The trusts in manufactured products, broadly speaking, then, are all dependent on the tariff. Here is a strange condition of affairs. In the early history of this nation, the people of this country, represented by their popular government, were appealed to by the men engaged in manufacturing after this fashion: "We cannot make the things you need as cheaply as the manufacturers in foreign countries. They are wealthy and we are poor. They have their mills already in operation, we have ours to build. The capital we borrow bears a rate of interest double that which the foreign mill-owner has to pay. The labor we must employ is not yet trained as is theirs, and it must receive far higher wages. Therefore we ask that you aid us in establishing our industries by paying us higher prices for our goods than those for which you could purchase the same goods of foreign manufacture. In order that every one shall be obliged to do this, and that all may contribute equally to our support, we ask you to pass laws laying a tax on all imported goods which compete with ours, whereby none shall be able to buy them at a cheaper price than we can afford to sell our own goods."

And the people replied: "While we recognize the fact that we must pay an increased price for your goods compared with that which is asked for goods from foreign mills, and are thus taxing ourselves for your benefit, yet we see how desirable it is that our industries should be diversified and that we should not be dependent on foreign nations for the necessaries and comforts of life. Thus for a season we will grant your petition and tax ourselves to establish you in your business."

Such was the spirit of the movement that inaugurated the protective tariff. One other great argument for its establishment, which was believed by the people and was assented to by the manufacturers, was as follows: "Our natural advantages for engaging in manufacturing are beyond those of any other nation. Our workmen are more skillful, intelligent, and ingenious; our capitalists are more enterprising. At the same time there are many difficulties to be overcome in establishing a manufacturing business in a new country. Some assistance is needed at the outset to tide it past the critical period. Now, if we can give our manufacturers a start and enable them to establish themselves, they will improve all these natural advantages which we possess; and with the abundance of raw material in our mines and farms and forests, with our ingenuity and Yankee enterprise and skill, who can doubt that our manufacturers, once established, can produce goods more cheaply than they could ever be brought across from foreign countries? This protection from foreign competition will be a great incentive to the establishment of manufacturing enterprises. Everywhere mills and factories will spring up; a brisk home competition will be created; and that will finally reduce prices lower than they could ever go if we remained dependent on foreign countries for our manufactured goods."

It was a wise and well-founded plan, and only as to its final result did it fail. The protective tariff did make manufacturing more profitable than any other business, and mills and factories of every sort have sprung up in all parts of the country. But the expected extreme competition which was to reduce manufacturers' profits and the price of manufactured goods to a basis in accordance with the profits in agricultural and other branches of industry has been long delayed. The wonderful development of the country has kept up prices and profits, and has furnished a market for our manufacturers which has long kept in advance of their capacity to supply it. At last, however, the result which was expected by the founders of the protective tariff has come to pass. Our domestic mills and factories have a capacity beyond the present demand for their products. The home competition which was predicted has come; and if it had operated to reduce prices as was expected, there would now be employment for all our mills, for it is an axiom that every reduction in price increases the demand.

But the manufacturers who had been making enormous profits of ten, twenty, and thirty per cent. on their capital for these many years, were far from willing to accept calmly the situation and reduce their profits to a reasonable figure. They have tried combinations of many sorts to keep up prices, and at last have found in the trust a strong and effective means of killing home competition and keeping up their profits, if they choose, to the highest point which the tariff permits.

It is not to be argued that the manufacturers were especially worse than the general run of men in taking this action. It is the most natural thing in the world that a man who has all his life been used to making enormous profits in his business should come to think that he had an inalienable right to make them; and that when competition became so sharp that he had to lower his prices, it was due to an unnatural condition of affairs glibly designated as "over-production," for which the trust was an appropriate and wise remedy.

It is thus plain how, in a secondary way, the tariff is a cause of the trusts. The fat profits which the former gave have made men covetous enough to engage in the latter.

We are, perhaps, not yet prepared to discuss the question of the proper remedies for trusts; but it is too obvious to call for comment that an easy and most effective remedy is to cut away the protection from foreign competition, under which they flourish, and let them sink or swim as they best can. At the least it will be wise to reduce their protection to a point where any attempt to tax the nation of consumers and reap exorbitant profits by putting up prices so that profits of twenty-five per cent. or more can be reaped, will be counteracted by foreign competition.

It is only fair to point out at the same time that this remedy is far from being a panacea against all trusts and monopolies. The monopolies in the peculiar products of this country will be unaffected by it, and the combinations which embrace the whole globe in their plan of operations are quite beyond its power. The copper syndicate and the salt trust, and according to Mr. Carnegie a steel rail trust, are the only actual examples of international combinations which have ever been attempted, and it will probably be many years yet before the constant movement towards Tennyson's "Federation of the World" permits the general formation of effective industrial combinations which shall embrace all commercial nations.

We have finally to consider the monopolies carried on directly by the government. The carriage of the mails is the most important monopoly carried on by the government, and we may find some facts of interest by enquiring the reasons why it is for the public welfare that it should be so conducted rather than by private enterprise. In the first place, if it were left to private enterprise to furnish us with postal facilities, the postal service would be much more limited than now; many places of small importance being left without postal facilities or charged a much higher rate for service than now. On the other hand—and this is an important point—there would, perhaps, be in and between the large cities competition between different companies; in which case there would be duplicate sets of postal facilities, including buildings, mail-boxes, furniture, and employees of every grade. It is plain that all this would be a waste. One set of facilities is better for the public than two or three or more, and is ample to carry all the mails. To put another set of men at the work that others are already able to do, is to waste just so much of the working force of the world, as well as the capital necessary to furnish tools and buildings for its use. The matter of rates, too, would vary with the competition. One could never be sure what his postage bill for the coming year was to be. The receipts of the companies would be uncertain, and they would be obliged to pay a high rate of interest on the capital invested in their plant, thus making it necessary for them to charge high rates for their service. The intense competition between rival companies would lead to the bankruptcy of the weaker, and the final result would be the establishment of a single corporation in the control of the whole system. Rates would then be put up to the point where the greatest profit would accrue to the corporation.

