tion. That Corporation has gradually lost in its proportion of the output, but its power over prices has scarcely diminished. Unfair practices have contributed but little to its strength.

The truth is that in by no means all industries is it possible for a combination, however comprehensive, to add much to its power by unfair competitive methods. Still fewer industries possess peculiar monopolistic factors which tend to strengthen the power resulting merely from the combination of the greater part of the industry.

The importance of railroad discriminations, for example, as a factor in the monopoly power of the trusts has often been exaggerated. Such discriminations were undoubtedly of enormous aid to the Standard Oil Trust. They have been of considerable assistance to a good many other trusts. But for not a few industries in which combinations have developed, freight charges are a relatively unimportant element of cost. During the past fifteen years, which cover the entire history of many of the trusts, railroad discriminations have been much less common than formerly. Law has done much to eliminate them. So has the increased traffic of the railroads, which has made them less eager to take business away from one another. The government investigations have failed to show that the harvester or tobacco trusts enjoyed special favors of importance from the railroads. They also have failed to show that the Steel Corporation has received such favors, other than those arising from its operation of switching railroads at its plants; and similar advantages were enjoyed by the leading independent steel concerns as well. It would be rash to say positively that this or that particular

trust has had no unfair advantage over competitors in railroad rates, but it is certain that by no means every trust has had such advantage.

Again, price discrimination is not possible in all cases. True, it has been a tremendously powerful weapon in the hands of the Standard Oil Company. The peculiar method of marketing the principal petroleum products, by delivery in tank-wagons directly to the door of the retail dealer, greatly facilitated this practice. For example, some years ago the Standard Oil Company was selling illuminating oil at San Francisco, next door to its great California refinery, for 12 cents a gallon. It was transporting the same oil several hundred miles to Los Angeles and selling it for 7 cents. Half a cent a gallon is a fair profit on oil. The small competing refineries were located chiefly near Los Angeles. many industries, however, price discrimination cannot be made an effective tool of monopoly. In the case of those products which are standard in character and which are handled through central markets, comparatively little can be gained by it.

In

So, too, the practice of requiring exclusive patronage, - refusing to sell goods at all except to those who agree to refrain from buying the goods of competitors, can be made a means of aiding monopoly in comparatively few industries. In the case of staple goods obtainable at central markets, it makes no difference to the purchaser whose product he buys. He runs little risk that by refusing to buy from a given seller, even the principal producer, he may be unable to supply himself from other Where a combination has already, by patent rights, reputation or otherwise, a practical monopoly of certain products, it can sometimes use that monop

sources.

oly as a means of forcing purchasers to buy its other products also, to the exclusion of those made by competitors. Otherwise the practice of requiring exclusive patronage seldom tends to monopoly. Indeed, it is a very common practice among concerns which have neither monopoly power nor monopoly purpose.

Some of the combinations have owed a good deal of their power to the possession of natural or patent monopolies. The grip of the Standard Oil Company was greatly strengthened by the system of pipe-line transportation, which, like other means of transportation, tends strongly to monopoly. The system of tankwagon delivery of oil to dealers also lends itself to monopoly, since duplication of service means needless expense. The possession of limited natural resources has aided at least a small number of the trusts to maintain their power. The possession of patents has been a factor of some importance in the case of the American Can Company, of the combinations in the electrical industry, in the shoe machinery industry and a few others.

Were it possible to deprive trusts of these special monopolistic privileges, or to control the exercise of them by fixing transportation rates, fixing prices or rentals for patented articles or otherwise a number of the trusts would be decidedly weakened.

Nevertheless, it is far from true that factors of this sort are present in a majority of the combinations. They count little, for example, in the sugar business, or the tobacco business, or the meat-packing business. I doubt even if the United States Steel Corporations has owed any appreciable part of its power in the past to the ownership of ore lands or the operation of railroads and

steamships, considered merely as elements of natural monopoly.

It would, of course, require volumes to enter into all the details of the known facts regarding the individual combinations and to discuss carefully their significance. The statements I have made thus briefly may be challenged. Some of them may not be well-founded. On the whole, however, after much observation and study, I am strongly of the opinion that past experience goes to show that trusts and pools, merely by virtue of combination, can work injury to the public, through excessive prices. I do not believe that experience supports the contention that to prohibit unfair competitive methods and to deprive combinations of special monopolistic privileges would sufficiently protect the people from extortion.

The opinion that the possession of a dominant proportion of a given business will by itself enable an industrial combination to exercise monopoly power over prices is not without theoretical support.

Some economists go so far as to maintain, on abstract grounds as well as on the ground of experience, that under modern conditions continued competition is impossible in most fields of manufacturing industry. They hold that the large amount of fixed capital places modern manufacturing industries in the same category with railroads. It has long been recognized that competition among railroads tends to go to such excessive lengths as virtually to force combination in self protection. Those who take this view would have us adopt neither the policy of permitting combinations to go unrestrained, nor the policy of attempting to destroy

and prevent them. They find the only possible solution of the trust problem in government regulation of prices and profits.

This view seems to me extreme. It will be discussed more fully in another lecture. There is a material difference between the conditions in the great majority of manufacturing industries and those in railroad transportation. To maintain that it is impossible by law to prevent combinations in restraint of trade is very different from maintaining that, in the absence of laws against such combinations, they will be able to exercise a large degree of monopoly power. However, whatever force there may be in the arguments in behalf of the first of these positions is obviously still greater in behalf of the second.

Against this extreme view, that competition is impossible, stands the other extreme view, that monopoly power is impossible in manufacturing industries if unfair competition and special privileges be eliminated. There are, we are told, plenty of capital and plenty of business talent ready to enter any field where prices are high and profits promising. This is true in very considerable measure. The investigations of the Pujo committee, however, have made it clear that the flow of capital into industries is not altogether free from restraint. We may not credit fully the conclusions of that committee as to the power of the Money Trust. It is a fact, nevertheless, that a limited number of great financial interests, closely intertwined, and with a multitude of ramifications, have a considerable degree of control over credit throughout the country. A concern requiring

large capital would find difficulty in placing securities or in borrowing money, if its purposes were inimical to