gers. Then we have single tickets, fifty-trip family tickets, monthly commutation tickets, etc., with enormous variations. in price. We may go farther and say that the American railway rate system of "charging what the traffic will bear" is a consummate example of monopoly prices.

Nor need it be supposed that in all its ramifications class price is a bad thing. It is, when ignorance and need are exploited by a special high price; frequently it works well when an attempt is made to reach a class of limited means with a very low price, as in the case of early and late workingmen's trains, etc.

Monopoly price will vary with use also; and this is one special subhead under class price, and may be designated as use price. The typical instance is that of two prices sometimes charged for gas: a higher when it is used for illuminating purposes; a lower when it is used for fuel.

Monopoly Price High Price. It is often said, and frequently even in judicial decisions, that the monopolist can charge any price that he pleases. We have already seen that this is not the case. The law of monopoly price shows that the price, even in the case of monopoly, is determined by economic forces. It is conceivable that there may be cases in which monopoly price will exactly coincide with competitive price, although the probabilities would be against a frequent coincidence of this kind. There are also cases where monopoly price may be even lower than competitive price. If a monopolist should be able to effect great savings as compared with the expense of doing business under competition, it could happen, in theory, that the price which would yield the largest net returns would be a lower price than would be possible under competition. Probably, and in fact almost certainly, under a condition of competition, letters could not be carried as cheaply as they are.

Generally there are strong reasons for the position that monopoly price is high price. Monopoly is formed for the sake of gain. Gain may be secured in two ways by monopoly: first, through economies of production; and it is alleged by trust promoters that these economies are a chief motive in their activity. There are some gains of this kind, but what their magnitude

may be in a particular case is highly uncertain. When we compare a monopolistic business with a competitive business organized on such a scale as to secure the maximum of efficiency, the gains of competition in alertness and inventiveness, stimulated by rivalry, have recently been too little considered.

The principal source of gain in monopoly is found in the ability to get a high price. In confirmation of the position that monopoly price is high price, we may refer to history, the utterances of which seem to be clear and distinct. At any rate, there can be no doubt that, in the opinion of historians who have treated the subject, monopoly means high price. Hume, in his treatment of monopoly in his History of England, speaks of the price of monopolized articles as exorbitant, and cites the price of salt, the price of which had been raised by monopoly tenfold and even more. It is generally conceded that in most cases of a government monopoly of the production or sale of salt the price has been so extremely high as to be a real popular grievance; and it is generally necessary to inflict severe penalties to prevent the people from securing the salt at a lower price from non-authorized sources. But of still greater significance are the results of the investigations of the Industrial Commission of the United States. It was there made evident that when monopoly appears in a form at all clear and well defined, the tendency is plain to increase the margin between the prices of finished products and raw materials.1

The courts of the world have made it clear in their judicial utterances that they regard monopoly price as high price; and, as their opinions are based upon cases actually brought before them, we cannot do otherwise than attach great importance to their view.

been comprised marked tend

Wherever commissions have been formed with power to regulate monopoly price, and these commission of independent and strong men, there ha ency to reduce monopoly price:

1 See report by Professor J. W. J. Report of the Industrial Commissi work, The Trust Problem, Chap

ated monop

oly price has very often been found to be excessive and unjust. The opinions of the Railroad Rate Commission of Wisconsin afford many illustrations. This Commission has authorized a higher price in a few cases, but generally has been forced to lower prices, although in a notable case of passenger rates it did not go so far as the legislature subsequently did. The same statement holds true in large measure of the decisions of other state public utility commissions and of the Interstate Commerce Commission.

Monopolies and the Distribution of Wealth.

We have not

the precise statistical data which will enable us to state the exact influence of monopoly upon the distribution of wealth. We have, however, sufficient data to warrant the opinion that the high monopoly prices and the gains resulting from the exclusive position of the monopolist give us a large privileged class in countries of modern civilization, and especially in the United States. Even when the increment of price is comparatively small, it has large significance in the case of the sale of a vast number of units of services or commodities. The difference between a four-cent street-car fare and a five-cent street-car fare may not appear to be great, but it is a difference of 25 per cent and leads to an enormous difference in earnings.