Under the existing system, then, we save in cost of service over competing systems under private direction, in that the existing facilities are all made use of. There is no waste by setting two men to do the work of one, or by renting two offices to do the business which one could accommodate, neither is any energy wasted in soliciting business. The capital invested by the government in its plant for carrying on the postal service would bear interest, if the money were borrowed, of not more than two or three per cent. But if a private company borrowed money to carry a similar business, they would have to pay five to seven per cent., which they would have to make up for by charging a higher rate of postage.

Other monopolies which have been carried on by the government are the business of transportation, and the provision of roads, bridges, and canals therefor; monopolies in mining; and in the case of municipal governments, as already noted, the supply of water, gas, and electric service, and street railway transportation.



VIII.

MONOPOLIES IN THE LABOR MARKET.

It should be said at the outset of this chapter that, in a very true sense, practically all men are laborers. That into which a man puts his energy and by which he earns his living, is his labor, whether it be work of the hand or the head. But the labor we are to consider in this chapter is that of the men who work for wages; and we will also make the arbitrary distinction that it is that of the men who work for wages in some branch of manufacturing, mining, trade, or transportation, the great divisions of modern industry which we have thus far considered.

Almost all these monopolies employ large amounts of capital in carrying on their business; and in the popular speech, "monopolist" and "capitalist" are often used interchangeably. It is a very common belief that monopolies are confined to the capitalized industries of production, transportation, and trade, which we have already considered; but we are now confronted by the fact that the wage-workers in the various trades of the country are engaged in exactly the same monopolistic schemes, in which they have exactly the same ends in view as have the monopolists who combine millions of dollars' worth of capital to effect their purposes. On the one hand we have the Standard Oil Trust and the Railroad pools and the hundreds of other capitalistic combinations striving to benefit the producer at the expense of the consumer; while among those whose only capital is their strength and skill, we find the workers in all the various trades, and even some of the lower grades of laborers firmly banded together with the avowed purpose of raising their wages above those which they would receive if competition alone determined the rate. And they are successful, too. Notwithstanding the fact that they deal with tens of thousands of producing units where the combiner of capitalized interests deals with tens, the success achieved by the combinations of labor is quite comparable with that reached by combinations of capital. It speaks volumes for the intelligence and ability of the wage-workers of the present day—yes, and for the growth of the spirit of fraternity; that in the advancement of what they deem a just and righteous cause, they should voluntarily put themselves under discipline and endure patiently the untold hardships of uncounted strikes, often brought on in the unselfish work of aiding their brother laborers against what they deem a common enemy.

The modes in which the combinations of skilled laborers attain their desired ends are akin to those which obtain in a well organized manufacturers' trust. The former allow only a certain number of apprentices to learn their trade. The latter permit the establishment of only such additional mills as shall not unduly increase the market supply. The former fix a standard scale of wages below which no member of the union shall work; the latter fix a minimum price for the goods sold in the market. If there are more laborers in the union than can be employed at the advanced rate of wages, some must be idle. If there are more mills in the trust than the lessened demand for the goods will keep busy, some must be shut down. The trade-union boycotts competing workmen outside its ranks, and stigmatizes them as "scabs." The trusts endeavor to punish every outside manufacturer, sometimes by forcing upon him such a competition as shall cause his ruin; sometimes by means as illegal and criminal as are the riotous acts of a mob of hungry workmen, and far less defensible. But let us not yet bring up the question of relative blame. The main point which must impress every candid observer is that the means employed for the monopolies of capital and the monopolies of labor are identical in principle and motive. Nor are we confined to manufacturers' trusts to show that the spirit of rule or ruin characterizes capital as well as labor. Railroad monopolies, in the words of the president of one of the greatest corporations of the country, "strive eagerly to protect themselves while entirely indifferent as to what shall befall their rivals." How many weak corporations have been deliberately ruined by the cut rates of stronger competitors? If the laborer has "scab" in his vocabulary, has not the railroad manager his "scalper" and "guerilla"?

The close relationship, viewed in many different aspects, of the monopolies of labor and the monopolies in production generally has hardly received the notice its importance deserves. Still, it is an evidence that people are thinking of and discussing the matter when such a writer as W. D. Howells, who is popularly supposed to cater to the tastes of those who have very little in common with the laboring classes, puts into the mouth of one of his characters a defence of workingmen for executing a boycott on a non-union workingman, on the ground that they "did only once just what the big manufacturing trusts do every day."

Perhaps it was never so forcibly realized how thoroughly effective these labor combinations have become, and how completely they hold the country at their mercy, as in the strike of the locomotive engineers on the Chicago, Burlington and Quincy Railroad system in March, 1888. Here were, perhaps two thirds of the men in the country qualified for the responsible and onerous work of running a locomotive engine, firmly banded together to advance their own interests and secure assent to their demands. Granted the will, the courage, the discipline, and it was possible, yes, easy, for them to have obliged the railroads to raise the wages of every engineer in the brotherhood to $10.00 per day, for on a refusal they could have enforced the extreme penalty of bringing down a total paralysis upon the business of the country. It speaks volumes for the good sense, the honesty and moderation of the men and their leaders, that, notwithstanding the fact that their demands were not immoderate, and that the failure which came permanently deprived of a remunerative position a thousand members of their brotherhood, they refrained from the extreme to which they might easily have gone, and permitted themselves to be defeated, when they had the power to have forced a different result.

