Conglomerate

“ The consumers’ theory maintains that all profit on price is abstracted from the consumer, and must be returned to him; while to him should also belong all capital and control, subject to such regulations as the state and the trade unions enforce. This theory is fully exemplified in the English Wholesale Society, and in some of the smaller federations for production, which employ workmen, whether co-operators or not, for wages only, and admit no individual, but only co-operative societies, to membership. ”

“ The union of the Factory-Shop Committees of different concerns must be accomplished on the basis of the different trades, in order to facilitate control over the whole branch of industry, so as to come within the general industrial plan; and so as to create an effective plan of distribution among the different factories of orders, raw materials, fuel, technical and labour power; and also to facilitate cooperation with the Trade Unions, which are organised by trades. ”

“ The American manufacturers of a certain industry organize themselves into a big combine, the industrial magnates of the other countries do the same, and the national combines begin competing with each other. ”

“ The suspicious element in the general dynamic movement is progress in organization. That which we have primarily studied is the marshaling of forces for mere production—the creation of efficient mills, shops, railroads, etc. This, however, carries with it a tendency to create large mills, shops, and railroad [Pg 559] systems, and, in the end, to combine those which begin as rivals in a consolidation in which their rivalry with each other ceases. This means a danger of monopoly, and is the gravest menace which hangs over the future of economic society. ”

“ Fifty years before, the consolidation of the industries of the country under national control would have seemed a very daring experiment to the most sanguine. But by a series of object lessons, seen and studied by all men, the great corporations had taught the people an entirely new set of ideas on this subject. They had seen for many years syndicates handling revenues greater than those of states, and directing the labors of hundreds of thousands of men with an efficiency and economy unattainable in smaller operations. ”

“ The combination or the federation of existing organizations is but the natural response of the workers to the ever-growing complexity of modern industrial life. Ever closer organization on the part of the employers, the welding together of twenty businesses into one corporation, of five corporations into one trust, of all the trusts in the country into one combine, have to be balanced by correspondingly complete organization on the part of the workers. ”

“ Small businesses, as far as they still remained, were reduced to the condition of rats and mice, living in holes and corners, and counting on evading notice for the enjoyment of existence. The railroads had gone on combining till a few great syndicates controlled every rail in the land. In manufactories, every important staple was controlled by a syndicate. These syndicates, pools, trusts, or whatever their name, fixed prices and crushed all competition except when combinations as vast as themselves arose. Then a struggle, resulting in a still greater consolidation, ensued. ”

“ This incursion of foreigners was not without its effect on our craftsmen, who saw, that to command success, they too must combine, organize, and regulate. The result was that nearly every trade and industry soon had its guild organized on the continental model, the object of which (unlike the modern trades-unions that exist mainly to prevent the power of the capitalist over his employées from becoming absolute) , was to create a monopoly, and hedge it round so that no outsider could enter the exclusive circle without being properly initiated and regularly admitted to craft-membership. ”

“ We have now to inquire whether production upon a large scale is in turn to be supplanted by single consolidated enterprises, by those combinations of capital known as trusts. Under one of these three conditions industry must be carried on; few people wish to revert to the stage when production was carried on in small establishments, but warm controversy and difference of opinion still exist as to whether centralized management by a single company or combination offers superior advantages to production by independent competing establishments. ”

“ Rise of Great Corporations.%—That mechanical progress so astonishing should powerfully affect the business and industrial world was inevitable. Trades, occupations, industries of all sorts, began to concentrate and combine, and corporations took the place of individuals and small companies. In place of the forty little telegraph companies of 1856, there was the great Western Union Company. In place of many petty railroads, there were a few trunk lines. ”

“ While, on the one hand, the facilities possessed by each for certain kinds of production will render exchange mutually advantageous, on the other hand, the citizens of each will, under the industrial régime, tolerate no such restraints on their individualities as are implied by interdicts on exchange.
With the spread of the industrial type, therefore, the tendency is toward the breaking down of the divisions between nationalities, and the running through them of a common organization—if not under a single government, then under a federation of governments. ”

“ Machinery revolutionized the methods of production and, to keep pace with the possibilities, changed the mode of ownership. The old time partnership became a corporation; thus permitting the conduct of business on a broader scale and placing the management of large enterprises in the hands of men specially gifted or trained for the task. Ownership and control were separated and today we find many of the great industrial institutions directed and managed by men, who have no other interest in them than their splendid salaries. ”

“ Such an extreme iconoclastic position, which would overtly assert the mechanical standardization of industry as against the common-law standardization of business, seems to be the logical outcome to which the trade-union animus tends, and to which some approach has latterly been made by more than one trade-unionist body, but which is, on the whole, yet in the future, if, indeed, it is to be reached at all. ”

“ The co-partnership party answer that labour at least helps to make the profit, and that competition, as yet almost insignificant between their societies, can be avoided by federating them (a process long ago begun) for buying and selling in common, and for other common purposes, while leaving each the control and responsibility of its own internal affairs. They further advocate the eventual federation of the productive wing of co-operation with the distributive, for settling prices and all matters in which their interests might conflict. ”

“ That is to say, the interindustrial relations into which any branch of industry necessarily enters do not run to a final term in any direction; within the process of industry at large there is no member that stands in the relation of an initial term to any sequence of processes. The ramification of industrial dependence is without limits. The method of these relations of one concern to another, or of one branch of industry to another, is that of bargaining, contracts of purchase and sale. ”

