trust was formed. By putting them together, destroying competition among them, reducing unnecessary expenses, and with the advantages of high-grade management, this value, it was assumed, would be increased to $4,000,000, or the value of the five from $10,000,000 to $20,000,ooo. This plan was followed in nearly every case.

Now, if we wish to discover the value and extent of these "economies," it is only necessary to look at the quotations of these common stocks. Most of the trusts have been in existence eight years or more, and the period of their life includes some of the most profitable years in the history of American industry. They have had plenty of time to realize these economies. If there is a basis for the organization of consolidations of numerous plants, managed by a board of directors in New York, the common stocks, which represent the "economies of combination"-the savings from buying in large quantities, the lower rates of interest paid to the banks, the superior talents of high salaried men, along with the admitted gains from stable prices-would appear in high dividends and high prices for the stocks. And yet we find such quotations as these, representing the percentage of $100 per share,

at which the trust common stocks are now selling: Allis Chalmers, 9%; American Beet Sugar, 3934; American Agricultural Chemical, 46; American Can 8%; American Car and Foundry 504; American Locomotive, 3534; and so on. There are a few exceptions, but for the most part, so far as the market quotations of the trust stocks are concerned, the "economies of combination" do not exist. It is possible that the United States has paid too high a price in an industrial development arrested by the stagnant routine of monopoly for the benefits of suppressed competition.

XXII

THE INVESTOR AND GOLD SUPPLY

In a series of articles recently published in Cotton and Finance, dealing with the subject of gold production and its effect upon the prices of bonds, stocks, and commodities, Mr. Theodore H. Price reaches a conclusion which, if it can be established, is of vital moment to every owner of property in the United States, whether that property be bonds, insurance policies, stocks, or real estate. This conclusion, briefly stated, is that the increasing production of gold is responsible for the great rise of prices which has been the characteristic feature of the last decade; that this increased production of gold will continue indefinitely; and that the world is facing an economic crisis arising out of the certainty of a persistent depreciation in its standard of value.

This subject has been much discussed in recent years, as the steady rise of prices has brought home to every class in the community the importance of the problem presented. The fact of the advance of prices is well established. In 1896

Bradstreet's compilation of the wholesale prices of 106 commodities, including all the leading commodities of commerce, was 59,124. In 1900, this figure had risen to 78,839; in 1905, to 80,987; and in 1912, to 90,362. Specimen increases in particular commodities are even more striking. For example, the price of wheat, during this period of seventeen years, rose from 64 cents to $1.22; the price of corn, from 33 cents to 86 cents; the price, of beef cattle, from 4.6 cents to 9 cents; eggs, from 12 cents to 20 cents; raw cotton from 7 cents to II cents; anthracite coal from $4.25 to $5.50; and so on, with hardly any exception, throughout the entire list. This rise of prices is mainly responsible for the high cost of living. The advance of prices is lessening the purchasing power of gold over the necessaries of life.

The competition of corporations for the money of the investor, on the other hand, because of the rapid multiplication of companies, and the numerous safeguards which its experience and information is teaching the bankers to throw about the stocks and bonds which they offer for sale, is growing constantly sharper, and is forcing down the prices of all securities which carry a fixed income, and which have no prospect of sharing

in increasing profits. The investment fund, it is true, is steadily increasing, but since the purchasing power of a 4 per cent. or 5 per cent. investment income is so rapidly declining, while, at the same time, the number of securities offering these rates of interest is increasing, the natural result is that the investor discriminates against so-called "gilt-edge" bonds. This depreciation in the prices of bonds, while apparently it is an advantage to investors making new purchases, is threatening heavy losses to the owners of investments already in existence.

Few realize to what an enormous total the securities of bonds and stocks issued by American corporations has mounted. In an article by Francis Lynde Stetson, published in the Atlantic Monthly for July, 1912, which is quoted by Mr. Price, the following statement is made:

In the fiscal year 1909, according to the report of the Commissioner of Internal Revenue, there were in the United States 262,490 corporations of all kinds, with more than $84,000,000,000 of stocks and bonds, and $3,125,000,000 of income, paying a Federal tax of about $27,000,000. For the fiscal year 1910-11 the figures had risen to 270,000 corporations, with more than $88,000,000,000 of stock and bonds, and $3,360,000,000 of income, paying a federal tax of $29,432,000. As the total wealth of the United States has been estimated at $125,000,000,000, it would appear that nearly two-thirds of it is held by corporations.