Organized workers in many trades have the power to force wages much higher than they have done. Would that the Sugar Refineries Company, and some other monopolies of production, were as moderate in their demands upon the public as are the workingmen. But though their demands are in one sense moderate, it is yet true that in so far as they exceed the amount which the laborer would receive when the market for labor is open to free competition, they are the direct result of the artificial monopoly which the laborers have created by their combination, and, in effect, levy a tax upon the community. To illustrate: let us suppose that if every man were permitted to follow the trade of bricklaying who wished to do so, the equilibrium between supply and demand would be found at a rate of wages of $3.00 per day. At that rate, if the price rose, more men would wish to follow the trade and at the same time less people could afford to build houses, thus raising the supply above the demand. If the price fell, some of the men would prefer to work at some other trade and more people would conclude they could afford to build houses. But when the rate, which, without prejudice, we call the natural rate, is at $3.00 per day, suppose the men belonging to the trade form a union and resolve to charge $5.00 a day for their work. Then it is very evident that the cost of building is increased, and every one has to pay more for construction and ask a higher rent to repay himself afterward. Evidently, then, by this action of the bricklayers every man in the trade receives $2.00 more per day for each day's work, which must be paid, directly by their employers, but indirectly by the whole community. It would be easy to prove that the tax on the community when the wages are raised in any trade, affects the whole public as well as those directly employing the workers in that trade; but it seems too plain to require proof. The main point we now wish to show, is that any increase in the wages of labor over that received under ordinary competition must be paid by the community, just as much as any increase in the price of coal, iron, copper, wood, wheat, or any other commodity must be paid by consumers at large. Nor does the injury to the community stop here, by any means. We saw that the advance of prices by the linseed oil trust was an injury to all those who, on that account, were obliged to forego painting; and that it thus caused a further injury to painters, paint-makers, and even those employed in the building trade. But the increase in the price of the bricklayers' work has results no less important. Not only is injury done to those who build and have to pay more for their buildings, but many are prevented from building on account of the increased cost. If we argue according to a prevalent method, we may say that this reduced activity in the building trade will cause stagnation among allied trades with corresponding loss of employment. Again, as a less number of houses are built, and those which are built are more expensive, rents are certain to rise, which means that the poor man must pay out a still greater part of his earnings for his shelter, or else must put up with poorer and meaner quarters.

It is a strange thing to trace, in connection with this, the history of labor, and see how recent it is that the natural right of a man to sell his services for such a price as he could obtain has been acknowledged. History shows that until modern times, compulsory personal servitude has been in every age and country the lot of a large part of the human race. And when wages began to be paid for service, conditions were not much improved. In England, in the fourteenth century, in the reign of Edward III., a pestilence seriously depopulated the country, and reduced the supply of laborers so much that it was not equal to the demand for labor, and wages began to rise. Laws were therefore enacted that each able-bodied man and woman in the realm, not over three score, "not living in merchandise, nor exercising any craft, nor having of his own whereof to live, nor land about whose tillage he might employ himself, nor serving any other," should be bound to serve at the wages accustomed to be given five years previously. No persons were allowed to pay an advance on these wages, on pain of forfeiting to the Crown double what they had paid. Previous to the fifteenth century, workmen in various occupations were impressed into the service of the king at wages regardless of their will as to the terms and place of employment. Indeed, all through the fifteenth and sixteenth centuries, there were continual attempts to fix the rate of wages arbitrarily by law, and also the hours of labor. These, by one old statute, were decreed to last from 5 A.M. to 7 or 8 P.M.

These acts, and others of similar nature, were intended for the subjugation of laborers and the benefit of the employers of labor. It is only since the era of popular government that legislation for an opposite purpose has come in vogue. Gradually the right of the workingman to have the price of his labor fixed as is the price of other commodities, by the law of supply and demand, came to be recognized, although the progress was pitifully slow. The old ideas of the relation between "master" and "servant" were very tenacious of life, and the substitution of the terms "workman" and "employer" is a change which has taken place in England during the present generation.

It was the petty tyranny and the grinding extortion which the laborers had begun to feel, even though they were far better paid and better treated than their fathers, that caused the formation of the original trade unions. Laborers saw that each was helpless alone, but that combined they were a power which their employers need not despise. The old craft guilds furnished them an example of effective combination among those engaged in the same trade; and as men everywhere in every age, when a common danger or misfortune has confronted them, have come together for mutual help and defence, these ignorant laborers, in violation of stringent statutes, but following blindly their human instincts of self-defence, came together and organized the first trade unions.

The common law has always held trade unions to be "illegal combinations in restraint of trade." Between the reigns of Edward I. and George IV., the common law was affirmed and made more effective by the passage of over thirty acts of Parliament, all intended to abolish the trade unions. In 1800 a stringent law was passed, by which all persons combining to advance their wages or decrease the quantity of their work, or in any way affect or control those who carried on the business in which they were employed, might be committed to jail by a justice for not more than three months, or to work in the house of correction for not more than two months. Not till 1824 was an act passed slightly ameliorating this stringent law, and even then the trade unions remained for the most part secret organizations. At last, in 1871 and 1876, laws were passed under which no person can be prosecuted for conspiracy to commit an act which would not be criminal if committed by him singly; and the trade unions, thus legalized, were taken in common with other benefit societies under the protection of the law.

We have already pointed out the main fact that the chief end and aim of the trade unions is the advancement of wages by securing a monopoly of the supply of labor in some particular trade. It is now fair to explain, as we have for other monopolies, the labor monopoly from the standpoint of the laborer himself.

It is a sound axiom of business that a forced sale is apt to be an unprofitable one to the seller; and that when a man's needs are so great that he is absolutely obliged to sell at any price, he is quite certain not to get the full worth of his goods. Now it is an undeniable fact that the condition of many of the wage-workers of the country approximates to this: They must have food, shelter, and clothing for themselves and their families, and the only thing they can offer in exchange for it is their labor. Suppose an honest and industrious man has some misfortune, as an accident, or illness, and loses employment. When once more able to work, he finds his old place filled and new places hard to find; but at last he finds a mercenary employer who agrees to give him half wages. Disheartened at his prospects, he thinks half a loaf is better than no bread, especially when those dearest to him are hungry, and so takes the place. But his employer takes care that his constant work shall leave him no time to hunt for a better position. Indeed, by a few judicious threats from his employer, the man may be put in terror of losing the pittance he already has, and seeing those dependent on him in absolute starvation. Such cases are amply provided for by the trade union. Ill treatment of any one of its members may be avenged by the organization as a whole, on the principle, whose spirit of fraternity and self-sacrifice all must admire, that "an injury to one is the concern of all." More than this, by means of the benefit feature of the fraternity, the member unfortunate, or in distress, is properly cared for. No member is obliged to feel, when seeking for employment, that his food or shelter is at stake if his attempts fail, and he need never be at the mercy of employers who drive sharp bargains.

