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A Monthly Magazine for Sell-Education.


APRIL 190 20 19011

No. 1.


இ B y w a a y

HE trust question is settling itself, thoughtful writers said at the beginning of the year, and it was certainly believed by many that the combination movement in the manufacturing industries had reached its natural limit. The report that under the auspices of J. Pierpont Morgan, the railroad magnate, practically all the leading steelmaking corporations of the country were to be merged and consolidated into one colossal corporation, caused a world-wide sensation. There were many obstacles to be surmounted and apparently conflicting interests to be reconciled, and success appeared doubtful. But the combination is an accomplished fact. It is the most colossal ever formed even in the United States. It has been called a "billion dollar trust," but the stocks and bonds of the new corporation, organized, of course, under the "liberal" laws of New Jersey, exceed that amount, aggregating in fact $1,154,000,000. The companies merged are these: The Carnegie Steel Company (Mr. Carnegie having retired from business and surrendered his interests for $180,000,000, according to certain estimates), the Federal Steel Company, the American Steel and Wire Company, the National Tube Company, the American Sheet Steel Company, the National Steel Company, the American Tin Plate Company, and the American Steel Hoop Company. The plants of the twenty-four corporations which are absorbed are scattered over several states and many cities, and will unquestionably be subject to the federal laws.

The charter granted to the combination is of the most sweeping character. In terms it permits any kind of manufacture, mining, and method of transportation to the corporation. There is little doubt that the combination will have its own ships and railways, just as it has its ore beds and coal mines, in order to carry its own products to every market, domestic and foreign. One might

think that New Jersey was granting the United States Steel Corporation the right to become "guardian of the world." Following is a condensed statement of the grants made:

This corporation may manufacture iron, steel, manganese, coke, copper, lumber and other materials, and all articles consisting or partly consisting of iron, steel, copper, wood, or other materials, and all products


It has the right to acquire and develop any lands yielding these materials, and to extract coal, ores, stone, oil, etc., from any lands which it may own or acquire. It may buy and sell these materials and any of their products, and it may construct bridges, buildings, machinery, ships, boats, engines, cars and other equipment; railroads, docks, slips, elevators, waterworks, gas-works and electric-works; viaducts, aqueducts, canals and other waterways and other means of sold, maintained or operated, but the corporation may transportation. These agencies may be bought or not maintain a railroad or canal in New Jersey.

This corporation may engage in any other manufacturing, mining, construction or transportation business of any kind or character whatsoever, but it may not engage in any business which shall require the exercise of the right of eminent domain within the state of New Jersey. It may conduct its business in other states and territories and in foreign countries.

dollars, divided into thirty shares, fifteen of which are
The total authorized capital stock is three thousand
preferred stock and fifteen common stock. From time
to time the preferred stock and common stock may be
increased. The holders of the preferred stock shall
cumulative dividends of preferred stock have been
receive seven per cent annual dividends.
made, dividends on common stock may be declared.

When all

The duration of the corporation shall be perpetual. when and where they please. The board may vary the The board of directors may meet outside of New Jersey amount of the working capital of the company and may determine the disposition of any surplus or net profits. The board may determine whether the accounts and books of the corporation shall be open to the inspection of the stockholders, and no stockholder shall have any right to inspect any account or book or document of the corporation, except as conferred by statute, or authorized by the board of directors, or by resolution of the stockholders.

It may be expected that such an unprecedented combination will wield enormous power and be able to suppress all competition at home, and to cripple the steel

men have manifested no little apprehension, not to say alarm, over the fact that their nation has been industrially outdistanced, and an animated discussion has sprung up regarding ways and means, not of regaining the supremacy now lost, that is conceded to be out of the question, but of insuring to Great Britain's foreign trade a satisfactory rate of growth. Six years ago British exports exceeded those of the United States by $250,000,000. In 1899 we were but $35,000,000 behind our leading rival, and last year the lead was transferred to our side.

manufacturers abroad. The question has of exporting countries. The British statesbeen seriously asked whether this trust is likely to abuse its powers, to attempt extortion and discrimination, to charge higher prices at home, and to undersell foreigners abroad. Opinions vary, but it is feared that whatever economy there may be in the principle of combination, and in doing away with overproduction, etc., may be neutralized by overcapitalization and the watering of the stock. The consolidated company has undertaken to pay 7 per cent dividends on $400,000,000 of cumulative preferred stock and 5 per cent interest on $300,000,000 of bonds. There are those who believe that half of the capitalization is of "water," which, if true, will necessitate high prices.

