisely the evolution outlined in the last patagraph of my 1912 "moral," quoted above, actually took place. The Corporation's competitors were the free lances in making high prices and huge profits; and they grew greater and greater, though the Cor poration by no means shrank. As I write (May 1 I, 1922) comes the announcement of the purchase of Lackawanna Steel by the Bethlehem Company; and another great merger of Midvale, Inland, Republic, and other large steel works is under negotiation. The "large scale of warfare," which I forecast, is everywhere coming to pass, with its far reach after world trade. * *Since the foregoing 'was written the interference of the Federal Trade Commission with the proposed merger of the Midvale, Republic, Inland, and other so-called independent steel concerns has resulted in its abandon ment. This seems to the writer a particularly characteristicinstance of the stupidity of government regulation. The ground of the Commis sion's objection to the merger was that it tended to reduce competition, [ 19 ] Too Much Government-Too Much Taxation But in the name of common sense (or of "dam ..

foolishness," if you prefer) what on earth have these Democratic and Republican political" gallery plays" accomplished for the relief of the great American people from alleged robbery; or for the punishment of Morgan, Gary, and other alleged steel profiteers? To be sure, the Steel Corporation voluntarily gave up the Hill ore-lease, probably in part because it was condemned by the Knox and Stanley Reports -but also, the wise men say, because it was burdened with excessive royalties. Otherwise the big Corporation went on as usual. It continued to take more and more of its earnings to build up the business than it paid out in dividends on the once watered Common Stock. Up to the end of 1921 it had so reserved some $649,000,000 against $482,000,000 total dividends paid on $508,000,000 of Common Stock in twenty years, thus pretty thoroughly de-watering that stock. The following table gives, year by year, the average price of steel presumably between the concerns to be combined; which undoubtedly was true as far as those companies were concerned. Their aggregate output averaged less than one tenth of the steel production of the United States; so that the competition between themselves could not have been of very great importance to the American people, even in the immediate neighborhood of the mills. However, their reason for combining was not because they competed with each other, but for the advantage which integration into a larger unit, with resulting economies of production and distribution, would afford to the concerns combined in competing with their great and overwhelmingly powerful rival, the lI. S. Steel Corpora tion, and such other greater producers as the Bethlehem and Jones & Laughlin. In other words, the combination would be in very much better competitive position, able to serve the public better and cheaper than the individual concerns composing it have been or will be able to do. The very essence of modern competition is development of production on the very largest scale consistent with physical and market conditions. But, of course, being a governmental institution, and endeavoring to execute a bureaucratic law for the regulation of business, the Federal Trade Com mission is in honor bound to ignore common sense and the advantage of the public. That fact, however, cannot commend its continued existence to the thoughtful citizen.

[ 20] Government Meddling with Big Business billets in open market; the output thereof of the Steel Corporation; the dividends paid on its Common Stock, and the average market value thereof: u. S. STEEL CORPORATION RECORD 1901-1921 94 95 42 68 76 66 31 4 3l o o Dividends A ve~age Market on Com Stock. Pnce of Stock(Common) 39t 381 25 211 34 Tonnage of Billets Price of Steel Year Billets nearest Dollar 1901 $24 14,735,000 1902 3I 13,470,000 1903 28 12,796,000 1904 22 8,4°5,000 1905 24 11,995,000 (Garfield Investigation) 1906 27 13,510,000 1907 29 13,099,000 (Tenn. Coal & Iron Purchase) 1908 26 7,839,000 2 1909 25 13,345,000 2! 1910 25 14,179,000 5l 1911 21 12,750,000 5 (Stanley Com. Report-Smith Report-Government Suit) 1912 22 16,901,000 5 70 1913 26 16,656,000 5 60 1914 20 11,826,000 41 55 1915 22 16,376,000 ° 64 (District Court decided favor Steel Corporation) War Prices , 1916 44 20,9II ,000 7 104 1917 71 20,285,000 16! 108 1918 47 19,583,000 16 . 101 1919 41 17,200,000 6 100 (Supreme Court confirms District Court) Business Boom 1920 58 19,278,000 5 1921 35 10,966,000 5 Dividends of 7% paid all along on Preferred Shares The first, or Garfield, government investigation of the Steel Corporation commenced in 1905; the Tennessee Coal and Iron purchase was approved by Roosevelt in 1907; the Stanley investigation and Knox dissolution suit commenced in 191 I, and the Corporation abandoned the Hill ore-leases in 1912.