It is often charged as an evil of trade-unions interfering with wages, that they tend to bring all their members to the same level, and are opposed to the payment of wages in proportion to the varying abilities of the men working at the same employment. But with unorganized labor, and employers who were none too just in their ideas, it was not uncommon to see the necessity of the laborer, or his inability to drive a good bargain, taken advantage of. Thus the workmen whose necessities were greatest, and who were the most docile and obedient, received lower wages than the men who were not particular whether they were busy or idle, and were inclined to pay more attention to their own rights and prerogatives than to the work for which they were hired. While the tendency toward non-recognition of the varying abilities and ambitions of workmen by the trade unions must be deprecated, it has largely grown from the reform of this worse abuse.

There is another benefit which the organization of labor has effected which may, perhaps, be thought an evil by some, but which every broad and generous man must gratefully recognize as a gain to the whole community; and in a self-governed nation like our own, it is a benefit whose importance it is difficult to over-estimate. This is the maintenance of the laborer's dignity and self-respect. We have but to look back to the times we have already mentioned, to see the laborer hardly better than a dog, a cringing dependent, kicked and beaten on slight pretext, and with almost every vestige of manhood worked and bullied out of him. We have come upon far happier times to-day, and there are few corners of the civilized world where conditions so evil prevail now. But without the organization of labor, the status of workingmen would be much farther removed from what is just and right than it now is. Every employer who is wise and honest, and who has the true spirit of a gentleman, will see that his workmen are treated with the respect that is their just due. Discipline there must be, but it is a wrong view of discipline that makes it consist of oaths and brutal insults delivered according to the prevalent good temper or ugliness of the overseer. Unfortunately, not every man who is placed in authority is wise, honest, and a gentleman. Bodily violence is no longer permitted by law, but too often the curses and insults which are heaped on men with no due cause are a violence which is more severe to many a man than actual cuffs and kicks. No man can take such treatment without resentment, and maintain his dignity and self-respect. Yet in how many places is petty tyranny of this sort still active, and its victims are cowed into submission for fear of taking the bread from their children's mouths.

But the member of a strong labor organization need not be cowed or tamely accept insult. He has the right to resent it, and has the power of his fraternity to support him. He knows this, and his employer knows it. Overseers, big with their importance, and inclined to show it by attacking the self-respect of the men under them are no longer in demand.

It is very unfortunate that many people misconstrue this result of the organization of labor as a move toward the abolition of all social ranks and grades. It is nothing of the kind. Social gradations cannot be created or brushed away by any legislative enactment, or the acts of any single class. The combination of the workmen to secure their right to protect themselves from insult is indeed a movement toward making them better and nobler men, just as the abolition of slavery in all its forms was a move in this direction. But no man is truly free if he is not secure in his right to immunity from personal insult as well as from bodily violence. It is not strange, however, that the workman, conscious of the strength of the fraternity behind him, sometimes grows arrogant and insolent toward those who must necessarily be in authority over him. Unaccustomed for generations past to other government than fear of one sort or other, he is all unused to self-control. But it is hardly possible that this should be a great evil. The body of workmen will, eventually, if not now, refuse to sanction and defend their members in any thing which their innate sense of justice must teach them is wrong. Few workingmen will causelessly ask their brotherhood to undertake the hardships and loss of prestige which accompany a strike. And even when insolence is shown toward employers or overseers, they have at least equal power to resent it, and are not, as was the laborer of a half-century ago, forced to submit to insults with outward humility.

We have already noticed the condition of the laws in reference to the laborer in former times: but the repeal of the laws oppressing the workman, and making him a servant to a master instead of a workman for an employer, has been largely due to the organized efforts of the trade unions. To them, also, we owe the passage of many acts like those for the guarding of machinery in factories, the restrictions upon the employment of child labor, and the proper care for the health, comfort, and convenience of employes in general. It cannot be said that the labor interests have always shown great wisdom in all their advocacy of new legislation, and too many acts, like those in reference to the employment of convict labor, show a lamentable retrogression. On the whole, however, there is every reason to believe that the general course of justice has been aided by the influence of the trade unions—something which can be said of very few special interests for whose benefit our legislatures have enacted laws.

All the above facts we must admit in defence of the organizations which have, to a large degree, killed competition in the labor market. But in defence of the especial action of the labor monopolists in forcing wages up to a point above that which competition alone would determine, there is also much to be said. Those who are unwilling to concede that there is any justice in the claim of the wage-workers that full justice is not yet awarded them, are accustomed to expand on the theme of the improved condition of the laborer over that in which he was a century ago. How this can be taken for argument is a mystery. No one thinks of disputing or diminifying the well-known fact that many workmen of to-day have more comforts than the princes of the Middle Ages. The single point in dispute is this: Of the total wealth which is being produced in the world to-day, is the laborer receiving his fair share? There are not wanting men of judgment and ability who answer this question with a decided No. And the greater share of the blame for this injustice they lay upon the monopolies which we have been discussing. They charge, and they verify their charge with ample and sound testimony, that of the wealth which the united brains, and strength, and skill of the world daily produces, the lion's share is taken by men who render the world no proportionate service. This is partly due to existing laws, which the public is not yet wise enough to better; partly to the inertia of public opinion, which is still prone to cling in many points to the idea of past generations that the workman was necessarily a slave; and partly to the narrow selfishness and grasping ambition of many men in the business world. This is not arguing for the reduction of all to a dead level, as is so often absurdly claimed. It is arguing that the inequalities which exist at the present day are not held securely in place by agreement with the inflexible laws of justice and right. Instead they are abrupt and uneven, and contrary to these laws; and there is great danger that the readjustment, which must inevitably take place to bring them in accord with these laws, will come, not as a gradual change, but as a series of terrible social catastrophes, involving us in a wreck which will require a century of civilization to repair.