The progress of our foreign trade has indeed been wonderful. In twenty-five years France has gained nothing; Germany, by extraordinary efforts and application, has increased her exports nearly fifty per cent; the United Kingdom has gained about forty per cent; while the United States have increased their commerce with foreign countries about two hundred per cent. The period of most rapid growth, however, opened only about six years ago. Here is a table showing our exports by great divisions in 1895 and 1900:

There has been some demand for legislative interference, though not as much as a similar enterprise would have excited a few years ago. Congressman Babcock, a prominent Republican and business man, offered a bill in congress repealing all duties on the products of iron and steel. This was promptly indorsed by many leading papers and public men, including high protectionists, but it received little support in congress. The main objection was that free trade in iron and steel products might injure the few competitors of the combination and really benefit the latter by giving it a complete monopoly of the home market. There was also the feeling that the combination ought to be given a fair trial, and that the withdrawal of protection could be resorted to in the event of oppression and monopolistic practises being attempted by it. If the corporation should be conservatively managed, the consumers would be advantaged by the reduction of prices, steadiness of production and superior efficiency claimed for combination; but the danger of manipulation and artificial inflation is generally recognized. Much, however, will depend on how far the raw material of the industry will be monopolized by the gigantic concern. Ultimately society may have to protect itself by exercising the right of eminent domain. In manufacturing industries, especially under a low tariff or free trade, it is almost impossible to maintain oppressive monopoly, so long as the supply of the raw material is subject to competition.

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The revised trade statistics for 1900 establish one result beyond peradventurethe preeminence in the matter of exports has passed from Great Britain to the United States. This country is now first in the list arms."

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THE OCTOPUS: "Guess I'll have to grow some more -Minneapolis Journal.

Bureau of Statistics has, in a revised statement, given the total value of our exports in 1900 as $1,478,050,854. The imports for the same year were valued at $829,052,116. The so-called "balance of trade" in our favor amounted to $648,900,000, in round numbers. The percentage of manufactured goods in our exports rose to 30.38, against 24.93 in 1895. Of the imports nearly 45 per cent, it is estimated, consisted of materials for use in our manufacturing industries. We have been reducing our imports from Europe and North America, and increasing those from South America, Asia, Oceania, and Africa. The Bureau of Statistics makes the following detailed analysis of the trade movements, due generally to two causes the increase of manufactures at home and the diversification of products, whereby markets are made abroad for many articles formerly produced here in but small quantities or entirely neglected:

From Europe, to which we are accustomed to look for manufactures, our imports have fallen [since 1890] over $35,000,000, while Europe has largely increased her consumption of our cotton-seed oil, oleomargarine, paraffin, manufactures of iron and steel, copper, and agricultural machinery, as well as foodstuffs and cotton, our exports to that grand division having increased $428,000,000 since 1890. From North America, the imports have fallen $20,000,000, due chiefly to the falling off of sugar production in the West Indies, the imports from Cuba alone having decreased from $54,000,000 in 1890 to $27,000,000 in 1900. To North America, the exports have increased meantime over $100,000,000, the growth being largely manufactures and foodstuffs, a considerable portion of the latter being presumably re-exported thence to Europe.


-Minneapolis Journal.

From South America, the imports have increased in quantity, especially in coffee and rubber, but decreased value in the decade is but $1,000,000, while in exports proportionately in price, so that the total increase in the increase is $6,500,000, chiefly in manufactures. From Asia, the importations have increased more than $50,000,000, the increase being chiefly in sugar and raw materials required by our manufacturers, such as silk, hemp, jute, and tin; while to Asia the increase in our exports has been nearly $40,000,000, principally in manufactures and raw cotton. From Oceania, the imports show little increase, though this is due in part to the absence of statistics of importation from Hawaii in the last half of the year 1900; while to Oceania, there is an increase in our exports of more than $20,000,000, chiefly in manufactured articles. From Africa, the increase in imports is $6,000,000, princotton forms the most important item; while our cipally in manufacturers' materials, of which raw exports to Africa increased meantime $17,000,000, chiefly in manufactures.