The Decision of the U. S. District Court against [ 21 ] Too Much Government-Too Much Taxation the Government came in 1915, and was finally sus tained by the Supreme Court in 1920. It is probable that the price ofD. S. Steel Common would have ranged several points higher in the market but for this suit between 191I, when suit was commenced, and 1915, when the lower court threw out the Government's plea. But the great rise in 1916 was evidently far more due to the war profits that came rolling in than to that decision; as is shown by the subsequent fall of the same stock to 69 in 192I, following the fall of steel billets from $58.00 to $35.00 per ton. Apart from an unimpor tant and transient scare to the stockholders (of whom some 50,000 were working people, employees of the Company) I defy the most rabid collectivist to trace from this table of net results any effect whatever of the determined Government-war on the Steel Cor poration; either in helping the American people by lowering the prices of steel, or in hurting Wall Street by lowering the values of stocks or cutting down dividends.

Yet one, or the other, or both, must have been the sole objectives in this attack; this simply stupid attempt· to nullify the laws of trade! The eminence of the successive leaders in this war fare, and the real or fancied patriotism of their mo tives, make the student hesitate to label the whole business as rotten demagogy. But in my earlier conviction of 1912-still stronger in the light of 1922--;it was just "politics"-no more, no less. Let me end this chapter by quoting the end of my 1912 chapter on certain "Stock Exchange" Trusts, that had come, unlike "Steel," to well-deserved grief: "These three unfortunate ventures do not stand alone. Moody lists, as far back as 1904, no less than forty-eight I 22 ] Government Meddling with Big Business unsuccessful trusts capitalized at 1,132 millions of dollars. I single out the above for illustration here because they were confections of the Morgan, Standard Oil, and Moore parties, one or other-that is, of men of powerful con structive influence and ability, dominant in the so-called Money Trust; and because it is the· fashion to say that these particular men and a few others literally carry the United States in their breeches pockets, and with their enormous money power will set aside the course of trade, reverse all economics, make water run up hill, and the like -unless Congress shall re-enact the once eternal laws of gravity, supply and demand, etc., and bid the world rely for their enforcement on a mixed commission of politicians and reformers.

" Bosh! The fact is--and no candid man who opens his. eyes to the selfish and hard-hearted quotations of the New York Stock Exchange can blink that fact-that every at tempt to evade the inexorable law of the survival of the fittest, by combining the unfit together with the fit, has merely loaded the former on the back of the latter, and weighed down the whole, as Sindbad the Sailor was weighed down by the Old Man of the Sea. In the long run-not so very long, either-the burden has had to be thrown down, the unfit has had to be sloughed off and the fit only retained. For this reformation neither passion nor panic has been needed, nor the wrath of gods and men, nor the might of the people, nor Congress, nor even Mr. La Follette; nothing but the quiet action of the laws of trade and a swing or two of the scythe of Father Time." Standard Oil. I made merely passing reference to the Standard Oil Co. in my book of 1912, not be cause there was not plenty to say, but because its latest breakup, by action of the Governmerit, was then too recent to present the actual results achieved, either for trade, on stock-market prices, or prices of oil.

I did venture the following general conclusions and predictions: . [ 23 ] Too Much Government-Too Much Taxation "Then, too, the magnitude of world trade, too great for any man or set of men to monopolize, is a third and yet more important cause of its division. I do not believe it to be within the bounds of possibility for any concern long to monopolize any large trade. Certainly the evidence be fore us does not justify the extraordinary fear of monopoly which has possessed us all. The late H. H. Rogers said to me not long before his death that the ever-present problem confronting the Standard Oil Company was too much oil. In order to maintain its power to steady production and prices it has to be prepared to put tanks and pipe lines in every new field as fast as it comes in; and be ready to take and pay for the oil. But new fields are con stantly developing, not only in North America, but all over the world. In spite of the Standard's enormous capital and perfect organization, competition is develop ing and will more and more develop here at home; it has plenty of foreign competition already. There is no protective duty against oil coming from abroad; and our home market has long been protected only by the match less efficiency of the American refiners-unless perhaps there may exist ~ecret agreements with the great foreign producers to stay out of our market, which I have never heard said. Anyhow, such agreements always break down when times are dull and trade scarce. Even the Standard Oil is not big enough to do all the oil trade of the world.

Competition is bound to increase; and the Standard's management, in order, like Carnegie, to keep the "under .. hold," must constantly maintain its unrivalled facilities for manufacture and distribution; and keep its prices low enough and stable enough to take the trade, as it does now. "To-day's papers (January 22, 1911) say that, despite the recent disintegration of the Trust, prices of oil-of 'independent' oil, too-are rising. That is rough on Washington t "To sum up, I do not believe it to be possible actually to enforce competition or prevent combination by law; or to control prices hyCommission or otherwise. Still less do I believe it necessary, in the common interest, or wise to Government Meddling with Big Business attempt to do either, Sooner or later, if we may. judge by the past, even by the short twenty years of Trust history, world supply and demand:..-nay, domestic supply and demand-will adjust prices: whilt as to all other ele ments of competition, it is to the public interest that quality, brands, patents, and trademarks, good serviceand salesmanship should inure to the benefit of those who develop them, be they big or little in their business; else they will never be developed."

