Table III, giving the average monthly prices of the association (the net prices paid to manufacturers), shows, on the whole, a decline; but one not so great after all, when one considers the general tendency of prices of all manufactured products. Moreover, there are several times when the price has gone up enough to counterbalance in great part the decline.

Besides the statements of reliable manufacturers regarding their profits, a comparison of the table of prices with the table showing the amount produced in different years in Michigan

gives us still further reason for the belief that the association cannot secure prices which make the profits at all extraordinary. A distinctly marked rate of increase (not absolute increase) or falling off in production usually follows, especially in later years, like changes in the average yearly price. One should not lay too much stress, however, upon such similarities, as there are many other determining factors.

Many of the advantages to manufacturers of such an association, especially the freedom from competition with one's neighbors, cannot be secured unless a very large proportion of the manufacturers of the state are united. The association aims, of course, to have as many join as possible; and in case of necessity it does not hesitate to "squeeze" a manufacturer whose block is so situated that he has no need of the association, and whose competition is troublesome. This brings to our notice the disadvantage it might be to some manufacturers to become members. As the prices, freight charges, etc., are arranged for the whole association, the manufacturer who has a ready market near at hand could oftentimes realize somewhat more by remaining outside.

In the year 1886, about 600,000 barrels of Michigan salt were sold by outsiders. The amount was large enough to make a real competition that could be severely felt by the association. At length, the managers issued the order to their agents to meet any rates, however low they might run. Table III shows the gradual decrease, as the fight went on. In August, 1887, the unprecedentedly low price of 50 cents per barrel was reached. In the same month manufacturers representing some 350,000 to 400,000 barrels, yearly product, joined the association; and we note the consequence in the rise of price to 57 cents for that month's product, while the prices for the following three months (58, 60, and 62 cents) still show the upward tendency.

It has been impossible to obtain with any degree of accuracy the data which would indicate the influence of the competition. within the state; namely, the times of the accession of different manufacturers to the association and of their withdrawal from it. As the contracts are made yearly, some enter the association

and others leave it every year.

In one or two instances, however, the effect of such changes is marked. Reference to Table III shows, in 1880, a sudden decline in price from $1.09 to 72 cents within three months. This is probably to be explained by the fact that "a large number of the manufacturers went out March 1, and that they commenced cutting prices, and we [the association] concluded to more than meet them.” The sudden drop in prices in the early part of 1882 followed the breaking of the pool with New York. The rise in August, 1887, is due, as noted above, to the accession of a number of manufacturers. It should rather be called the setting back of the price toward that obtained before the cutting to force the manufacturers in. Doubtless, too, many of the other changes noticed are to be ascribed to the same causes.

When a barrel containing 280 lbs. of fine salt of the first quality can be bought in the Chicago market at a price ranging from 75 to 85 cents, there is not likely to be very much complaint on the part of consumers, nor much talk about "monopolies," "coalitions for robbing the people," etc.; and yet the Michigan Salt Association is sometimes attacked as a monopoly, and it doubtless has some of the features of one. Adolph Wagner is strongly inclined to recommend the manufacture of salt by the state, on account of the danger of so common an article of consumption being monopolized by the manufacturers and dealers.2 The advisability of state control seems to him, on the whole, greater than in the case of the coal industry. Our experience with anthracite coal companies within the past few years has been such that we may well note the circumstances of our salt industry in this regard. Is it likely or even possible that a really oppressive monopoly in this article can be made?

The salt-producing territory of the United States, while widespread, is nevertheless so limited that competition in manufacture is by no means so free as in other lines where the raw material may be shipped in at low rates; e.g. cotton, or shoes. This makes it much easier for two or three combinations to unite

1 Letter from the secretary of the association.

2 Wagner, Finanzwissenschaft, Bd. I, §§ 251, 254.

and control the whole product; and we have seen that in two instances, at least, for short times, such a union was made to control "disputed territory "an expression, by the way, which in itself emphasizes the limited nature of the competition.

The coal and petroleum industries have been able to secure complete control by the aid of the railways. Aside from the fact that the capital invested in salt is much smaller, it would be much more difficult for the associations to control the means of transportation. The territory is more widely scattered, and is, besides, much of it adjacent to the great lakes. Such a control as the coal syndicates exercise, would require a controlling influence over all the larger railways east of the Mississippi, and over the boats on lakes Huron, Michigan and Erie, as well.

In

A further matter to be noted is the large import of salt. 1880 some 38 per cent of all the salt used in the United States came from abroad. Though part of this is of a different quality and does not enter into competition with the American product, yet a large part of the sea-board traffic in salt, and the larger part of the salt used in the South, is controlled by the importers. The salt is brought as ballast, so that the cost of transportation to our coast is practically nothing. It is the cost of transportation from the sea-board that keeps it out of the territory now controlled by the Michigan association. It may be readily seen that our protective tariff on salt would need to be far higher than at present, before our manufacturers, even if all in the United States were united, could command prices comparable, when considered with reference to the cost of production, to those obtained on anthracite coal. The character of the combinations, too, would need to be much stricter.

Without such combinations, considering the Michigan association as it is, the New York competition is enough to keep the price from becoming exorbitant. Add to this the abovementioned fact that the association has no power to limit production, and the fact that new wells are being sunk continually, whose owners can be forced to join the association, if inclined to remain outside, only by a tedious and expensive fight on prices, and the dangers to consumers from the association seem slight. Doubtless, the manufacturers who have been in effect

forced into it, and who feel that without an association in the state more profit could be made, are inclined to think that such a combination is oppressive. These manufacturers, however, form but a small proportion of those in the state.

The conclusion to which one must come, then, regarding the influence of the association is this: it is probable that the average consumer is but slightly affected, though it is possible that he has to pay a little more for his salt than would otherwise be the case; it is certain that, with the exception of a few who are uncommonly well situated, the manufacturers are decidedly benefited by the association. Certain it is that most of them are well content, and that the association never stood firmer than it does to-day.

J. W. JENKS.

The subsequent history of combination in this industry has been unfortunate. The National Salt Company was organized in New Jersey in 1899, acquiring the business of a company of the same name chartered by West Virginia. Most of its properties were in New York, but the company purchased the best plants in Ohio and Michigan, claiming in 1900 to include 94 per cent of the evaporated salt of the entire country excepting the Pacific coast. In 1900 plans for controlling salt works in Spain and Italy were inaugurated.

The next step was the formation of a New Jersey company in 1901, known as the International Salt Company, which absorbed the National by interchange of securities. This operation was financially tainted by the enormous compensation, amounting to about one-third of the stock of the new company, issued to the promoters. By 1902 also it became clear that the National Salt Company, which had been paying dividends at 8 per cent on the common stock, was practically insolvent, not even having earned interest on its bonds. It was officially stated that this embarrassment was due more to extravagant purchases of plants than to losses in operation. Meanwhile disorganization and losses of property under receivership has greatly reduced the proportion of the entire industry controlled. In so far as the possession of natural salt deposits constitutes a basis for monopoly, a foundation for successful combination would seem to be present; but failure has evidently resulted hitherto from a combination of extravagance, mismanagement and perhaps even downright fraud. — Ed.