Only fanatics preach absolute equality. As men differ in their ability and their power to serve the world, so is it just that the reward which the world metes out to them should differ in like proportion. But if we stretch to the utmost the benefit which we conceive the world to derive from the life of many of its men who reap the richest harvest from its production, we cannot in any way make out that their services are so valuable as to deserve such munificent reward. Indeed, it is not very far from the truth to say of some of our most wealthy men that their wealth was won instead of earned; and many place a much worse term in the place of "won."

The workman sums up his case with the argument that as he is confessedly not getting his just share of the results of his work, he is only getting his due, or part of it, if by combination with his fellows to crush out competition, he is able to put up the price of his labor above the natural rate. Finally, as a last defence for the labor monopolies, he calls attention to the trusts and pools and monopolies which are taxing him at every hand for the necessaries of life, and declares that if he, working on the same principle as the wealthy capitalists, is able to combine his tens of thousands of fellows into an effective monopoly, surely he should not be condemned for following the example of the men who are, or are supposed to be, his social, moral, and intellectual superiors.

Such is the strong case which the labor organizations present in defence of the unions which they have formed to kill competition in the labor market. The investigation we have pursued in the preceding chapters enables us to add to this a statement of the case more comprehensive and striking even, than the narrower views which have preceded. In the chapter on the monopolies in trade, reference was made to the fact that the competition among purchasers tends to keep prices up, just as competition among sellers tends to keep them down. Now labor is a commodity whose price in the market is governed by the same laws of supply and demand that regulate the prices of all other things that are bought and sold. But it has this peculiar difference, that the sellers of labor are many, while the purchasers are few, as compared with the relative proportion of sellers and buyers of goods in general. Then, wherever there is little competition among purchasers of labor, we shall expect to find low wages; and where competition to secure workmen is active, high wages will be the rule. This is so obviously true, in the light of every one's experience, that we need not stop to prove it. Now, in the days when manufacturing was carried on in small workshops, there was a great number of purchasers of labor. The concentration of manufacturing in great establishments where thousands of workmen are employed has lessened the number of employers greatly; has it not also lessened competition among them? It is a well-known fact that in many great industries, as, for instance, the mining of coal or the manufacture of iron, there is one rate of wages paid all through one district, and the employers fix that rate through their associations. The makers of trusts have sometimes defended them, on the ground that they enabled the employer to pay his laborers higher wages; but it is plain that when all the firms in a trade are united in one combination, there can be no competition between them for the employment of labor. They will pay them only such wages as they choose; and the bulk of evidence seems to show that, notwithstanding the vast profits which the monopolies are reaping, they have been far from showing any general disposition to share their profits with their employes. It seems almost unquestionable that we have here the real reason for the extraordinary increase of labor monopolies within the past quarter century. This period has witnessed a rapid growth of consolidation and combination in all our industries, lessening thus the number of employers of labor. The wage-worker found himself confronted with the fact that he was soon to lose entirely the benefit of competition for the purchase of his work, and felt that his only salvation from practical slavery was to prevent the competition between himself and his comrades from forcing his wages down to the starvation point. He met the monopoly that threatened to lower his wages by forming another monopoly that could meet the first on equal terms.

We have given little space in this chapter to the consideration of the limit of the power of labor monopolies; but it is obvious that this is very clearly defined. In the first place, while there are certain attempts at combination among unskilled laborers, and those not working at trades, these attempts cannot, as a general rule, be at all successful. Any man out of employment may be a competitor for the work which they do, and it seems practically impossible that any organization can combine, under effective discipline, even a majority of the workingmen of the country not skilled in a trade. The only ways in which attempts to kill competition in unskilled labor can be successful, then, are by the use of force or the boycott, or similar means, and these can never come into vogue as permanent agents in the world's industry. The labor monopolies which exist, and which promise, if let alone, to enjoy continued success, are principally combinations of the workers in skilled trades, and certain of those employed in manufacturing, mining, trade, and transportation.



IX.

MONOPOLIES AND COMPETITION IN OTHER INDUSTRIES.

As we take a look back over the long list of monopolies which we have investigated in the preceding chapters, the natural thought is that we have considered now the greater part of the industries of the country. Certainly these occupations of manufacturing and trade and transportation, are generally considered as our important industries, and a pretty good share of our legislation and public agitation concerns itself with the welfare of these industries and with the men who are employed in them. But certain questions will naturally arise in the curious mind. Just what proportion of our total working population are employed in these industries; and of that number how many are reaping the profits of the monopoly? What are the remaining occupations of our people, and are the workers in them doing any thing to destroy competition? To the investigation of these matters we will devote the present chapter.

The United States Census Bureau classes the gainful occupations of the people in four great divisions: (1) Agriculture. (2) Professional and Personal Service. (3) Trade and Transportation. (4) Manufacturing, Mining, and Mechanical Industries. The monopolies which we have studied in the preceding chapters are all included in the last two classes. The total number of persons engaged in trade and transportation in the country in 1880 is given as 1,810,256, and the total engaged in manufacturing, mechanical, and mining operations is 3,837,112, or a total of 5,647,368 in all these occupations among which we have found monopolies to exist. Of course the great proportion of the persons included in the above number have no direct interest in the profits of the industries in whose operation they aid. It is, indeed, argued that the manufacturer, miner, or merchant who is making enormous profits, pays, therefore, larger and more generous wages; but it is urged on the other side that while this is true in isolated cases, the general rule holds good that the price of labor is governed by the law of supply and demand; and that, as already pointed out, monopoly among producers means a monopoly among purchasers of labor. Let us now, however, leave out this indirect benefit which may, or may not, accrue to the workmen in these various occupations, and find as nearly as we can the number which are, or can possibly be, directly benefited by the operation of monopolies. Let us deduct from the total of 5,647,368, such classes of persons as it is evident cannot have a direct share in the results of a monopoly and are not engaged as skilled workmen in a trade which has been organized to control competition.