“ Industrial combinations that consist, not in the approximation or fusion of parts, but in the establishment of common centres of connexion, are exhibited in the Bank clearing-house and the Railway clearing-house. While of yet another genus are those unions which bring into relation the more or less dispersed citizens who are occupied in like ways: as traders are brought by the Exchange and the Stock-Exchange; and as are professional men by institutes, like those of Civil Engineers, Architects, &c. ”

“ Manufacturing, mercantile, and banking companies have all tended to combine in large corporations, partly for greater economy, partly for an increase of profits through manipulating reorganization of stock companies, and partly for centralization of control. ”

“ The history of the formation of any one of the great industrial coalitions of modern times will show how great and indispensable a factor in the large business is the invention and organization of difficulties desired to force rival enterprises to come to terms. ”

“ Consolidation and amalgamation are the necessary and unavoidable tendencies of modern business. As surely as the primitive partnership succeeded individual effort and as, later, corporations were created to enlarge the sphere of partnerships, so is it certain that the industrial units which will fight for control of trade in the much larger markets of the modern world will represent vastly larger aggregations of capital than (except in extraordinary and generally state-aided institutions) were dreamed of fifty years ago. ”

“ Let the American Wholesale Co-operative supply him with an outlet, and he'll unionize his works; he'll sell to it as cheaply as to a middleman, if he gets his money just the same. He'll betray his competitors in a holy minute if he can make a sale. ”

“ Furthermore, in case of urgent necessity the Commonwealth, if it is in the interest of collectivism, may combine by law business enterprises and associations on the basis of administrative autonomy, in order to insure the co-operation of all producing elements of the people, to give to employers and employees a share in the management, and to regulate the production, preparation, distribution, utilization and pecuniary valuation, as well as the import and export, of economic goods upon collectivistic principles. ”

“ The joint venture, like the 'merger' and the 'conglomeration,' often creates anticompetitive dangers. It is the chosen competitive instrument of two or more corporations previously acting independently and usually competitively with one another. ”

“ Exciting as all this was, however, the desire for adventure was not as powerful as the desire for profits, and cut-throat competition in industry led as naturally to combination, as rate-wars on the railroads led to pooling agreements.
An important factor in the development of large corporations was the increasing use of the corporation form of industrial organization, as contrasted with the co-partnership plan. If a few men enter a copartnership, each of them must supply a considerable amount of capital ”

“ What is syndicated industry (industries united in syndicates) ? Syndicates are huge industrial combines. When capitalist owners of various enterprises see that it is not worth their while to compete for each others clients, and that it is far more profitable to form a close union for the purpose of jointly fleecing the public, they organise syndicates or still closer combiner of manufacturers, namely—trusts. ”

“ The so-called industrial and transportation trusts, the banking rings and investment pools, the labor unions and cooperative societies, and the associations of commission men and retail merchants are simply concerned in seeking to acquire the advantages of exclusion and organization. In each instance, united action for the elimination of waste and competition is the initial motive. "Cooperative efficiency in production" is the shibboleth of industrial organization ”

“ It is a fact that little companies exist, in spite of the State's partiality. If in France, land of centralization, we only see five or six large companies, there are more than a hundred and ten in Great Britain who agree remarkably well, and who are certainly better organized for the rapid transit of travellers and goods than the French and German companies. ”

“ During the past thirty years the work of organization has made enormous strides; and it has been much accelerated by the increasing industrial power of huge corporations. The mechanic and the laborer have come to believe that they must meet organization with organization, and discipline with discipline. Their object in forming trade associations has been militant. Their purpose has been to conquer a larger share of the economic product by aggressive associated action. ”

“ The ideal of taking over the instruments of production appealed to all intelligent workmen as work- men. To them it seemed merely Co-operative Production writ large, the ownership of the instruments and of the product of labour by the workers themselves. But the ownership and management was now to be carried out, not by small competing establishments doomed to failure, but in the industry as a whole by a " blackleg-proof " Trade Union. ”

“ Each trade organized in a syndicat would elect a council of labor; the syndicats of the same trade would be federated nationally and internationally. The Bourses, knowing the quantity of products which must be produced, would impart this information to the councils of labor of each trade, which employ all members of the trade in the manufacture of necessary products. ”

“ In the formation of a consolidation or a merger the services of a promoter may be necessary. This is especially true if the various companies are direct competitors and deep-rooted jealousies exist. Under the circumstances an outsider has the best chance of effecting an agreement between the parties. The difficulty encountered in all consolidations and mergers is the exaggerated idea of officials regarding the importance and value of their own plant and organization as related to the rest. ”

“ The Co-operative Wholesale Society, Limited, is a trading federation of the great majority of the English stores. Founded in 1863 on a small scale, it now counts its employees by thousands, its capital by millions, and its yearly sales by tens of millions. Besides its merchant trade, it manufactures to the value of £4,500,000, owning factories, warehouses and land in many districts. ”

“ Such a coalition involves a loss of independent standing, or even a loss of occupation, to many of the business men interested in the deal. If a prospective industrial consolidation is of such scope as to require the concurrence or consent of many business interests, among which no one is very decidedly preponderant in pecuniary strength or in strategic position, a long time will be consumed in the negotiations and strategy necessary to define the terms on which the several business interests will consent to come in and the degree of solidarity and central control to which they will submit. ”