--But it is of course extremely difficult to
maintain these loose agreements among merchants and producers engaged in
intricate and far-reaching trades. A big opportunity is constantly
tempting one of them to undersell; new firms are constantly springing up
with new machinery, willing to trade upon the artificially raised
prices, by under-selling so as to secure a business; over-production and
a glut of goods tempts weaker firms to "cut rates," and this breaks down
the compact. A score of different causes interfere with these delicate
combinations, and plunge the different firms into the full heat and
waste of the conflict. The renewed "free competition" proves once more
fatal to the smaller businesses; the waste inflicted on the "leviathans"
who survive forms a fresh motive to a closer combination.
These new closer combinations are known by the names of Syndicate and
Trust. This marks another stage in the evolution of capital. In the
United States, where the growth is most clearly marked, the Standard Oil
Trust forms the leading example of a successful Trust. In 1881, this
Standard Oil Company having maintained for some ten years tolerably
close informal relations with its leading competitors in the Eastern
States, and having crushed out the smaller companies, entered into a
close arrangement with the remaining competitors, with the view of a
practical consolidation of the businesses into one, though the formal
identity of the several firms was still maintained.
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