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this is precisely why the disinterested friends of free institutions are demanding the introduction of the initiative and referendum. They would preserve democratic government, they would secure the ends of popular rule in an orderly, peaceable and enlightened manner. The initiative and referendum have been in operation in Switzerland for the greater part of the past fifty years, and have proved immensely successful, placing that nation in the very van of the republics of the world. Switzerland is known to all men as a government preeminent for its orderly, progressive and enlightened rule.

"The shallow alarmist cry raised by the Senator made me indignant, as it was an insult to the intelligence of every person present. By the initiative the people compel legislators to act upon measures that they desire to have acted upon. The legislators have thus every opportunity to oppose the proposed measure with all the arguments that they can bring to bear against it. If they defeat it the measure will then go before the people with the stamp of disapproval of the legislative body. Here again it will be thoroughly discussed through the press and on the hustings before the people are called upon to vote Yes or No on its adoption. Does this extension of an educational campaign and general deliberation, not only in the legislature but on the part of the press and the people, smack of inconsiderate action, mob rule or anarchy? Is is not almost inconceivable how any man prominently before the people would place himself in so ridiculous and unenviable a light as to attempt to excite the fears of the ignorant by summoning the bogy of mob-rule in connection with the initiative and referendum? For the referendum is also an equally rational and obviously needed democratic safeguard to protect the nation against the corrupt usurpations of legislators acting for privileged interests against the public good. Here, if a certain per cent. of the voters demand

that a measure shall be submitted to the people, and make known their demand in the prescribed manner within sixty or ninety days of the passage of the bill, it must be submitted to the electorate at the ballot, when the people have a right to pass on the measure, and if their servants have yielded to the corrupt lobby, the corrupt boss or to the privileged interests that purchase legislation through campaign funds, they have the opportunity of defeating the measure and thus merely protecting themselves. Does that suggest anarchy or the coming of a mob into the legislative halls to over-awe popular servants? I think Senator Lodge is the first man of any reputation who has had the hardihood to intimate that DirectLegislation fosters or could foster either anarchy or mob-rule."

"No," replied the poet, "as a matter of fact the initiative, referendum and right of recall all discourage mob-rule. They are also safeguards against the ever-growing anarchy of selfish wealth. They are the safety-valves essential to the life of the people. As long as the people feel that the public servant is betraying the plain rights of all men, giving to the Few the things that belong to All, public discontent grows, the pot of popular indignation boils, and there is ever-growing danger of popular explosions. The true statesman knows that when the pot begins to boil it is time to lift the lid. DirectLegislation would be a lifting of the lid. It would quiet the rising tide of discontent; it would render impossible the betrayal of the people by corrupt partymachines. Who does not remember the betrayal of the people in Philadelphia, in Cincinnati, in San Francisco?

"Another thing should be noticed. Who are fighting or opposing DirectLegislation? All the associated villainies of the nation, for the good reason that these measures would prove effective extinguishers for these villainies.

"No, it is the continued disregard of the wishes and interests of the people that

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The Pageant of the Throne-Powers-The voting and managing syndicate, with Smelter-Trust-A General Glance

at the Trusts.

HE SMELTER-TRUST now apTHE proaches in the procession of the throne-powers. But before we strictly confine our attention to this trust, a few general observations may be helpful.

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In the popular understanding, any big corporation or combination is a "trust." This understanding, too, is far enough right to indicate "corporations as the great division of the law along with "monopolies" where we are to look for the legal treatment of "trusts." It is somewhat anomalous, however, that one of the oldest and largest divisions of the law carries the significant title of "trusts," implying a fiduciary or confidential relation with respect to property, and yet our modern commercial "trust" implies no such relation, and is legally classified not as a “trust” at all, but as a corporation or a monopoly.

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This curious misnomer arose through the fact that the early form of the "trust," as exemplified by the Standard Oil and the Sugar-Trust, was, in fact as well as in law, a literal "trust" where a fiduciary relation was actually established by the stockholders depositing the stock of the confederating corporations in the hands of certain trustees, who then became a *The first of this series of articles appeared in the July, 1905, number of THE ARENA.

strings in their hands, like a mechanical toy, enabling them to control each company in the interest of all the conspiring companies. The magnitude and novelty of those early oil and sugar operations attracted such general public attention that everything since of the same or a "trust," even though there was no semsimilar order has been usually called a blance of a fiduciary relation or any actual trusteeship.

Counting only the large industrial, franchise and transportation trusts, there are 440 of them, with a floating capital of $20,379,162,511.† The greater industrial trusts are only eight in number and are as follows: The Copper-Trust, the Smelter-Trust, the Sugar-Trust, the TobaccoTrust, the Oil-Trust and the Steel-Trust.‡ Trust, the Shipping-Trust, the Beef

These eight trusts have merged and consolidated more than 1,500 distinct

companies and plants; and all of them, except the Sugar-Trust and the BeefTrust, were created and turned loose upon the country by the State of New Jersey. The par value of their stocks and bonds (omitting the Beef-Trust) is $2,662,752,100, and the Steel-Trust alone has more than half of these fabulous figures with its

Moody's The Truth About the Trusts, p. 11. The total wealth in the United States, according to the census of 1900, is $94,300,000,000.