The reader will remember perhaps, that Standard Oil had once before been broken up, in suit brought about by Attorney General Monett of Ohio. It then reorganized to comply with the order of the court, setting up corporations in different states to hold its properties in the same; the stock of all of which was, I think, held by the Standard Oil of New Jersey. I may be wrong about this detail, but that does not much matter. The Standard was the pet octopus of every demagogue in and out of Congress; and John D. Rockefeller, its head, was unquestion ably the most conspicuous target for denunciation of wealth in all the United States of America. Of course the U. S. Government got after Standard Oil; and this time attempted the divorce of the various, subsidiary corporations from the old-time centralized management at 26 Broadway, New York. Here again I do not attempt exact details ; but my under standing is that the stocks of the subsidiary compa nies were distributed in 1912 as dividends to the stock holders of the Standard Oil Co. of New Jersey; and that the latter now vote directly for the election of in dependent boards of directors for each of the former subsidiaries, so that they are in fact, as well as in name, entirely independent corporations. Never theless the provision in the Constitution of the United States that no man's property shall be taken away [ 2s1 Too Much Government-Too Much Taxation from him except by due process of law has made this breakup the merest technicality; inasmuch as the same men, or group of men, who formerly owned control of the Standard Oil of New Jersey, now own control of the subsidiaries. They are still directed by the same controlling brains and their operations are still co-ordinated in masterly manner.

"To a man up a tree," it looks as though the reor ganization had immensely benefited the Standard stockholders and stimulated the business itself. Not long after the breakup I heard a young man, an accountant in the auditing department at 26 Broad way, casually remark that to his astonishment it took fewer auditors to audit the accounts of the various subsidiaries, on the spot, than it had done when the auditing was centralized at 26 Broadway. I can well understand this, because decentralization and com plete unit control, upon the spot, is naturally better practice than any method of control from a distance by mail and telegraph; that is, if the unit has at tained sufficient magnitude to support a complete and well-balanced overhead staff. One new development is of interest, and was probably another agreeable surprise to the masters of Standard Oil. The subsidiary stocks were listed on the New York Stock Exchange and regular state ments of operations, earnings, and expenses are now furnished by the companies in the customary fashion (which had never been done before) so that the pub lic knows all about them. The more it knows, the better it seems to like them; and the suspicion of sharp practice which always attaches to secrecy is rapidly fading from the public mind. At any rate, the stock-market quotations and dividend returns, since the breakup, must make the Government and the Attorney General and-"ut parva magnis"[26 ] Government Meddling with Big Business Miss Ida Tarbell herself, feel that their greatest effort in life, viz., what might be called John D-molition, has been a dismal failure. Standard Oil stock before the breakup in 1911 sold on the New York Curb Market at an average price of $573 a share. Soon after the breakup, in 1912, it sold for an average of $1,100 a share, and the market value of the various subsidiary stocks which now represent one share of the old Standard Oil was at last quotations given by the Financial Review, say for 1920, about $1,185.

Certainly the Government did not hit the Rocke fellers very hard in this breakup. John D's minions still· send their tank wagons farther and farther out on to the prairies and into the backwoods, and more and more bring those elusive, but necessary, hydro carbons, kerosene and gasoline, to the farmer's back door; and the farmer's wife still persists in buying them, Ida to the contrary notwithstanding. Fur thermore, "Texaco," and "Sinclair," and the pur veyors of "That Good Gulf Gasoline" have followed Standard Oil's example, building pipe lines and re fineries, and sending tank wagons all over the land; to say nothing of several hundred minor competitive concerns that are drilling and refining wherever oil is found. It seems that my various· predictions of 1912 have already come true; and I think it safe now to predict that the once-execrated plutocrat, Rocke feller, will go down into history as the man who founded: first, a business as immensely beneficial as it was successful; next, a great University (in whose chapel, by the way, his portrait hangs, called by the irreverent "The Vision of John the Baptist"); next, a colossal fund for General Education; next, a won derful organization for abolishing the dread hook worm disease and other parasitic plagues that have tortured humanity for centuries; next, as one who r27 ] Too Much Government-Too Much Taxation sent a relief ship to stricken Belgium; next, as one who taught modern medicine to China; and only the good Lord knows what next the man will do I Ida, per haps, will go down to history-or oblivion-as the woman who, not doing any of these, things, zealously slammed the man who did them. "The pen" may indeed be "mightier than the sword"; but verily it is not a marker to the oil-can.

