The Online Library of Liberty

A project of Liberty Fund, Inc.

• Preface
• Protectionism the -ism Which Teaches That Waste Makes Wealth [1885]
• Tariff Reform
• What Is Free Trade?
• Protectionism Twenty Years After
• Prosperity Strangled By Gold
• Cause and Cure of Hard Times
• The Free-coinage. Scheme Is Impracticable At Every Point
• The Delusion of the Debtors
• The Crime of 1873
• A Concurrent Circulation of Gold and Silver
• The Influence of Commercial Crises On Opinions About Economic Doctrines
• The Philosophy of Strikes
• Strikes and the Industrial Organizaton
• Trusts and Trades-unions
• An Old “trust”
• Shall Americans Own Ships?
• Politics In America, 1776–1876
• The Administration of Andrew Jackson
• The Commercial Crisis of 1837
• The Science of Sociology
• Integrity In Education
• Discipline
• The Cooperative Commonwealth
• The Cooperative Commonwealth
• The Forgotten Man
• Bibliography
• Index

TRUSTS AND TRADES-UNIONS

TRUSTS AND TRADES-UNIONS1

I have attempted to show, in foregoing essays,2 what an immense attempted rôle is played by monopoly throughout the whole social life of mankind in all its stages. There would not be any struggle for existence if it were not true that the supply in nature of the things necessary for human existence is niggardly. The struggle for existence consists in a contest against the constraints by which human life is surrounded; the process by which men have won something in that contest, in the course of time, has consisted in playing off one of nature's monopolies against another — the process, namely, which we call “employing natural agents.” On its social and political side, the advance has consisted in securing for the individual a chance in some degree to control his own destiny; not to be at the sport of natural and social forces, but to bring his own energy to bear to enlarge his own conditions of enjoyment and survival.

At every stage of history, however, the natural monopolies have formed the basis of social and political monopolies. The possession of those powers which, under the circumstances, were most efficient for the acquisition of what men want has always given superiority and dominion in human society, whether those powers were physical force, beauty, learning, virtue, capital, or anything else. Where does any one find ground to believe that the fact will ever be different, and that those who have the powers which are most potent in the society in which they live will use those powers, not to get the things which all men want for themselves, but to get those same things for other people?

The fashion has always been in the past for those who possessed the essential powers to take control of the state and realize their monopoly in that way. If plutocracy should now prevail it would be simply a repetition of that experience. The only device which has ever given promise of wider and more humane organization of the state is constitutional liberty, which compels, by the intervention of institutions created to serve this purpose, the ruling class, whoever they were, to respect the recognized and defined rights of all the rest.

Now, democracy having sapped and dissolved all the inherited forms of social organizaton and reduced the social body to atoms, it is most interesting to observe the inevitable recurrence of all the old tendencies, in new forms fitted to the times. Some of us thought that liberty was won forever, and that the race was nevermore to be disturbed by its old problems, but it is already apparent that, when a society is resolved into its constituent atoms, the question under what forces, and upon what nuclei, it will crystallize into new forms, has acquired an importance never known before.

Just now public attention is all absorbed by the new name “trust” applied to one of these phenomena. I can see nothing new in a trust as compared with the rings, pools, etc., with which we have been familiar during this generation, except the guarantee which the trust secures to all the members of the same that no one inside of it shall play traitor to the rest. The greatest difficulty with modern combinations has been that there have been no sanctions by which the members could be bound, and that the profits of the insider who turned against his comrades have always been an irresistible temptation. In the mediæval guilds, which were “trusts” of the most solid construction, the sanctions were of the sternest kind — religious, political, and social — and yet they never succeeded in their purpose. In modern times, as is well known to all who are acquainted with the attempts which have been made, inside of various branches of industry, to arrange agreements which have not been large enough or public enough to get into the newspapers the difficulty of enforcing loyalty against those who felt strong enough to beat the rest if they should go alone, or against those who saw a chance to sell out on the rest, or against those who were in desperate straits for cash, has been the constant stumbling-block. Fifty years ago, in the last days of the United States Bank, Nicholas Biddle organized a cotton trust, to try to control the cotton market of the world. It was a complete failure. In general, combinations of this character are in constant dilemma: they must always grow bigger and bigger, in order to encompass a sufficient area to constitute a unit; but the bigger they grow, the less is their internal cohesion. The exception to this must be noted in a moment.

