e
eighties and the nineties. The number of commercial failures in 1875 was
double the number of 1872. The number of failures in 1878 was over three
times that of 1871. The same thing happened in the eighties. The
liabilities of concerns failing in 1884 were nearly four times the
liabilities of those failing in 1880. The climax came in the nineties,
after a period of comparative prosperity. Hard times began in 1893.
Demand dropped off. Production decreased. Unemployment was widespread.
Wages fell. Prices went down, down, under bitter competitive selling,
to touch rock bottom in 1896. Business concerns continued to fight one
another, though both were going to the wall. Weakened by the struggle,
unable to meet the competitive price cutting that was all but the
universal business practice of the time, thousands of business houses
closed their doors. The effect was cumulative; the fabric of credit,
broken at one point, was weakened correspondingly in other places and
the guilty and the innocent were alike plunged into the morass of
bankruptcy.

The destruction wrought in the business world by the panic of 1893 was
enormous. The number of commercial failures for 1893 jumped to 15,242.
The amount of liabilities involved in these failures was $346,780,000.
This catastrophe, coming as it did so close upon the heels of the panics
that had immediately preceded it, could not fail to teach its lesson.
Competition was not the life, but the death of trade. "Every man for
himself" as a policy applied in the business world, led most of those
engaged in the struggle over the brink to destruction. There was but one
way out--through united action.

The period between 1897 and 1902 was one of feverish activity directed
to coordinating the affairs of the business world. Trusts were formed in
all of the important branches of industry and trade. The public looked
upon the trust as a means of picking pockets through trade conspiracies
and the boosting of prices. The Sherman Anti-Trust Law had been passed
on that assumption. In reality, the trusts were organized by far seeing
men who realized that competition was wasteful in practice and unsound
in theory. The idea that the failure of one bank or shoe factory was of
advantage to other banks and shoe factories, had not stood the test of
experience. The tragedies of the nineties had showed conclusively that
an injury to one part of the commercial fabric was an injury to all of
its parts.

The