American Tobacco Company. I am not a smoker and never had very much interest in tobacco or the American Tobacco Company. The. Government did, however, and broke it up for the benefit of the people. Most of my readers are probably smokers, and will. know better than I just how much the price of cigars (by the way, they are advertising "Rocke fellers" just now); of "Camels" and "Bull Durham" has fallen in consequence of this breakup; but I understand that the Tobacco Company still con tinues in business at the old stand and, indeed, at a good many new ones. The market fluctuations of American Tobacco Common Stock read as though the shares were still good property, videlicet: 1912 282 1913 247 1914 216 1915 223 1916 210 1917 161 1918 169 1919 250 1920 (increased capital comparison difficult) The Packers. Until very recently the business of the great meat packers has, fortunately for the country, escaped the intrusion of the Government.

It is now destined to suffer that fate, and I venture to predict the general consequences. The industry started, that is in a large way, I think in Cincinnati three quarters of a century ago, but reached· its first great development in Chicago. When I first went there in 1877 there were many packers down at the stockyards, most of whom have [ 28} Government Meddling with Big Business now I think passed into the discard. The great firms of Armour and Morris, however, were then, as they have remained, conspicuous for ability and success; and with them, as I remember it, Hammond and Swift constituted the then "Big Four." The dressed beef business had not commenced, and cured or salted meats, principally pork, constituted the bulk of the trade. The packing houses were ramshackle affairs and none too clean. All the same, they were far superior to the local slaughter houses, whose stench daily pervaded some unlucky suburb of all large cities, and the whole of every small town when the wind blew that ,vay. Although very early in the game, the Chicago packers boasted that they "uti lized all of the hog except the squeal," and the big houses killed at the rate of 5,000hogs a day. A profit of a dollar a hog was considered royal in those days, though that meant but z! to 3 per cent. upon gross sales. Salt pork, hams, and like cured products could, of course, stand transportation to any distance; and the large scale of operations and the utilization of all parts of the animal, with the recovery of all byproducts, gave the large packers' so great an ad vantage over the small local village slaughter houses that they were able very soon to distance them in competition, even in their own local trade.

Dressed beef and other fresh meats could not, of course, stand transportation unless iced; which led to the evolution of the refrigerator car. With it came the business of beef slaughtering and distribution on a large scale. From the very outset the packers found it necessary to build and own their own cars; because the railroads were not willing to undertake the burden of equipment and the delay and cost of icing in transit. Nevertheless, the advantage gained . by wholesale handling of fresh meat in this way was [ 29] Too Much Government-Too Much Taxation so great that the packers were enabled to finance the purchase and operation of their own refrigerator cars, with icing stations at convenient distances apart, until they covered substantially the entire country. In their business, however, as in all aggressive mod ern merchandising, they found it necessary, in order to insure quick unloading and return of empty cars, and facilities for storing and distributing fresh meats at the point of destination, to own and control their own local refrigerating and distributing plants.

Armour's cars, yellow stores and wagons, are now seen near the railway stations in every important town in the United States, as are Swift's, Wilson's, and Mor ris's; but the smaller, feebler packers dropped behind in this race for transporting and distributing facilities; and to-day, though many of them exist, their small influence except on local trade is evident in that the politicians take no notice of them. At the time of the Garfield Report, made, I think, to the Roosevelt Ad ministration, there were and are still local slaughter and packing houses in every important city in the country besides not a few in the larger towns. This means that the great packers, like Armour, Swift, Morris, Wilson, and Cudahy in the West, are shipping fresh beef which was calved perhaps in Texas, fat tened in Nebraska, slaughtered in Omaha, Kansas City, or Chicago, and transported in refrigerator cars to refrigerator plants in far-distant Boston or Balti more, for sale in direct competition with beef grown and slaughtered in Massachusetts or Maryland, and sold almost at the door of the slaughter house; all at a minute profit ranging from I to 3 per cent. of the gross turnover, and probably not averaging over 2 per cent.

The immense economies realized by their enormous operations enable the great Western packers at this minute profit to sell from 70 to 80 per cent. of the fresh [3° ] Government Meddling with Big Business beef consumed in Eastern markets. Naturally the price of the remaining 20 to 30 per cent. produced by local firms must be held down to the level fixed by the Western competition; and that fact has occasioned bitter hostility on the part of the former. The West ern packers are accused of underselling and driving the small Eastern producer out of business; which is true, in fact-but the whole Eastern· population is equally guilty of underbuying as to the aforesaid 70 to 80 per cent. If it is legally or morally wrong to undersell, it must be equally wrong to underbuy; yet everybody does it! In whose mouth then does it lie to accuse the great packers of ruthless competi tion? The demagogue promptly answers, "In mine"; and he proceeds to demand government regulation of the great Western packers.