The chief factor, however, in the marvelous progress of our foreign trade is our predominance in iron and steel. Our exports in that line last year amounted to nearly $130,000,000, against but $32,000,000 in 1895. Yet twenty years ago this country was an importer of iron and steel products on a rather heavy scale. In 1880 the figures in this branch of trade were as follows: Imports, $54,060,720; exports, $14,716,524. What a phenomenal change in two decades! Today we are underselling Great Britain in her own markets as well as in those of continental Europe and the world at large. Mr. Andrew Carnegie recently wrote that this country is not only successfully competing to supply the wants of the world in steel and the thousand and one articles in which steel is a component part, but that these wants, steadily growing, can be met only by us. And he added: "The nation which makes the cheapest steel has the other nations at its feet so far as manufacturing is concerned in most of its branches. The cheapest steel means the cheapest ships, the cheapest machinery, the cheapest articles of all kinds of which steel is the base."

And it is generally agreed that the rate of American progress in exports is certain to be an accelerating one. Responsible newspapers, statesmen and economists - we may mention Sir Charles Dilke and Anatole Leroy-Beaulieu-have gone so far as to suggest a Pan-European commercial or customs alliance to fight the United States and prevent a disastrous economic invasion of old-world markets. A fierce struggle for trade is impending, and all industrial nations are preparing for a tariff war as the first manifestation of hostilities. Even in England the return to protection is vigorously advocated.


For a time it seemed as if the threatened general tariff war had already broken out. The sugar-bounty controversy between Russia and the United States suddenly assumed an acute aspect, and the Secretary of the Treasury, Mr. Gage, was subjected to considerable criticism for his alleged "haste" in the matter. Now, however, the facts are better understood, and a second, sober thought has removed the apprehension of serious industrial effects.

Envoy Extraordinary and
Minister Plenipotentiary
from Belgium to the
United States.

Under the Dingley tariff act an additional, countervailing duty must be imposed by the Treasury Department upon any foreign product imported into the United States which receives any gratuity or bounty, direct or indirect, from the government. We have been levying additional duties on sugars imported from Germany, France, Belgium, and other countries that are encouraging the production of sugar by bounties. There is no doubt whatever that Russia is "encouraging" the production of sugar, but she has strenuously denied that the countervailing duty provision of our law applies to her case. Russia does not pay a bounty, but it remits from all exported sugar the internal revenue tax levied upon sugar sold in the home market. This exemption enables Russian exporters to pay the ordinary Dingley rate on sugar, and yet undersell American and other producers of sugar in the markets of this country. Secretary Gage, after an investigation, felt himself constrained to rule that the remission of the internal revenue tax by Russia amounted to an indirect bounty, and accordingly he directed an increase of thirty-five per cent of the duty on Russian sugar imported into the United States. His ruling was not final, and is subject to revision, first by the board of appraisers, a quasi-judicial body, and next by the supreme court. His duty as an administrative officer, he pleaded, was to give the benefit of any reasonable doubt to his own government and to throw the burden of proof on the Russian exporters of sugar.

But, pursuant to previous semi-official warnings, the Russian government declined to await the outcome of a test case in our courts, and "retaliated" by ordering an increase of about fifty per cent of the duties upon American agricultural machinery, tools, and manufactures of iron and steel generally. This order, issued by M. de Witte, the minister of finance, created a sensation throughout the industrial world. The American manufacturers became alarmed, and there was much talk about losing a trade worth $20,000,000 a year. As a matter of fact American exports to Russia in 1900 were valued at $10,488,419, against imports valued at $7,246,981, and the balance of trade in our favor was a little over $3,240,000. Cotton is one of our principal exports, and there are other leading articles to which the retaliatory tariff does not apply. Our total exports of machinery and the products of iron and steel in the fiscal year 1899 amounted to $4,439,999. Even should the prohibitory tariff rates remain in force permanently, our loss of trade would hardly reach $3,000,000 a year. On the other hand, failure to levy the additional duty on Russian sugar might offend Germany, France, and other bounty-paying countries, and lead to retaliation which would cost us hundreds of millions.