‡ Id., p. 485, etc. Mr. Moody makes the number seven and omits the Beef-Trust.

capital of $1,370,000,000. The marketvalue of the stocks and bonds of the seven trusts, not counting the Beef-Trust, is $2,278,460,000.


If there is a necessary relation between large corporate combinations, or the men who compose them, and a code of morals, certainly the code is not very high. In our chapter on "The View-Point," we indicated that the accepted code of morals was made by the economic needs of the ruling-class. The history of the evolution of every dominant trust gives ample

evidence that this view is well sustained by the facts. A great many people confuse magnitude of money with exalted character and honor. This is generally a mistake. There is no more specific solvent of character and honor than magnitude of money. Those who would deceive us into making a safe asylum in our midst for the ingratiating trust, would fain have us think that we can rely upon the high character and morality of the class of men interested in promoting the trust. But why should we rely upon them when we recall our glimpse of "high finance" as exemplified by the dominant trusts and corporations in Colorado, and in the nation by such petrified consciences as those exhibited by the Alexanders, Hydes, Depews, McCalls, McCurdys, Drydens, Rockefellers, et als? Thus reminded, we are more inclined to look beneath the surface, and to appreciate the eloquent words of Governor Thomas in speaking of the promoters of the Trusts:

"The voice that intones the litany is the same that commands a rise in the price of grain when hunger is abroad. The pen that signs the check for the erection of a church or a library is the same that approves the vouchers of the lobbyist. The hand that gives freely to the cause of temperance in New York is the same hand that regulates the output of the Kentucky distilleries. The influence that deplores the decadence of public

morality is frequently the same which tempts the public servant to his downfall."*

But from the mouths of the trust-promoters themselves, and from one who has attained such eminence that he is entitled to speak for his craft, we have the most convincing evidence of their moral delinquency and perversion. When asked by the Industrial Commission whether he thought it was a “fair, ethical position to make the consumer pay dividends on $25,000,000 of over-capitalization, H. O. Havemeyer, head of the Sugar-Trust, testified, under oath, as follows:†

"I do not care two cents for your ethics. I do not know enough of them to apply them."


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Such an answer from a child, showing so clearly a moral lesion, would lead our psychologists to classify it as a deplorable case of "arrested development" and to recommend it to competent hands for immediate treatment. Yet, through the power of money and monopoly, Mr. Havemeyer has so dazed and duped our social psychologists that they are content to diagnose his case as that of a great 'captain of industry." This "captain is in Colorado now (October, 1905) trying to excite the people to increase his profits by an organized effort to prevent Congress from putting the sugar from the Philippines upon the free-list. He and his disciples, including Mr. Morey, the same gentleman who, as we have seen, figured with the Smelter-Trust in coercing a settlement of the rate-fixing telephone suit, are deftly instructing us now, while saying nothing about their own profits, how to save our sugar-beet interests by pulling the right string on the Filipinos. Of course, we have forcibly made these unhappy people our wards, and all principles of justice and equity require us, as their guardians, to act in their interest and not in our own.


February 21, 1899 (Sen. Jour., p. 520.) *Message on "Trusts" to Colorado Legislature, tReport Indus. Com., Vol. I., p. 118.

this "captain," who does not give "two cents for our ethics," is now in Colorado, backed by his unethical millions, seeking for help to pull the string that will strangle the Filipinos and push up the profits of the Sugar-Trust.

Smooth are the lieutenants he has already enlisted, and it may not be long before we shall have another proof that economics make our morals; and sugarbeet raisers may come to see that it is all right to promote their industry by inducing a great national guardian to betray its trust to its helpless wards. But there are counter-economics now at work, and just at present they are a powerful influence against the cunning designs of the Sugar-Trust.

Colorado-made sugar is sold cheaper outside the state than at the plant where it is made. Beet-sugar made at Loveland is sold in Denver at the New York price plus the freight between New York and Denver. If you backed your wagon into the Loveland factory for a load of sugar the price you would pay would be the New York price plus the freight to Denver, and plus the freight from Denver to Loveland. This fact has already arrested general attention and the people, if not aroused, still are suspicious and afraid of this trust. They see the handwriting on the wall and know it will only be a short time before the Sugar-Trust will become one of the throne-powers of the state, and like the Franchise, Smelter and Coal-Trusts will be a constant menace to social order and justice. We have thus digressed a moment on the sugarbeet industry to illustrate the inevitable social tendencies of an enormous trust controlled by a "captain" who does not "give two cents for our ethics and does not know enough of them to apply them." This total absence of moral uplift in trust-promoters is not at all peculiar to Mr. Havemeyer. It is so obviously in keeping with the end to be achieved by every trust, that even this early in their career they have come to have a code of morals of their own. They have under

ground "short-cuts" by which they go "to the root of things in acquiring and dominating the sources of supply and the raw material, in controlling shipping rights of way, in securing exclusive benefits, rebates on large shipments, beneficial legislation, etc. These so-called 'short-cuts' in business methods are made in many ways, and it may be that men are sometimes obliged to break through the lines of abstract justice to achieve their ends."* That is precisely the point I am making, and it is frankly confessed by such an adroit expounder of the trust as Mr. Moody.