Moreover, the farmers throughout the land have been in the habit of selling their cattle on the farm to travelling buyers, either of the great packers, or of middlemen in packing centres. Many farmers ship direct to commission men at Chicago and the other centres, who sell the cattle at auction as they come in. Of course, cattle must be watered and fed, both in transit and after receipt at the slaughtering point until killed. Meantime, as it is impossible to feed and treat them as well in transit, or in crowded stock yards, as on the farm, they lose weight and condition rapidly . For every reason of profit and economy they must be sold at once without delay; conse quently the prices realized at auction sale from day to day in the various stockyards fluctuate greatly with the number of head daily received; much the same as' with fish in the seaport markets, though the fluctuations are not quite so sharp. At all packing centres the, great packers are represented by buyers, who move from pen to pen as the lots of animals are [ 3I ] Too Much ·Government-Too Much Taxation auctioned off, bidding against each other and a mis cellaneous lot of outside bidders, representing pack ing houses at points farther east, export houses, and other cattle buyers; but the great packers over shadow the miscellaneous buyers, and their bids go far to fix market prices.

Therefore the farmers, when prices fall below ex pectations, very naturally accuse the great packers of conspiring together, to purchase cattle at lower figures than would prevail, if they were not so big and had no understanding with each other. Lastly, the public, which has seen with dism~y from year to year the mounting costs of meats, and has also seen the packing firms grow great, puts 2 and 2 together and calls it 10; and for its part accuses the packers of conspiracy to extort extraordinary prices for beef. One more step in the evolution of this business re mains to be considered. The great packers are con stantly sending refrigerator cars loaded with meat prod ucts to .California and the South; and at first there were no return freights offering from those sections to make use of the special equipment pos sessed by these cars. In order not to haul them several thousand miles back empty, the packers commenced buying fruits in California, melons in Colorado, and berries and fresh vegetables throughout the South. This was a perfectly natural, perfectly legitimate, and exceedingly beneficial procedure to the public, and of course very profitable to the owners of the cars. Naturally it took large capital to carry on. It extended, in the course of time, to the can ning of fruits and the handling of butter, eggs, cheese, milk, and the like.

Here again the big fellows trod on the toes of the small fellows in the various trades, and some outcry ._~ [ 32 ] Government Meddling with Big Business arose against the packers; the little fellows complain ing that the big ones are out for the control of the entire food business of the United States. Meantime, nobody did the business of bringing California fruit or Southern vegetables,etc., to Northern and Eastern consumers better than did the packers. Naturally their business· grew; and again, naturally the dealers who have not their vast facilities were disgruntled, though the public was better served. Once more came the opportunity for the demagogue to jump on the back of the big fellows in alleged behalf of the little ones; and he did it with enthusiasm. The packers were between the devil and the deep sea. On the one hand the farmers said they kept down the price of beef. So also asserted the local butchers; but the public said they conspired to keep up the price of beef':-and to catch big profits both ways, going and coming! Same thing with fruits.

Well; the Roosevelt Administration started an investigation of the packers; and an exhaustive re port was made by Mr. Garfield, then I think the head of the Bureau of Corporations of the. Depart ment of Commerce. The substance of his report was that there were still many hundred local slaugh tering and packing houses in operation throughout the United States, which always competed in killing and marketing of local beef and pork with the great Western packers. That the latter, nevertheless, by superior methods and nearness to the great cattle ranges were enabled to dress and ship, all over the country, from 20 to 85 per cent. of the meat con sumed; the larger percentages being in the greater Eastern cities and the smaller percentages in country towns and smaller Western cities. The Garfield Report showed that the great Western packers did not compete with each other to the extent of a finish [ 33 ] Too Much Government-Too Much Taxation fight, but did compete with local packers and slaugh ter houses all over the country, holding down prices generally to a level which yielded themselves a very minute profit. That minute profit was a matter of common knowledge at Chicago, for instance, years ago, as hereafter set forth.

As a matter of fact, there was nothing like mo nopoly in the packing business in spite of the fact that the great Western packers did not fight each other to a finish and did do the bulk of the business in large cities. The Garfield Report was denounced at the time by Democratic politicians and Socialists be cause it told the truth, and the truth was favorable to the packers. Its result was, however, that they were let alone for some years. Later, under the Wil son Administration, the Federal Trade Commission got after them, and proceedings were commenced by the Attorney General, for some reason that I don't understand, not in the U. S. Courts at Chicago, but before the Supreme Court of the District of Columbia at Washington. The burden of the complaint of the Federal Trade Commission seemed to be that the packers were going into too many lines of trade, and its objective was to force them to give up the owner ship of refrigerator cars, of fruit, butter, egg, and grocery business, and stick to the slaughtering of beef and pork.

