Steel Trust

“ It is pure folly to organize one trade in one mill, or all trades in one mill, or even all trades in all the mills in one locality, when, at any time it sees fit to do so, the Steel Trust can defeat the movement by merely shutting down its mills in the affected district and transferring its work elsewhere, as it has done time and again. It was plain, therefore, that the proposed campaign would have to affect all the steel mills simultaneously. It would have to be national in scope and encompass every worker in every mill, in every steel district in the United States. ”

“ The great steel trust was to be capitalized at a billion and a half. There had to be room for everybody. Bullguard was to be its deity. There could be no other. The charter had been applied for. Famous lawyers had reconciled it with the law. All these facts came out gradually, mostly in the form of midnight rumors. In the highest circles of the steel court an extremely curious fact was already privately known. Sabath was to be the manipulator. If he could not perform the unimaginable feat of selling the shares of a billion-and-a-half dollar corporation to the public nobody could. ”

“ If a few thousands of its employees would enter upon the Certain Way, the steel trust would soon be in a bad plight; it would have to give its workingmen more opportunity, or go out of business. Nobody has to work for a trust; the trusts can keep men in so-called hopeless conditions only so long as there are men who are too ignorant to know of the science of getting rich, or too intellectually slothful to practice it. ”

“ The limits of the power of the trust to control prices are strikingly shown by the fact that it cannot even insure low prices if the market conditions do not justify them. The steel trust, in 1902-3, declared that it would not advance the price of steel rails above twenty-eight dollars, and this was hailed as a beneficent effect of trust control, which, by equalizing production, could prevent excessive fluctuations of price. ”

“ A hundred years ago an industry consisted of a half a dozen or a dozen men, working under the personal supervision of an owner, and using crude hand tools. Today it consists of a gigantic trust, owning and managing scores and perhaps hundreds of mills and factories, each employing thousands of workers. A corporation like the Steel Trust owns enough of the sources of its raw material to give it practical monopoly ”

“ In 1890 the trust, or the industrial combination, had almost reached its present state of development. Large aggregations of capital had already secured a monopoly of many of the necessaries of life. The Standard Oil Trust was then, as it is now, the most conspicuous of these combinations, and had already attained an unpopularity almost as great as it enjoys today; the Sugar Trust controlled practically the whole output of refined sugar. The Steel Trust, it is true, did not exist; but many combinations in steel products had already been formed. Combinations on steel rails dictated prices ”

“ They also proceed to control subsidiary industries—as the Steel Trust controls not only rolling mills and furnaces, but iron ore quarries and steamship and railway lines required for the transport of its material. So the grip of capital upon industry tightens, and the empire of finance widens. ”

“ The Steel Trust is over-capitalised two hundred per cent. Because of the tariff it is able to sell its product at home for fifty per cent more than it charges abroad; and even so, it has to keep cutting its dividends! Its common stock is down to ten. It is cutting expenses on every hand, and of course it's turning out a rotten product. And now along comes Wyman, the one man in Wall Street who dares to shake his fist at old Dan Waterman; and he gives the newspapers all the facts about the bad steel rails that are causing smash-ups on his roads ”

“ Even the Standard Oil and the American Tobacco companies, big and prominent as they were and as much as they have been attacked for their methods of eliminating competition, have failed to strike the public imagination as forcibly as the so-called Steel Trust. ”

“ It will know exactly how many men it will need to manufacture this pig iron. It will employ a few more men than those employed in 1910. The state will issue to the steel guild weekly the amount of store notes necessary to pay the wages upon the same scale as in 1910. Men engaged in the Steel Trust at the moment of transference will continue to work and receive the same rate of wages; but they will be entitled to their share of the profits after the amounts due annuitants and the amounts necessary to create a fund for old age and sickness have been deducted. ”

“ The spirit of enterprise is remarkably encouraged and the highest premiums are put on individual achievement. Almost all the men who hold responsible positions in the mammoth works of the Steel Trust have worked up, like Carnegie himself, from the bottom of the ladder, and made their millions simply by working better than their fellows.
311On the other hand, the trusts have their drawbacks. One of the most regrettable to the American mind is their moral effect. ”

“ They will find that the railroads do not treat them squarely; cars will be slow in coming, and all kinds of petty annoyances will be practised. You know what the rebate is, and you can imagine the part which that plays. In these and a hundred other ways, the path of the independent steel manufacturer is made difficult. And now, Mr. Montague, this is a project to extend a railroad which will be of vast service to the chief competitor of the Steel Trust. ”

“ But since those times they have been defeated so often, due to a weakening of their proportional strength and strategical position, that they have lost much of the independent spirit which once characterized them. They now fear the power of the Steel Trust; they dread its pitiless blacklist; they hesitate to put in jeopardy their comparatively good jobs, which they secured only after long years of service in minor positions, and which, once lost, are so hard to regain. ”

“ So of course they want free trade in labor, and protection in commodities; and they have always had it, and our wise Americans that are the marvel of the day, including the working people, have cheerfully given them protection in the commodities that they sell and free trade in the labor which they buy. (Applause) . And they thought by protecting the Steel Trust, so there can't be any foreign competition that it will make the Steel Trust so rich that they can afford to pay high prices to their working men. It is one thing to make a man rich enough so he can [Pg 14] afford to pay high wages ”

