D. Rockefeller on Industrial Combinations (1899)
Q. What are, in your judgment, the chief advantages from industrial
combinations—(a) financially to stockholders; (b) to the
All the advantages which can be derived from a cooperation of
persons and aggregation of capital. Much that one man can not
do alone two can do together, and once admit the fact that cooperation,
or, what is the same thing, combination, is necessary on a small
scale, the limit depends solely upon the necessities of business.
Two persons in partnership may be a sufficiently large combination
for a small business, but if the business grows or can be made
to grow, more persons and more capital must be taken in. The
business may grow so large that a partnership ceases to be a
proper instrumentality for its purposes, and then a corporation
becomes a necessity. In most countries, as in England, this
form of industrial combination is sufficient for a business
coextensive with the parent country, but it is not so in this
country. Our Federal form of government, making every corporation
created by a State foreign to every other State, renders it
necessary for persons doing business through corporate agency
to organize corporations in some or many of the different States
in which their business is located. Instead of doing business
through the agency of one corporation they must do business
through the agencies of several corporations. If the business
is extended to foreign countries, and Americans are not to-day
satisfied with home markets alone, it will be found helpful
and possibly necessary to organize corporations in such countries,
for Europeans are prejudiced against foreign corporation as
are the people of many of our States. These different corporations
thus become cooperating agencies in the same business and are
held together by common ownership of their stocks.
is too late to argue about advantages of industrial combinations.
They are a necessity. And if Americans are to have the privilege
of extending their business in all the States of the Union,
and into foreign countries as well, they are a necessity on
a large scale, and require the agency of more than one corporation.
Their chief advantages are:
of necessary capital.
of limits of business.
of number of persons interested in the business.
in the business.
and economies which are derived from knowledge of many interested
persons of wide experience.
to give the public improved products at less prices and still
make a profit for the stockholders.
work and good wages for laborers.
speak from my experience in business with which I have been
intimately connected for about 40 years.
11. Q. What
are the chief disadvantages or dangers to the public arising from
The dangers are that the power conferred by combination may
be abused; that combinations may be formed for speculation in
stocks rather than for conducting business, and that for this
purpose prices may be temporarily raised instead of being lowered.
These abuses are possible to a greater or less extent in all
combinations, large or small, but this fact is no more of an
argument against combinations than the fact that steam may explode
is an argument against steam. Steam is necessary and can be
made comparatively safe. Combination is necessary and its abuses
can be minimized; otherwise our legislators must acknowledge
their incapacity to deal with the most important instrument
of industry. Hitherto most legislative attempts have been an
effort not to control but to destroy; hence their futility.
12. Q. What
legislation, if any, would you suggest regarding industrial combinations?—
First. Federal legislation under which corporations may be created
and regulated, if that be possible. Second. In lieu thereof,
State legislation as nearly uniform as possible encouraging
combinations of persons and capital for the purpose of carrying
on industries, but permitting State supervision, not of a character
to hamper industries, but sufficient to prevent frauds upon
[From U.S. Industrial Commission, Preliminary Report on Trusts
and Combinations, 56th Cong., 1st sess. (30 Dec. 1899) Document
no. 476, Part 1, pp. 796–97.]