The packers apparently thought best to yield as Standard Oil and other great concerns had done, probably seeing (as we all of us see) that the segrega tion of the business into various corporations, carry ing on its various branches, would make no great dif ference in the net results, or in actual ownership. They consented, in 1920, to court decrees, which have since been carried out, in pursuance of which Armour, Swift, and others have disposed of their [ 34 ] Government Meddling with Big Business railroads, stock yards, fruit-car lines, market news papers, cold-storage plants, their retail meat business, and other general food business outside of meat. It must be remembered that it took all of these busi nesses to give the great packers the 2 per cent. profit on turnover actually realized. Congress has lately passed a law putting them under the regulation of the Federal Trade Commission; and it is presumably going to knock out that 2 per cent. profit, of course for the benefit of the PEOPLE!

But 2 per cent. is an awfully small margin! Sup pose the F. T. C., as is barely possible, does not know as much about beef as Armour, and knocks out 3 per cent., or 4. What becomes of Armour? And what becomes of Boston-So per cent. of whose beef comes from Armour and the West? What would Boston have paid for beef all these years but for Armour? What will it pay before the F. T. C. gets through for beef, fruits, butter, etc? The question naturally arises to an inquiring mind: "How can the public possibly benefit by divorcing these naturally related industries, and forcing them into separate hands, which cannot possibly do them as well or as cheaply as they are now done?" Certainly no one else is doing them any better or any cheaper; and there is no one in sight likely to do them any better or cheaper. The Federal Trade Commission will infallibly be befogged, just as the Interstate Commerce Commission has been and is, by the conflicting claims of competing dealers, com peting prod ucers, middlemen, cities, region~, and perhaps transportation companies, whose private in terests may not jibe continuously with the routine adopted by the great packers. The Commission will be urged to favor this or that or the other com[ 35 ] Too Much Government-Too M~ch Taxation plainant; and will favor the most ingenious and persistent of them, with very little regard to the commercial factors that enter into the case. The public will never be represented by attorney before it. A huge mass of vexatious rules, regulations, and limitations will be built up around this great business, the cost of which will inevitably fall upon that public.

To put the matter in a nutshell, the consumers of meats and fruits and fresh vegetables, preserves, butter, cheese, eggs, and the like, are just as certain to pay more for what they eat, under what may be called without exaggeration an idiotic attempt to run the entire food business of the United States through a bureau of politicians at Washington, than ever they paid in the past or would pay in future if they and the packers were left to the tender mercies of the law of supply and demand. The simple and easy proof of the foregoing predic tion lies in the public statements made by the great packing companies to the Stock Exchanges and Commercial Agencies. They have always been large borrowers of working capital from the banks on short-time paper, frequently renewed; and in the strenuous finance of the last ten years they have been obliged, like most other large manufacturing concerns, to convert this dangerous and troublesome floating indebtedness into a long-time bonded debt; which could not be done without entire publicity of their earnings and operating expenses, for the benefit of investors in their securities. It is now several years that Armour, Swift, and the other great pack ers have annually filed such statements, and they are open to the public. Armour, for instance, made gross sales of 1,899 millions of dollars during the years 1918 and 1919; upon which was realized the net profit of 37 millions of dollars, that is not quite [ 36 ] Government Meddling with Big Business 2 per cent. of gross sales. On a pound of beef that meant a profit of -'llTf of a cent upon the packers~ wholesale price of about 2Z! cents. How long does the reader suppose that minute profit will last under government control? What actually did become of a far larger margin of railroad and telephone profit under government handling in 1918 and 1919, and what happened forthwith to railroad and telephone rates paid by the public? Why, naturally, the profit had to go down; the rates to go up!

History is bound to repeat itself. What will surely happen to the meat trade, unless the nation turns its back upon collectivist tomfoolery, and re turns to the sound principles upon which in the past, our wonderful prosperity was based, is: first, heavy loss to the packers; next, application to the Federal Trade Commission for permission to raise prices; and last, the raising of prices to the public. Along with the pressure of conflicting commercial interests will come that of the butchers' unions, for fatter jobs and better pay for working men; again, as always, at the expense of the public. There will be strikes and interruptions of meat supply and dead locks, as 'to-day in the railroad and coal trades, with eventually the demand by labor and farmer dema gogues for nationalization of the great food-supply ing. industries; so that each of these classes may feather its own nest by dint of votes rather than by hard work. Indeed, the demand for national ization of the packing industry has already been made by some who pretend to speak for the farmer bloc.

