more and more expeditiously. Time is money to an increasing extent even in the bulky traffic of ocean com

merce.

The progress of ocean transportation during the past sixty years and the working out of an economical organization for handling the traffic for which steamship lines are best adapted have had two general results. The small steamship company operating four or five small vessels over a single route has grown to be a company owning scores of ships, with an aggregate tonnage of from 100,000 to several hundred thousands, and engaged in traffic over numerous ocean routes. These great companies, furthermore, have found their competition with each other increasingly severe, and they have been forced to seek to control their interrelations by associated action and traffic agreements, or by the amalgamation of competing companies by means of purchase and sale. As in industry so in transportation, both by railway and on the ocean, steam power has revolutionized business methods and compelled the substitution of organization and associated effort for the unorganized struggle of competitive individual activity.

The extent to which organization and coördination. have been worked out in the ocean transportation service by the building up of great lines may be illustrated by referring to the Hamburg-American Packet Company, which started business with a few sailing vessels in 1847; nine years later steamers were added to the service; in 1893 the company was operating 99 vessels of all descriptions, with an aggregate tonnage of over 200,000 tons. The fleet of this company in 1905 comprised 324 vessels, with a total tonnage of 736,108. This included 140 ocean steamships, with a total tonnage of 695,356 tons gross. The company maintains a service to Canada, to the West Indies, to the west coast of South America, to China, Japan, Australia, and to Africa. The North German Lloyd, which started

in 1857 with three steamers, had in 1903 a fleet of 315 vessels, with a tonnage of 587,070, in which there were included 74 ocean steamers, with a tonnage of 476,205. The Cunard Company started in 1840, and had in 1901 a fleet of 24 vessels, aggregating 114,410 tons. This, however, is not the largest British Company; the British India Company had 117 ships, of 361,695 tons, in 1901; and the Peninsula and Oriental Company 57 ships, of 320,351

tons.

These great companies have been built up partly by internal growth and partly by buying up the lines operated by other companies. The most conspicuous instance of the combination of lines was the formation of the International Mercantile Marine Company, which in 1902 brought under one ownership and management five large transatlantic lines, whose aggregate fleet comprised 136 vessels, with a tonnage of 1,034,884. The lines brought together were the Leyland Line, the White Star, the International Navigation Company, the Atlantic Transport, and the Dominion Line. In forming this merger, Mr. J. P. Morgan and his associates sought to include the powerful Cunard Company, and the two great German companies, the Hamburg-American and the North German Lloyd; but the Cunard Company was given a largely increased subsidy by the British Government to remain an independent British company, and the two German lines were under contract with their Government not to sell out to a foreign company. The German lines, however, entered into an agreement with the International Mercantile Marine Company whereby a territorial division of traffic was effected, and the main results of consolidation were secured.

The economy of doing business on a large scale accounts for the growth of the great steamship companies. The merger of these companies into a mammoth organization, such as the International Mercantile Marine Com

pany, is prompted not only by the greater economy of management, but also by the necessity of regulating competition, which, if left unrestrained, will, as experience has shown, destroy profits and prevent the successful development of the service. Competition in the ocean transportation business is widespread and keen; and as the rival companies become larger and more powerful the forces of competition become increasingly intense, and some method of regulating the interrelations becomes a necessity. Hence, we find that the growth in size of the steamship companies, and the development of a higher organization of the service they perform, is accompanied by an increasing effort to regulate their competitive interrelations. The truth of this general principle will become evident upon an analysis of the nature and scope of competition in the ocean transportation service. Such an analysis is essayed in the following chapter.

REFERENCES FOR FURTHER READING

SMITH, J. R. "The Organization of Ocean Commerce." 1905. Chapter IV, pp. 33–39.

MEADE, E. S. "The International Mercantile Marine Company." Political Science Quarterly, vol. xix, pp. 50–65. March, 1904.

CHAPTER X

MONOPOLY AND COMPETITION

IN THE OCEAN TRANSPORTA

TION SERVICE

A BUSINESS or a service may be competitive or monopolistic, or it may be in part monopolistic and in part subject to competition. A monopoly may be complete or partial. Complete monopoly is the absence of all competition as regards the fixing of prices. The essence of monopoly is the power to decide what price the purchaser shall pay; and the degree of monopoly possessed by a producer or a carrier is determined by the measure of his ability to fix the charge.

In discussing monopoly and competition, the author states, in his volume on "American Railway Transportation," that "in a certain sense the producer (or carrier) never has the sole power to fix the price, even though he may be the only person from whom the commodity or service in his control can be secured, because he must always consult the nature of the purchasers' wants and their ability to pay. If the possessor of a monopoly charges more than any buyer is willing to pay, no sales will be made; if the prices are fixed higher than any considerable percentage of possible buyers can afford to give, the market will be largely restricted. This is equivalent to saying that the consumers or users are the ones who fix the limit beyond which charges cannot go; but if all, or the larger share, of the supply required by purchasers can be obtained only from one person or combination of producers, those who

sell can compel those who buy to pay all they are willing to give rather than go without the commodity or service desired. The price fixed under such conditions is a monopoly price pure and simple. Those who sell, charge what they think will yield them the maximum profits on their total business."

If purchasers can compel those who have commodities or services to sell to accept the lowest price which they will take rather than not make a sale, the business or service is one in which there is free competition; if the producer or carrier can compel the buyer to pay all he will give rather than forego having the article or service he desires, there is complete monopoly. If neither of the parties to the transaction, the producer and the consumer, the carrier and the shipper, can compel the other to accept the least favorable terms, there is neither free competition nor complete monopoly. If the carrier cannot compel the shipper or traveler to pay all he would be willing to pay rather than go without the service; or, stated otherwise, if the buyer of the service can compel the carrier to charge less than the maximum value of the service to the buyer, the rate or fare is partly competitive and partly monopolistic. The carrier possesses a partial monopoly.

The service of ocean transportation is highly competitive, much more so than the business of railway transportation. There are several reasons why this is true:

1. The ocean is a highway free to all persons. Not only may every vessel sail the sea at will; it may also enter the ports of every country to load and unload cargo. A small charge may be made for the privilege of entering the port and using its facilities, but the rate of charges is the same for everybody. Even at ports where the commercial facilities have been provided by the capital of a private company, the right of shippers and carriers generally to use those facilities is carefully maintained by