These imposing trust-promoters are continually "breaking through the lines of abstract justice," as exemplified in this series of papers by the Franchise-Trust, Coal-Trust, Smelter-Trust and the Railroads, and as exemplified in the nation by the Beef-Trust, Insurance-Trust, all other trusts, and also by the Railroads. They care nothing for social justice, and spurn it like a cast-off garment. When they do so, Mr. Moody assures us "that society is apt to endorse their methods on the general theory that the end justifies the means."†

If this is so, then the trust-magnate has already reached a stage of irresponsible depravity. He is a free-lance in morals, duly licensed to use either stiletto or club, as he may determine; the one or the other will secure his end. In my opinion, however, society is not "apt to endorse their methods." One who says otherwise forgets or ignores as an essential part of society the Socialists, Single-Taxers, Labor-Unionists, Roosevelt Republicans and Bryan Democrats. Society is in open revolt against the methods of the trust, but reserves its final rebuke until it may learn how it may be best administered. Even outside of the forces that make for reform, this revolt is also strikingly apparent. I quote from an address on "Moneyphobia" by ex-Assistant Attorney- General James M. Beck, before the recent

* Moody's The Truth About the Trusts, p. 17. † Moody's The Truth About the Trusts, p. 17.

New York State Bankers' Association: "The signs of the times indicate a grow ing feeling of social discontent which finds its chief expression in indiscriminate abuse of wealth. This agitation is not confined to the ignorant, the envious or the malic

ious. The recent commencement season

unmistakably indicated that the educated men are disinterestedly considering the phenomena of business in their moral aspects. Their deliverances teem with woeful jeremiads at the evil of the times and the decay of morals. Primarily, at least among the conscientious critics of the times, the present discontent is due to a profound dissatisfaction with the code of commercial morals. Abuses of trusts have run riot."*

Words like these sounded in the ears of bankers, and many others of similar import that space forbids us to quote, are cogent proof that society is not endorsing the "short-cut" methods of trusts; at least, not those methods that "break through abstract justice."

A most effective statement of the popular revolt against trust-methods and irresponsible wealth comes from the still virile pen of the venerable John Bascom. He is now of Williams College, but when the writer knew him and sat entranced by his earnestness and erudition, he was then the president of the University of Wis


A recent issue of The Independent contains an epoch-making discourse by Dr. Bascom,† from which we quote the following:

“The multimillionaire cannot be a member of a free state on equal terms with his fellow-citizens. . . . The most obvious and immediately serviceable of equalities which go with free institutions is equality in economic opportunities. No other quality concerns so many actions, or actions on which so large a share of welfare depends. The wealth of which

*Associated Press dispatches of Bankers' Convention, at Frontenac, N. Y., July 13, 1905. † New York, March 30, 1905.

we are speaking has been accumulated at the expense of this equality, and now threatens utterly to destroy it. One who can bring hundreds of millions to an undertaking, and, by a little combination, billions, has a power which, in comparison can carry the capital invested into the with that of men of ordinary means, gives him complete control of large undertakings. Not only does this mastery extend to securing these forms of enterprise, it carries with it the ability of making them, under almost any circumstances, profitable. No competition and no fear of of business of this order, and unless the competition accompany the development conception itself was a piece of folly the profits of a monopoly accrue to it at every stage. .. Whether it is steel production or the stock market that is under consideration, the multimillionaire creates the conditions under which he operates. Equality of opportunity in business relations has suffered a sudden overthrow which the future will easily complete. The strongest antagonism to social decay should be found in Christian faith, but faith slowly bends to the conditions which surround it. [Thus economics make religion.] The Greek church brings to Russia no liberty. Our own religion goes but a little way in carrying sympathetic aid to the working-class, or in arousing a sense of the service due from those who lead business. It has been no strange spectacle with us to find one ordering his economic activity in a method utterly subversive of the kingdom of heaven, and yet cherishing some detached notion of finding his way into that kingdom. He has provided himself with a night-key, so that, an opportune moment arising, he may leave his business companions in the street, and drop into this quiet home of the faithful. . . . The Republican party is fast becoming the bondman of plutocracy. Its motto is to "stand pat," careless of discussion or vindication. It has so long prospered by concession that inquiry and resistance are foreign to its spirit. The temper of Pres

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