All the many investigations that have been made recently in various lines of business (especially in railways, the beef industry, the steel industry, coal mining, etc.) point to monopoly as a prime cause of the so-called swollen fortunes of this country. In this and other countries some histories of families distinguished for wealth have been written, and probably few if any cases could be found in which some monopoly element had not entered. Various lists of rich men have been published, among them one published by the New York Sun in 1855, and one published by the New York Tribune in 1892. These lists cannot by any means be presumed to be accurate, and yet they do Ford very considerable evidence of the sources of large formonopoly as a prime source of the enor

is a subject which in itself would

esent one for adequate treat

ment. The student should attempt by observation and study to carry forward the lines of investigation and thought here suggested.

Public Policy with Respect to Monopolies. As many monopolies have come as a result of underlying laws of industrial evolution, they cannot all be abolished. Experience, and the analysis of industries like railways, gas works, etc., falling under the head of "public utilities," so called, should be conclusive. We must have monopoly in these cases, and the only question we are concerned with is, "What kind of monopolies shall we have?" We must admit that unregulated monopolies in private hands have always been odious and are opposed to the principles of the laws of civilized nations. They are opposed to that endeavor to secure equality of opportunity which is fundamental in modern democracy and which manifests itself as a red thread running through American history. Even George Washington, generally looked upon as calm and self-contained, denounced monopolizers and wished they might be "hunted down as pests of society" and "hanged on a gallows five times higher than the one prepared for Haman." It is not so much high price that disturbs the modern man as it is inequality of opportunity; and this general sentiment has been very clearly and forcibly expressed in court decisions. In the field in which monopoly is natural and inevitable, therefore, we cannot permit unregulated special privilege, and to this end we must choose between public monopoly-government ownership and public control of monopolies privately owned and operated. This opens up so vast a subject for discussion that we cannot enter into it here. It should be noted, however, that the considerations which must govern our choice differ for different types of natural monopolies. Municipal waterworks and the federal post office are in most respects efficiently and successfully managed. But in the case of many other natural monopolies the problems of management are more complex and difficult in many ways. Just now the method of public control rather than of public ownership is beginning to be given a thorough test. Our policy in the future 1C. J. Bullock, Essays on the Monetary History of the United States, p. 67.

will undoubtedly be determined in large measure by the results of that test. Public control, to secure equality of opportunity, must so regulate monopolies and limit price that the gains will be no higher than those produced by equally wise investments and equally wise and prudent management in the field of competition. Sometimes it is stated that owners of railways and other monopolistic enterprises should have a competitive return upon all the money that they have invested. This would give them a position of special privilege, inasmuch as in the competitive field a great deal of money is lost. It is only wise investment and careful management in the field of competition that can secure returns equal or superior to the current rates of interest. Imprudently invested capital is lost in the field of competition; and when it is imprudently and unwisely invested in the field of monopoly, it cannot justly claim any return.

When we turn to the field of social monopolies we find that the problems of public control are simpler, but more diverse. These monopolies exist only by the approval or tolerance of society, and each particular one can be judged on its own merits. The problem of social monopolies, therefore, resolves itself into such. problems as those of the economic effects of the patent system, the best way of controlling the consumption of liquors and other harmful commodities, and the most expedient means of raising public revenues. With respect to one class of social

1 This does not mean that in the case of old enterprises price must always be so reduced that the gains shall yield a competitive return only on the physical value of a plant. The principle of vested rights or interests has to be given a certain rôle. These have often been created by society rather than by private persons, and faith must be kept. In the case of railways and the telegraph, the American nation and states have deliberately encouraged a wasteful policy of competition which is in large measure responsible for high capitalization. It would not be right to place upon holders of these properties all the burdens of a mistaken public policy in the past. What is needed is to declare a public policy for the future and to base returns for the future upon future actual investments in the case of public utilities. In any case, our federal and state governments are acting wisely in insisting upon physical valuations of railways, gas works, and other similar monopolies as a help in determining fair prices for present and future. Now and here we can do no more than to throw out these suggestions in regard to a pressing present problem of great magnitude. A further discussion of some aspects of the problem will be found in Chap. XXVII (Transportation).