Only one thing is visible, at the end of a long vista of politics and paternalism, in government regulation of the packers; and that is the handwriting on the dead wall ahead, always growing bigger and plainer, [ 37 ] Too Much Government-Too Much Taxation as we travel down the road toward it; and its legend, always more terrifying: High Cost of Living Higher Cost of Living HIGHEST COST OF LIVING Although, as shown above, the government attack upon the packers had not reached the point of dis integration and regulation by the Federal Trade Commission until 1920-1921, so that the market re sult of the attack upon prices of beef and of packing securities is yet to come, it is worth while to note at this point how insignificant such results must necessarily be in comparison with those worked by the law of supply and demand .. On the diagram of commodity prices which will be found later in this book the fluctuations of the wholesale price of beef from 1910 to 1920 are given, showing a rise from $4.40 to $9.35 per hundred pounds. This was the consequence of the enormous war demand for dressed and cured meats coming from all over the world, together with the cutting off of the South American supply by lack of ships for two or three years. The Wilson Administration's at tack upon profiteering was started in 1919, but pro duced not the least apparent result in lowering the cost of beef.

At the close of the war, however, the return of the meat trade to its old accustomed channels produced the same violent deflation that took place with most staple commodities. The year 1921 was one of dras tic readjustment and heavy loss to the great packers. To-day the level of wholesale prices is given by Mr. Thomas E. Wilson, in an address before the Institute of American Meat Packers, on October 9, 1922, as I 38 ] Government Meddling with Big Business substantially the same as that of 1913. I quote his address as follows: "In the week of September 30, 1919, the best grade of beef at Chicago was selling at wholesale in the form· of dressed steers at 23.5 cents per pound, as compared with 17.5 cents during the week of September 30 this year; good carcasses of veal at 29.5 cents, then, as compared with 17.5 cents this year; pork loins 38 cents, as compared with 29 cents; leaflard 29 cents, as compared with 12 cents; spare ribs 19 cents as compared with II cents; fresh skinned pork shoulders 27 cents, as compared with 14 cents; fresh hams 30 cents, as compared with 19 cents; smoked hams 34.8 cents, as compared with 23.6 ·cents.

"Heavy native steer hides were quoted in wholesale mar kets then at 49 cents a pound, as compared with 22 cents in the corresponding period of this year; light native cow hides at 51 cents, as compared with 19 cents. "In the calendar year 1919 the meat products exported weighed 3,242,603,537 pounds and had a value of $985,011,33°, according to the United States Department of Commerce; exports of meat products in the last calendar year weighed 1,945,660,210 pounds and had value of only $287,070,966. The average value per pound of the ex ports had dropped from 3°.38 cents to 14.75 cents and the quantity also had been reduced as noted. The shrinkage in value per pound was 15.63 cents, or 5I per cent.; the shrinkage in total value was $697,94°,364, or 70 per cent.; and the shrinkage in quantity was 1,296,943,327 pounds, or only 40 per cent. "Those figures indicate, even to the casual statistician, what a readjustment of trade and values the meat and live-stock industry experienced; in only three years a decrease in exports alone of more than a half-billion dol lars, or 70 per cent., by value; and a decrease of more than a billion and a quarter pounds, or 40 per cent., by weight."

How perfectly puny and idle do the efforts of the United States Government appear as compared with [ 39 ] Too Much Government-Too Much Taxation the huge and rapid world-market deflation in price of beef here shown. Can the reader study these figures without intense disgust at the utter stupidity of governmental meddling in such an affair as this? Other Attacks on Business. My 1912 book stud ied, in greater or less detail, the 53 big trusts capi talized at more than twenty million dollars each, aggregating over 5,000 millions, which then survived; besides a lot more that were dead and buried failures. I showed that in 1912 but three of them had achieved substantial monopoly ; but four had slight competition and all the rest had to fight for their lives against fierce and abundant competition; in short, that com bination to prevent competition was a necessary and inevitable failure. Of the first three, the Harvester Trust was shortly attacked by the Government, and voluntarily gave up some of its control of the trade.

All of the next four, viz.: Tobacco, Standard Oil, DuPont Powder, and United Shoe, have since been broken up, or limited in operation, by government suits; while the Packers, the Telephone, the Western Union, and the Sugar Trust, have been haled into court and before Congress repeatedly. Long before (as I knew to my sorrow, because I was a large stock holder at the time) the Chicago Gas Trust, a combination formed to stop a destructive price-war between the four gas companies in that city, had been dissolved by the Courts of Illinois, in a suit· at Common Law, as 'an unlawful combination in re straint of trade; away back in 1889, two years before the Sherman Law was passed by Congress. That is to say, not only could the state or national governments have fought the Trusts perfectly well under the old Common Law, without any Sherman Law or Clayton Act whatever-but the actual his tory of all the big Trusts, as long ago as 1912, showed [4° ] Government Meddling with Big Business conclusively that it was perfectly unnecessary to fight them at all; because of their complete failure to monopolize or to fix prices above or below those determined ,by the law of supply and demand, even for a short time. In fact, only a little patience, a very few years' pressure of the natural forces of trade, were needed to force all these great combines, with out exception, either to suicide, dying of their own acts, or else 'to utter change of their ways, to vigorous and legitimate competition, in order to remain alive at all.