The great expansion of the market by modern inventions in transportation has broken up all the former local and petty monopolies, and is rapidly making of the industry and commerce of mankind a whole which cannot be divided by geographical lines. The conditions of competition in such a system are no doubt onerous to the last degree. The conditions that must be taken into account to win success are numerous and complicated. The nerve-strain of comprehending and of justly estimating the factors, and of following their constant variations, is too great for any one to endure. Foresight must be used, yet there are so many unknown quantities that foresight is impossible; if the attempt is made to master all the unknown quantities, then the task is so enormous that it cannot be accomplished. Furthermore, the relations with other persons in the industrial system are necessarily close. It is impossible to escape such relations, and it is impossible to avoid a share in the consequences of the mistakes and incompetence of the others. It must be added that, at a time when the advance in the arts has forced the whole industry of the globe into intimate relations which nothing can possibly cut off, legislative interferences have produced artificial and erratic currents in the industrial and commercial relations of all countries. The consequences are disappointing and disastrous incidents in the history of industry. At the same time the improvements in the communication of intelligence have made it possible for men farthest apart in space, language, and nationality, if they have confidence in each other's business ability and command of capital, to coöperate by personal agreements.

Trusts are an attempt to deal with this state of things. It is, of course, a jest when the makers of a trust affirm that they make it for the benefit of consumers, and it may very well be doubted whether a trust is a feasible and beneficial device in the interest of either party; but it is wrong to overlook the fact that the trust, in its efforts to deal with the case, and to secure orderly and rational development, instead of heats and chills in industry, has a real and legitimate task on hand. It is certain that there is room for the introduction of intelligent method into modern industry, under forms which shall be germane to modern conditions, and it is certain that this will never be done properly by legislation, but only by the voluntary and intelligent coöperative of the parties interested. It is also by no means certain that this systematization of industry, under intelligent coöperative of the parties conducting it, would cost consumers anything, provided always that there was no legislation to prevent the recourse at any time to any other sources of supply which might be available. The economies of management under intelligent administration are a source from which gains may be made which will cost the consumer nothing. The expenses of industrial war constitute a big fund for dividends to which the consumer does not contribute.

It is worth while to notice, by some familiar examples, what the motive of a trust is; it will be found a far more everyday matter than most people suppose. A man who owns a house and lot buys the vacant lot adjacent in order to control it. He and his neighbors buy up all the vacant lots on the street in order to prevent undesirable contact with anything which would deteriorate their property. They have already fallen victims to the spirit of monopoly, and are subject to all the denunciations heaped upon aristocrats and exclusivists. In their case already the practical difficulty of defining the unit to be comprehended, in order to attain the object and no more, is apparent. Examples are furnished every day in which capital is refused for certain enterprises because it is seen that the investment might no sooner be made than its profits might be destroyed by another enterprise parallel with it. The thing cannot be done at all until it is clone on a scale sufficiently large to constitute a complete unit. We are familiar enough with the dilemma offered to us when, on the one hand, railroads which consolidate put themselves in a position to serve us far more efficiently, yet on the other hand, railroads which consolidate cease to compete with each other for our benefit. Which do we want them to do? The railroads themselves are familiar with the experience that they are constantly forced to make extensions in order to secure a certain territory, that is, to establish a closed unit, and that every extension, instead of attaining a finality, only makes further extension unavoidable. This is the class of facts in the industrial development of our time which has produced the trusts, and it is certain that they offer another motive than that of simple desire to secure means of extortion.

I am not yet able to see that any trust can succeed unless it is founded on a natural or legislative monopoly, and furthermore on a monopoly whose product cannot be produced in an amount exceeding the demand at the price which has been customary before the formation of the trust; and I cannot see any chance for legislation to do any good unless it is in the repeal of all such laws as are found to furnish a basis for the organization of an artificial monopoly.

It cannot have escaped the attention of the reader that trades-unions are a monopolistic organization on the side of labor entirely parallel with the trusts on the side of capital, “a product of the same age and of the same forces,” and an endeavor to deal with the same problem from the standpoint of another interest. The motives of coercion, discipline, and strict internal organization are the same in both cases, and some of the sanctions are the same; for the pools and rings have tried the boycott until they have proved its worthlessness. There is a notion afloat that the modern trades-union is a descendant of the mediæval gild. It might, with equal truth, and equal futility, be asserted that the modern college, stock exchange, and joint stock company, are descended from the mediæval gild. The nineteenth-century trades-union is a nineteenth-century institution, as much or more so than the ring, pool, corner, or trust. They are all products of the same facts in the industrial development, and one is just as inevitable, and, in that sense, legitimate, as the other. There are some who, while vehemently denouncing trusts, offer us, with great complacency and satisfaction, as a solution of the “labor question,” the assertion that the employers and employees ought to combine or coöperate in some way; they do not appear to see at all that if any such thing should be brought about it would be the most gigantic “trust” that could possibly be conceived.

[1]The Independent, April 19, 1888.

[2]“Earth Hunger, and Other Essays,” pp. 217–270.