There is a general feeling, however, that the courts will decide in Russia's favor, and overrule Secretary Gage. Whether, in that event, western Europe will deem itself the victim of discrimination and attempt retaliation, it is impossible to say. The sentiment toward us is not too friendly. It is significant, however, that in Russia M. de Witte's order has not met with approval. The press is not free to express its opinion in explicit language, but such cautious comments as have been made indicate that the retaliatory decree is regarded as a mistake. Russia needs American tools and machinery and prohibitory rates on our products injure her more than they can possibly harm us. Then there are Russian editors and statesmen who believe that the United States and Russia, as the greatest producers and exporters of grain, have common interests to promote and should work together against the German agrarians who would exclude foreign agricultural products from their market. At any rate, the tariff "war" has not disturbed the political relations between the two countries.


While our attention is being directed to the figures which display the enormous

growth of American trade, it is pertinent to remember that a younger, and in some respects a more progressive commonwealth, begins the new century with an astonishing commercial exhibit. With the advent of a federated form of government for Australia some striking speculations have become current. The Australian Review of Reviews refers to a number of historical comparisons made by Sir Phillip Fysh as follows:

"The United States, when they began their independent political existence in 1787, had almost exactly our population, but only one-tenth of our revenue!

The income of the thirteen colonies was less than

£3,000,000; their foreign trade was microscopic. Australasia has a public revenue of £30,000,000, more than one fourth of that enjoyed by Great Britain herself; while the volume of Australasian trade reaches £150,000,000-just about that of Great Britain herself when the queen came to the throne. Going still further back, Sir Phillip Fysh compares Federated Australia with the England of Cromwell's day. Brit ain's population in Cromwell's time,' he says, was 5,000,000: the six federating colonies have a population of 4,000,000, an annual revenue of £25,000,000, productive industries £130,000,000 per annum, a volume of trade of £130,000,000 per annum, shipping in and out of their ports measuring 10,000,000 tons annually, and have accumulated £1,385,000 of material resources.' This is decidedly tall' arithmetic!"' Quoting further some trade statistics for the colonies during the last five years, there is shown a decrease in the percentage of trade with the mother country, and an

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increase of trade with the United States:

"Betwixt 1895-99 Australian imports have increased from £44,268,000 to £63,439,000; exports have risen during the same period from £55,349,000 to £76,908,000. The gross value of the commerce of Australia, in a word, has risen from less than £100,000,000 to over £140,000,000-an increase in five years of nearly 50 per cent. The competition for this rich trade is, of course, keen. Roughly, more than 80 per cent of this trade flows in British channels-the exact proportion was 89.7 per cent in 1895, 83 per cent in 1899. The foreign trade, it will be seen, slightly grows, and the trade with America grows fastest of all. Thus the imports from the United States into New South Wales alone have risen from £624,000 in 1895 to £2,219,000 in 1899."

Early in February there was considerable talk of a special session of the new congress to deal with the Philippine and Cuban questions, for it was not expected that the fiftysixth congress would have the inclination or time to deal properly, intelligently, and constructively with either of those momentous problems. But the unexpected, said to happen always in France, sometimes happens elsewhere. In the last days of the late "short session" congress, practically without genuine and serious debate, took radical and definite action on both of the great and vital questions named, thus obviating the

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The constitutionality of such unqualified and sweeping delegation of legislative power by congress has been questioned, but it is alleged that there are certain early precedents for it. There is is no doubt that the majority of thoughtful citizens would prefer

BARON W. A. F. GEVERS, Envoy Extraordinary and Minister Plenipotentiary from The Netherlands to the United States.

congressional legislation for the Philippines, but it is certain that congress was not prepared-lacking knowledge and grasp to take charge of the affairs of the far-eastern islands. The alternative to civil rule by executive authority appeared to be the indefinite continuation of military government, which, according to the Taft commission, hampered and delayed pacification. The resolution as passed gives the president absolute authority over the Philippine population, but this authority will exist only" until congress shall provide otherwise." qualification did not prevent Senator Hoar and a number of influential Democratic senators from denouncing the resolution as un-republican, un-American, and involving pure, bold, undiluted despotism.


The danger of carpet-bag and franchisegrabbing evils was earnestly urged upon the senate, and the result was the adoption, without objection from any quarter, of a rigid proviso protective of Filipino property and interests. It runs as follows, and requires careful study:

Provided that no sale or lease or other disposition of the public lands or the timber thereon or the mining rights therein shall be made.

And, provided, further, that no franchise shall be granted which is not approved by the president of the United States, and is not in his judgment clearly neces

sary for the immediate government of the islands and indispensable for the interest of the people thereof,

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