What, then, have our successive Presidents from Roosevelt to Wilson actually accomplished, in protecting the people from Wall Street, from railroad and manufacturing robbers, or in punishing the latter for their crimes? Let me, to save burying my unlucky readers alive with statistics, answer this question by plotting on the same diagram several curves; showing for each of the great industries attacked by the Roosevelt, Taft, and Wilson administrations the fluctuations, for the last twelve years, of the prices of their products or service to the public, and of their shares in the Stock Market. Surely, if the Government succeeded in punishing these "malefactors of great wealth" (as Roosevelt called them), the stock quotations should reflect it, or, if it succeeded in stopping robbery of the public, the prices of goods should reflect it. If, .however, it did neither one nor the other, satisfying nobody, the elections ought to reflect it.

Here are two diagrams, made up for "Sugar," "Tobacco," "Standard Oil," "DuPont," "Tele phone," "Western Union," and "Steel" -noting each government attack, victory or defeat, in its proper year upon the diagrams, so that its effect [41 ] Too Much Government-Too Much Taxation upon the rise and fall of stock and commodity mar kets can be seen at a glance. I have added to the commodity diagram the curve of what is known as "Bradstreet's Index Number" -representing the composite fluctuations of the open market value of all leading commodities (which is of course quite beyond the disturbing influence of any .particular trust or government suit); and to the stock dia gram that representing the composite fluctuation of "10 Industrial Stocks," used by the daily papers, for comparison with the prices of the trust shares and commodities. The reader will search in vain for any marked differences between fluctuations, that can either be charged to the trusts or credited to govern mental "trust busting"; while the elections totally ignored the whole contemptible business. In short, nothing has come out of the "mountain in labor" not even the traditional mouse!

(Note.)-Standard Oil of New Jersey stock sold on N. Y. Curb as follows: 1911 $ 593 (Broken up by Government late that year.) 1912 1100 (Just before distribution of "subsidiary" stocks) 1914 396 1915 477 1916 582 After dividend distribution of 34 subsidiary stocks, 1917 637 worth in 1920 $548 additional to values quoted 1918 645 for Standard Oil of New Jerseyo 1919 600 1920 728 The student will note here and there temporary disturbances in stock-market values-for instance, the lower range of prices for the Steel shares already mentioned above; but he will bear in mind that the great public does not trade in stocks on the exchanges -and does not care "a tinker" about the price of Steel Common. On the other hand, it is much in[42 ] Government Meddling with Big Business terested in the prices of sugar, tobacco, flour, gaso line, telephones, telegrams, railroad tickets; and not a few care something about the price of powder, har vesters, steel, etc.

Look now at the diagrams carefully. I shall be very grateful to the reader who will point out any great' reduction in the market prices, for goods, coin cident with, or apparently caused by, the government move into or against big business. (I do not include in it the government pricing of wheat and sugar during the Great War, which will be considered else where in some detail.) Two broad. conclusions stand out irresistibly from this diagram-record of these most conspicuous and important victims of government attack, showing the action of the open markets. First. That government attack on the trusts not only was always entirely unnecessary, but has actually been entirely futile-either to benefit the public or to punish the trusts-or their builders even where in some cases a technical breakup of combinations into several possibly competing units was effected. Second. That the natural forces of trade are not only amply sufficient, but, indeed, are the only forces necessary (and powerful enough) to correct automatic ally and at the earliest possible moment what is called "profiteering" -namely: the reaping of ex cessive profits from the many by the few; an excess which is necessarily rare, always temporary, and quite impossible of artificial maintenance.

It is true that the element of time must always come in; and that occasionally-as in the Great War a dire emergency exists that seems to demand action of the Government,.more immediate and more stable than that of time and trade. Very well; good citizens [ 45 ] Too Much Government-· Too Much Taxation in all the lately warring countries freely accepted government control of many things and would prob ably do so again; though now that the smoke has cleared away, it is, to say the least, doubtful whether free commerce would not have done the needful as quickly and more cheaply.. But, as to government interference in· times of peace, when we compare the far more numerous trusts that were not "busted" by the Government with the few that were; and note that the flow of trade ran on substantially alike in all -"the smoke went up the chimney just the same" as far as the public was concerned, it is hard to escape a gust of contempt for the demagogy that piles con gressional investigation on investigation, and Federal Trade Commission on InterState Commerce Com mission, Clayton Act on Sherman Law, and Trans portation Act on Adamson Act, plus taxes on taxes, on top of the whole huge useless mass-all utterly without visible result other than litigation and bureaucracy, and paralysis of industry!