Democratic Sentinel, Volume 16, Number 11, Rensselaer, Jasper County, 1 April 1892 — THE CORDAGE TRUST. [ARTICLE]

THE CORDAGE TRUST.

AN ABSOLUTE MONOPOLY OF PRODUCTION. It Manipulator the Markets and Gets from Ita Tariff Tax an Knormou* Proßt Whore’s That American Tin Plate? A Veritable Octopus. Hemp and Its substitutes, manila, sisal grass and jute, constitute the raw material of two important industries, those of cordage and bagging manufacture. The most important of these is the cordage industry, which comprises the production of all classes of ship and other cordage, rope and binding twine. It is seldom that these products are manufactured in separate establishments. Nearly all the materials used are imported, and the establishments in the industry are quite widely diversified throughout the country. A scheme to combine all these establishments into a gigantic trust would have been considered impossible several years ago. Now, however, after the people have become accustomed to the sight of trusts and combines, its successful accomplishment excites little comment. The growth of the present Cordage Trust from the so-called association which loosely bound the manufacturers together previous to 1887, when the present trust was formed, has been so gradual that except among the interests directly affected it has excited but little interest. Previous to October, 1887, the cordage manufacturers were in a combination or pool, the object of which was to fix prices. But, other loose arrangements of this kind, the members were not slow to break the agreements made when they found it to their advantage to do so. Early in 1887 this pool fell to pieces of its own weight and an era of free competition followed till October, when the .nucleus was composed of the following concerns: Elizabethport Cordage Company of New Jersey, and the Tucker & Carter Cordage Company, L. YVaterbury & Co. and William Wall’s Sons, all of Brooklyn. Around this nucleus of four concerns have been gathered forty-five other establishments in the United States and Canada, until now the trust controls over 90 per cent, of the production of cordage, rope and binding twine. At the time of its organization in 1887, the trust announced as the object sought by its formation, an increase in the profits to be derived from a lower cost of materials by the removal of competition In the market, and from the economies to be derived from a decrease ir the cost of production. It was asserted time und again that no attempt would be made to raise the prices of its finished products. These claims were repeated at the time of its reorganization as a corporation, and finally in February last in the annual report to the stockholders in the following terms: “Through these advantages secured by the control of many mills, and their management under one direction, the company hopes to be enabled to secure an increased margin of profit without increasing the prices of its product to the consumer.” Has the trust up to the present carried eut this promise, or, if not, is there any likelihood that it will do so in the future? In the following tables are shown the average monthly prices since 1885 of the raw material and finished product. The articles, the prices of which are given, are manila hemp and manila cordage 7-16 of an inch in diameter and larger: MANILA. HEMP, JO IA 3 I A3' A 3 AS A 3 * L& 1 * sus'gLi MONTHS. 2 -88 -.S -8 - 2a2®S®2 o 2 ® 2 as a - 91 si o a a v uI _o| o o January..:. 7.72 8.111 9.04 12.1111.75 9.81 February 7.25 8.06 1 9.12|11.62 11.12 8.08 March 6.78 7.89 9.t 011.56 9.62 8.50 April 6.98 7.75! 9.C011.87 9.00 8.31 May 7.92 7.67 9.00T2.87 9.25 8.19 Jane 7.87 7.44 9.00i13.0J 9.25 775 July 7.56 7.64 9.00 12.87 9.25 7.62 August 8.24 9.32 9.C0 13.87 9.25 7.45 September 7.98 9.87 9.00 13.87 ! 9.2 r >| 7.32 October 7.89 10.34 9.00 14.37 j 9.08 7.n9 November 7.95 9.40 9.2114.1210.5 6.87 December 8.1519.01 IU2 1 3.871 9.84 ftJ2 MANILA CORDAGE. A 3 £A 3 I g A 3 g MONTBB. J|J J | 5 | I n^ n 4i n 43| rl^ Ja a a a fl © w © © © o 0 0 o u January 11.75 12.00,10.50 1 4.25 14.50 11 50 February 11 25 12.0 110.50J5.25 15.C0 10.87 March 11.75 12.03 10.50j15.75 15.00 10.75 April 11.75 12.0.1|10 75115.75 16.00j10.f.2 May 11.75 12.00 10.75 15.7>115.00 9.75 Ju e 11.7511.00 10 75 15.75 15.9C] 9.25 July 11.75 10.50 1 '.76 15.1211.75 9.25 August, 11.75 11,37 11.87 13.60i14.75 9.12 September... 11.75111.25 11.60 13 00 14.75 8.87 October 11.75|11.75 11.25 13.2.>| 14.75! 9.12 November 11.75111.57 12.C0;13.25|H.67! 9.87 December 11,7 j 13,87 13.2i|14.25|12.00|10.25 The following are the average yearly prices of materials and finished product (cents per pound): 1886.1 18871j1888J1889.11890. j 1891. Cordage...... 1L7u|11.51 U.15'14.5714AS 9.94 Manila 7.68| 854- 9.04|13.00[ 9.77 j 7.63 Difference 4.02! 2 971 2.11| 1.57 i 4 76j 2-04