“ Gradually there crystallized the thought of a great trust of trusts to embrace everything. Not otherwise could the steel industry be stabilized. Any such colossal scheme as that would have to consider first of all the three dominant groups. But when overtures were made to John directly or through his partners, he repulsed them. ”

“ In the States, a country whose natural resources are wellnigh inexhaustible, and whose enterprising population has immensely increased its wealth, the creation of trusts is an event of everyday occurrence. The banker, Pierpont Morgan—a man of whom it is said that he combines the possession of an enormous fortune with an intelligence which is simply astounding—has already created the Steel Trust, the biggest combination the world has ever seen, and he has now set about to lay the foundations for an American mercantile marine. ”

“ As the “Steel Trust” in that year employed an average of 221,000 men, this meant that about 39,000 workers were busy on material destined for export and that $34,000,000, of the Corporation’s payroll of $190,000,000 was being paid to American labor by foreign consumers. In 1919, 16.5 per cent. of the total business was export and by131 the same analysis, foreign buyers paid American workmen in the Corporation’s plants more than $79,000,000 in wages. ”

“ Besides, each trust was a law unto itself and the steel industry was still anarchic.
Now finance began to be worried. The shares of these trusts having been floated in Wall Street and the public at last having begun to buy them, an outbreak of disastrous competition among the trusts, or between the trusts and the independents, or an overrunning of the steel spool, caused a panic on the Stock Exchange. Enormous sums of capital had become involved. Every such panic caused a general commotion, like a small earthquake. Something would have to be done to stabilize the steel industry. ”

“ The modern trust, as typified in its most developed form by the United States Steel Corporation, is apt to exert an undeniably steadying influence on prices. Precisely because of the immense interests at stake, and the danger of a reaction, the trust with its consummately able management tends toward conservatism. As compared with the action of a horde of small competitors under similar conditions, it is apt during a period of prosperity to refrain from marking up prices to the top notch, and is likely to make a more adequate provision for the contingencies of the market. ”

“ It is probable that certain branches of the iron and steel trade were the next to be combined by means of a trust, but as these were arrangements between private firms, not much information as to the time of their origin has reached the public. The second great trust to attract general public attention was the American Cotton Oil Trust, in which some of the same men who have so successfully engineered the Standard Oil combination are heavily interested. ”

“ Special charges of illegality and monopoly are made and special redresses and remedies are prayed, among others, that there be a prohibition of stoc ownership and exercise of rights under such ownership, and that there shall be such orders and distribution of the stock and other properties as shall be in accordance with equity and good conscience and 'shall effectuate the purpose of the Anti-Trust Act.' General relief is also prayed.
The Steel Corporation is a holding company only; the other companies are the operating ones, manufacturers in the iron and steel industry, 12 in number. ”

“ So great an operation cannot be considered merely as a matter of finance. The biggest of trusts must of necessity contain enormous potentialities affecting the general welfare of industry and of the State. Its organizers and managers, in consequence, cannot resent fair-minded investigation into the use it makes of its powers. Has the Steel Corporation’s existence been prejudicial to the interests of its competitors, its customers, its employees, or the general public? ”

“ Manufacturing Co., T. H. Symington Co., and many others must be a matter of deep satisfaction not only to their managements but to all who believe that American business men are not swayed solely by the desire to gather in dollars. And among those concerns whose managements asked themselves in regard to war activities not what profit there was in them but how best they could serve their country and help win270 the war, none was more ready and loyal than the United States Steel Corporation. ”

“ The desire for justice, for fair and full recognition of fair and full service, is deep grounded in every man, and the management of United States Steel, by giving each worker the assurance that he will get just what is his due, has secured for itself the entire coöperation of most of its employees and has, as a result, an organization that probably could not be equalled elsewhere in the industrial world.
The Steel Corporation is a true democracy. No position in it, however high or responsible, is beyond the reach of any employee who proves his ability to handle the job. ”

“ They had the greatest faith in it as a straightforward business enterprise. They believed in its future. Judge Gary, who took an active part in the organization, has always insisted that it would be successful and the enterprise justified. And the reader of the history of the big company must judge for himself whether it has justified its organization, not only from an economic, but more particularly from a sociological standpoint.
Morgan, it has been said, considered the financing of the Steel Corporation the crowning achievement of his career. ”

“ So obviously beneficial to American industry had been the Corporation’s activities in the export trade that even the Government’s attorneys did not attack it on this score, in fact, they suggested that the export organization should be preserved. On this point the Supreme Court majority opinion said:
We do not see how the Steel Corporation can be such a beneficial instrumentality in the trade of the world and its beneficence preserved, and yet215 be such an evil instrumentality in the trade of the United States that it must be destroyed. ”

“ Its resources, strength and comprehensive ownership of the means of production enable it to adopt measures to do again as it has done in the past, that is, to effectually dominate and control the steel business of the country. ”

“ The fact that the Corporation has at times sold abroad cheaper than at home has been used as a weapon against it by its critics. Apart from the fact that its doing so afforded labor to many American workers and thus reduced unemployment, it seems plain that a seller must make his price to suit the market in which he is operating, that had such price concessions not been made the Steel Corporation’s export business would never have shown the remarkable growth it has. Europe would have undersold it in all markets. ”