We may certainly deduct the following items from the total:

- + Agents 18,523 Clerks, salesmen, and accountants in stores 445,513 Commercial travellers, hucksters, and peddlers 81,649 Draymen, hackmen, teamsters, etc. 177,586 Sailors, steamboat-men, canal-men, pilots, and watermen 100,902 Apprentices 44,170 Blacksmiths 172,726 Fishermen and oystermen 41,352 Lumbermen, raftsmen, and wood-choppers 43,382 Photographers 9,990 Saw-mill operatives 77,050 Tailors, tailoresses, milliners, and dressmakers 419,157 + + Total 1,632,000 + -

There are a great many other occupations in the list[4] from which these items are taken which might properly be included in the above, as the combination which does or can exist in them it is almost certain is of no practical importance. On the other hand, however, our total of 5,647,368 takes no account of the persons interested in trade, transportation, or manufacturing through holding the shares or bonds of incorporated companies; also the errors and omissions of the census are so great in any event that only broad and general statements can be based upon them. Deducting, then, from the total of 5,647,368 the 1,632,000, which we found to be surely not interested in monopolies, we have about four million persons as the utmost number who are benefited by the profits of the monopolies which we have thus far considered. But let us look into this a little farther. As we have already stated, the monopolies of trade are generally unable to raise prices far above their normal rate. In retail trade, especially, competition shows great tenacity of life. Also with regard to labor monopolies, it is true, as we have already stated, that the limits of their operation are pretty closely defined; even the men in the highest grades of skilled labor cannot secure for each workman by any combination more than two or three dollars per day over what he would receive under the freest competition. Let us, therefore, deduct from the preceding four millions the persons engaged in retail trade, and all skilled laborers in the various trades which we formerly included because we conceived that they might be connected with some form of labor organization, and might also obtain some benefit through the profits of their employers. But when we make these deductions we find that we have only a hundred thousand or so of our four millions left. Briefly summed up, therefore, the fact is, that the strong monopolies in manufacturing, mining, trade, and transportation are owned by a very small portion of the population. Just what this number is, it is impossible to say, for the stock and bonds of railroad companies, mining companies, and manufacturing companies are changing hands continually, and no public record is taken of their distribution and ownership. It may possibly be true, however, that one million different persons own an interest in some of the various monopolies which we have studied, excluding the monopolies in trade and labor. But even if this estimate is correct, it is a well-known fact that a few hundred immensely wealthy men hold a large share of the stock of these very profitable monopolies.

[4] From the "Compendium of the Tenth Census of the United States," Part II., pp. 1378 and 1384.

Leaving the questions which this statement opens up, for later consideration, let us consider the other classes of occupations in which men engage for the purpose of gain, and see if this far-reaching movement towards the destruction of competition has infected them, and whether it has proved, or can prove, so successful there as it has in the industries considered in preceding chapters.

The third great class of occupations, rendering professional or personal service, gives employment to over four million persons (4,074,328), and includes in its members those in widely separated ranks of society.

It is, of course, true that the competition in the professions is far more a competition of ability, real or supposed, than it is a competition of price; and the former is a competition which is never likely to be done away with. Yet in all occupations, to a greater or less degree, there tends to arise more or less competition in relation to price, and the professions are not entirely exempt. Lawyers, indeed, seem never to have felt the necessity of fixing any minimum tariff of fees; and so far as is known, clergymen have never combined to advance their salaries. But the medical profession has its well known code of ethics which debars its members from "pushing their business," and has, in certain places and times at least, prescribed a minimum tariff of fees. It should be clearly understood, however, that this is not cited with the intention of putting any aspersion upon the medical profession in any way. The services which are freely rendered to the poor, and the disgusting indecencies and insults which are thrust upon the public by some who choose to ignore this code of medical ethics, would make us ready to forgive very much worse things than a possible tendency among members of the profession to refrain from "cutting under each other" in the matter of fees.

But while the three older professions have evidently little need or disposition to combine for the purpose of increasing their income from the community, some of the newer professions occupy different ground. Architecture is coming to be a profession of no small importance. The principal architects' society, the Association of American Architects, has a regular schedule of minimum commissions below which its members are forbidden to go. Another singular case of professional combination is the Musical Protective Union, a combination of professional musicians in New York City, which fixes minimum prices that its members may charge for their services. On the whole, however, it must be said that the limitation of competition in the professional and intellectual occupations is in this country still in its infancy. In England the fixing of prices of professional service by usage is very much more common, and in many professions the check to competition thus effected is of no small importance. To the careful observer there are indications of a tendency in a similar direction in this country. Is it not more and more common in professional circles to see a slur cast on the man who will work cheaply? There is hardly an occupation or specialty which has not its Associations and its periodicals; and what is more natural than that an association for mutual benefit should come to adopt that certain method of securing mutual benefit at the expense of the public, the restraint of competition?

Examining the remaining occupations in this division, we find that those engaged in them form a large percentage of the whole population. There are of laborers whose occupation is not more definitely specified, 1,859,223. Then there are 1,075,655 domestic servants, 121,942 launderers, 77,413 hotel and restaurant employes, 24,000 soldiers, 14,000 messengers, and enough in other occupations similar to the above, in that very many persons can engage in them without special training, to make it certain that at least three fourths of the members of this division, or a little over three million persons, belong to the class of unskilled workers, among whom, as we have already seen, the attempt to limit competition and force up wages has not, and cannot possibly have, more than a limited and doubtful success. Nevertheless, to a very great extent, the unskilled laborers of the country as well as those working at minor trades are organized for mutual help and protection; and while they cannot increase much the rate of their wages without drawing a host of competitors, they can do much in the way of protecting themselves from injustice and extortion, as we have pointed out in the preceding chapter. It may be possible, indeed, that certain changes in the future, as the requirement of greater skill and efficiency in all kinds of labor, may make combinations in this class of occupations easier and more effective. Our domestic affairs, for instance, are constantly growing more complex, and require greater skill in their operation. Housekeepers are prone to think the "servant girl" problem serious and perplexing enough already. It remains to be seen what they would say if a "Cooks' Protective Union," a "Chambermaids' Sisterhood," or a "Laundresses' Amalgamated Association," should assume control of the wages and hours of labor of their domestics.

