Professor Jenks gave his third lecture on Trusts last night, taking as his subject "The Effects of Trusts upon Prices and Wages," and illustrating his remarks with charts of prices.
Prices are at times affected by the capitalization of corporations,--so much so that the laws of Massachusetts and some other states require capitalization to be fixed at the actual cash value of the plant. Promoters and organizers of combinations, however, prefer to capitalize on a basis of earning-power, the profits, in most cases, being concealed from the public. In order to pay dividends on a capitalization of from two to six times the cost of the plant, prices are some times put considerably above competitive rates, and if the organization has acquired a virtual monopoly, it is often enabled to hold these rates for a considerable period.
On account of the various means of saving expense and of using to the best advantage the labor and capital employed, the combinations might sell their products below competitive rates. Experience, however, has shown that in most cases the larger organizations have secured sufficient control of the market to enable them to raise their prices, thus making consumers suffer for the benefit of stockholders. This has been the result of the organization of the American Sugar Refining Co., the Standard Oil Co., the American Tin Plate Co., and the American Steel and Wire Co.
By far the largest part of the increase in prices during the past year has come from the great increase in prices of raw materials and in wages. But comparison shows that in every case the combination has been able to take advantage of the situation much better than separate corporations could have done.
During the last few years experience shows that nearly all the large combinations have been disposed to deal fairly with their employees. Though in several cases the number of employees of certain classes, such as the commercial travellers, has been lessened, the wages of nearly all classes have been increased in no slight degree.
It is probable that at present in case of disputes between combinations and trade unions the former would be much stronger than individual corporations. Leading trade-unionists, however, believe that in the near future the unions will become so strong in organization that they will be able to wrest from the combinations a good share of the profits, which are now distributed to shareholders.