These figures would be misleading without explanation. The high prices of the raw material prevailing in 1889 were in part due to a shortage in the crop, but chiefly to the manipulation of the market by a combination of the Cordage Trust and English brokers. In the fall of 1888 this combination began to corner the product with such complete success that during a large part of 1889 they controlled nearly all of the stock. The prices prevailing in 1889 were these at which the trust was willing to sell, and not the prices which it paid for the raw material. By this corner of the material the trust was able to keep up the price of cordage to the high averages shown for 1889 and 1890, until it had succeeded in working off the whole stock on hand. The difference between the price of the finished product and of the raw material for 1890, as show r n atftve, was about the actual average difference in 1889 also. This shows that the trust succeeded in. making enormous profits entirely at the expeflse of the consumers. The reduction in the price of cordage in 1891 was made for a purpose. During the whole year the Trust was negotiating for the control of the independent establishments, and its success depended upon its ability to force these outsiders to terms. For had the Trust kept prices up, the outside establishments would either have refused to 'o n the Trust, or would hive held out for more favorable terms than they would have been willing to accept under other circumstances. By October, 1891, the Trust had so far suoceeded in securing control of the competing mills that it was able to advance prices again. As a result, the price of cordage has been raised from 8f cents per pound to the present price of 11J cents per pound.- And this advance has been made directly in the face of a declining market for the material. The present price of manila for shipment is 6J to 7 cents per pound. The difference between this nrice and that of the finished product is, therefore, 4.38 cents per pound. The promise made by the Trust, that the increased profits which it hoped to secure from organization would not be at the expense of the consumer, has been completely forgotten. . In spite of the fact that the Cordage

j Trust engaged in open war during the | whole of last year with the independent I manufactories for the purpose of forcing ! them into the Trust, it was able to make ! very large profits. During the fiscal I year ending October, 31, 1891, the Trust ; made a profit of $1,406,313, which enI abled it to declare dividends of 8 per i cent, on the preferred and 9 per cent, on ; the common stock, and at the same time : left a balance of $106,313. As a result ! of the higher prices since October, the Financial Director of the Trust felt justified iu making the following report for the quarter ending January 31 last: , “It is very difficult at this time to give an accurate estimate of the profits of : the business for the quarter ending January 31. I feel safe in stating, how- | ever, that after deducting expenses, ; rentals, and all fixed charges, these ! profits will be found sufficient to pay I the entire annual dividend of $400,000 on the preferred stock and a quarterly dividend on the common stock, besides leaving a large surplus.” Should this rate of earnings be e ntinued throughout the year the Trust will be able to pay the dividend of 8 per cent, on the preferred stock, 12 per cent, on the | common stock, and have $1,000,000 be- | sides to be added to the “large surplus” i earned during the past quarter, which later will be increased 300 per cent. 1 Just so long as the high tariff on the products of trusts is allowed to stand and prevent competition, just so long will the trusts use it to exact from conl sumers all the profit it allows.