To sum up, we find that as a whole the 4,000,000 persons engaged in rendering professional and personal services are in general not increasing the cost to the public of their services by combining together to limit competition; and that so far as we can determine, it is not probable that many of them can do so in the future, even if they are so disposed.

There remains yet one important class of the community to be considered: those engaged in agriculture. Can the farmers of the country fall into line behind the manufacturers and miners and railroad owners, and force up the price of their products by killing competition, to correspond with the increased prices which are demanded in many other lines of industry? They have one thing in their favor in that the principal products of the soil are necessaries of life, which the community cannot do without whether the price be great or small, although an increase in price is sure to result in a decreased consumption.

We may best determine this question by inquiring exactly how the prices are forced up by monopolies. There can be but one way. The laws of supply and demand hold good, and it is out of the power of the producer to greatly affect the demand. It is only the supply of which he has control. From the manufacturers' trust to the laborers' union, the only way in which prices can be controlled is through a reduction in the supply of goods made or men allowed to work; and if the price were to be arbitrarily raised, the result would be the same; there would be a surplus of goods, or some unemployed workmen. In order to raise the price of his products, then, the farmer must do one of two things, which will bring in the end the same result. He must send less of his products to market—lessen the supply—or refuse to sell any thing at less than the increased price which he desires. In either case, if he plants the same acreage and gets the same yield as before, he will have a part of his crop left on his hands.

The query then comes, can it be possible for the farmers all over the country to form so perfect and well-disciplined an organization that every member shall diminish his remittances to market of grain, wool, meat, hay, or what not, enough to raise prices; or that he shall refrain from selling all these articles below a certain defined price? It must be plain to every intelligent person that it would be a practical impossibility to effect such a thing. It would be possible to bring only a small percentage of the farmers in an area 3,000 miles in length and 1,500 in width into a single organization; and it would be essential to the success of this, as of every other scheme, that no outside competition should be permitted to exist.

It may be argued that the Knights of Labor succeeded to a degree in gathering into one organization a large proportion of the workingmen in all the various trades in the country; but their members were mostly in cities, many worked together in great factories, and as regards ease of combination, they were far more easily handled than the widely scattered farmers of the country could hope to be. Besides, the Knights of Labor organization appears to be too unwieldy and cumbrous to be long successful, and internal dissension seems to have already brought it near its end. It is plain that the farmers are powerless to effect a reduction of the competition among themselves. Nor is this condition at all likely to change. Farming is unlike other modern productive industries in that the cost of production does not decrease as it is conducted on a larger scale. The most profitable farms are, and perhaps will always be, the small ones, where the details of the tillage come directly under the eye of the owner.

Such are the facts with respect to the prospect of making a monopoly of agriculture, and it would seem that they are so simple and so easily understood that no attempt would ever be made to restrict competition among farmers. It is to be recorded, however, that such attempts are being seriously made. Prominent farmers of the West in the spring of 1888 took the preliminary steps towards the formation of a farmers' trust. Conventions were held and resolutions adopted reciting that the operation of trusts in manufacturing industries and of monopolies in trade and transportation laid serious burdens on the farmers of the country; and that in order not to be left behind in the struggle for existence the farmers must combine for their own protection. Committees were appointed to work out the details of a plan of organization; but the movement seems to have lost vitality when its projectors came to study it in detail. The preceding argument fully explains the reason.

It should be said, however, that cooeperative associations among the farmers are growing at a rapid pace. The Grange and the Farmers' Alliance are primarily cooeperative associations for the purpose of benefiting their members in the purchase of goods and in various other directions, and they are fast increasing in numbers and influence. The attempts made to benefit their members in the sale of their produce have been generally confined to protection against the "middle men." The only movement of which the author is aware for restricting production to increase price, has been in certain sections of the South, where recently a general attempt has been made to restrict the acreage planted in tobacco in the hope of raising the price.

It is a matter worthy of note here that the combined influence of the farmers of the country has recently been successful in securing legislation to defeat an important outside competitor. A few years ago some chemists found out that from a cheap substance known as beef suet, an imitation butter could be made, which was in composition and appearance the same as butter made by the ordinary process, and was exactly as nourishing a food. There has been much talk of the halcyon days to come when the progress of science will be so great that food will be made in the laboratory. Well, here was an important practical step in that direction. A cheap product worth three or four cents a pound could be easily converted by a chemical treatment into a valuable food worth three times as much, and the great profit in the business brought this substitute for butter rapidly into use. But at once an indignant protest went up from the farmers of the land. They were being ruined by the competition of the "grease butter" as they disrespectfully called it. There was something suggested about the idea that if just as good butter could be made out of the fat of the cow as out of her milk, and at half the expense, that it would be a benefit to everybody in the country who had butter to buy. But the weak protest for the protection of the general interests of the whole people was not heeded, and Congress passed a bill laying a tax on the new butter sufficient to stop the sale. Here was an evident case of killing competition for the sake of the farming interests, and the force of their unorganized sentiment alone was sufficient to secure the desired legislation. But when the farmers attempt to form a trust, they will have to kill competition among themselves instead of outside competition; and that is a different and far harder matter.

To agricultural laborers the same rule applies which we have found to govern other unskilled labor, viz.: that combination cannot effect much in raising wages. Added to this is the fact that they are widely scattered, and that a great proportion do not follow this as a steady occupation. In England, indeed, there is an agricultural laborers' union, and we may possibly come to that here. But our circumstances are widely different. The fact that in many sections the agricultural laborer is not a "hand," or an "employe," or "servant," but a "hired man," is an important one, for the difference in terms denote a vast difference in conditions. It is hardly likely that an organization of any sort is to be expected among those in this occupation.

This last division of occupations contains the most members of any of the four divisions. The farmers of the country number 4,225,945 and the farm laborers number 3,323,876. Other minor occupations of the division, as gardener, florist, etc., bring up the total engaged in agriculture to 7,670,493.

We can now make some interesting comparisons. The evident effect of monopoly is, in general, to tax the community at large for the benefit of those who own the monopoly. Let us see what proportion exists between the two classes:

- + Total number of persons engaged in manufacturing, mining, trade, and transportation (occupations more or less monopolized) 5,647,368 Total number of persons engaged in agriculture and in furnishing professional and personal services (occupations not monopolized) 11,744,821 + -

Thus at the greatest estimate we can make of the number benefited by monopolies, for each man who is gaining by them, two are having their income reduced. If we take the estimate previously made, that the utmost number of persons who can possibly be reaping benefit by ownership of the especially profitable monopolies, trusts, transportation lines, mines, etc., is one million, we have opposed over sixteen millions of the community who are being taxed by their operation. Let a sharp distinction be drawn at this point, however. The above comparison is to be confined to the things between which it is made, and not confused with others to which it has no reference. It is not a comparison of the sort which social agitators are fond of making between the great numbers of the working classes and the relative scarcity of the wealthy. Except so far as the operation of profitable monopolies by the few tends to bring about this unequal distribution of wealth, that is a matter with which we have nothing now to do.

There is one point in this connection, however, which it is well to make plain, as it concerns a class of people which is not included in either of the four divisions that we have already described—those who live on the income of their property.

We have before alluded to the fact that in the popular speech "capitalist" and "monopolist" are often used interchangeably. If we carefully consider the real status of the capitalist, however, we find that of the three requisites of production—labor, capital, and natural agents—capital is the requisite which is most perfectly secured from the control of monopoly. The rate of interest for the use of capital is regulated so perfectly by the law of supply and demand, that all the anti-usury laws which have ever been enacted have been able to accomplish but little in enabling the borrower to secure loans at a less rate than that prescribed by competition. The reason for this is plain on consideration. The total supply of accumulated wealth of the whole civilized world is engaged in this competition, and the millions of wealth which are added every day are new contestants in the market. Competition in other products is held in local bounds by the cost of shipment over long distances; but wealth in the form of value can be transferred quickly and easily to any part of the civilized world where a market awaits it. Every person who earns money or owns property is a potential competitor, in that he can be made to lend his capital for great enough inducements. Under the pressure of this competition, the price for the use of capital—the rate of interest—has steadily fallen; and the enormous production of wealth of which our industrial resources are now capable is such that the fall is certain to continue, and a very few years will see loans at 2 per cent. as common as those at 4 per cent. are to-day. Combination to restrict competition among those who loan capital for investment is an utter impossibility. The number of people with money to loan, or with property on which they can raise money for that purpose, if they wish, is too large a proportion of the population to be ever brought into a combination to restrict competition. The stringency which sometimes occurs in the money market need not be cited as a contradiction of this statement. That is a matter which has only to do with the currency. The broad fact, and it is a most important one, is that capital, a necessary agent of production, can never be monopolized.



X.

THE THEORY OF UNIVERSAL COMPETITION.

We have now examined all the important occupations in which men engage for the purpose of gain; and we have found that while certain large classes of men still have the returns for their industry fixed by the laws of competition, other large and important classes have been able to check and limit competition, so that their returns from their work are constantly increased; while others still, are in possession of certain agents, so necessary to the community and so rare, that a price can be exacted for their use greatly in excess of the original cost to their owners. Some of the effects of this state of affairs it is easy to perceive. We have, indeed, pointed out for each monopoly described some of the especial abuses to which it gives rise; and it is plain enough that the general tendency is, first, to greatly enrich the possessors of the strongest monopolies at the expense of all other men; second, to give a certain degree of advantage to the possessors of minor monopolies,—as, for instance, monopolies in articles which are luxuries, and can easily be dispensed with; and third, to seriously injure all those engaged in occupations in which the price of the product is still fixed by competition.

Every one will agree that this is an evil state of affairs. It is not just that my neighbor, who owns a mine or a railroad, should ask me what he pleases for coal, or for carriage of my produce to market; while I, being a farmer, must sell the products of my labor at a price determined by competition with the products of ten thousand other farms. No one can deny at this day that it is contrary to the principles of justice to give to the men in any one occupation or calling an advantage over those in any other, except in just the degree that one occupation is more beneficial to the world than another. The question then arises, how may we best remedy this state of affairs? Shall our panacea be to do away with all monopolies, and put every industry back upon the competitive system? If so, by what means are we to apply this remedy? Or shall we go to the other extreme and adopt the antipodal doctrine to the foregoing, that competition is an evil which ought to be done away with; and then proceed to abolish competition in every trade and occupation where it still exists, if we can find any possible means of accomplishing such a task.

The investigation we have already pursued gives us no answer to these questions. We have thus far studied facts, and made little attempt to deduce from them general truths. We are now informed as to the widespread growth of monopoly; and we have paid some attention to the injustice and wrong to which it gives rise, in order that we may understand the urgent necessity for finding the right remedies, and finding them at once. Our study is henceforth to be devoted to this end. How shall we go about it? In the first place, it is evident that we might make a far wider and more detailed investigation of existing monopolies, and still be no nearer our desired end. We might study the facts concerning each especial railroad monopoly in the country, for instance, without reaching any valuable conclusion with regard to the proper method of restricting railroad monopolies in general. But if we were to take the monopoly exercised by a single railroad company, and study the principles on which it is founded and the laws by which it is governed, we might then be able to state something of value in reference to proper methods for its control. Evidently, then, principles rather than facts are to be the chief subjects of our future discussion, although, of course, we can only discover these principles by investigating the facts already found, together with others which may come to our notice.

Our very first and most obvious generalization from the facts which we have studied is, that in all the monopolies we have considered, the inherent principle is the same, and the effect on the community is of the same sort. Therefore, instead of hunting for separate remedies for railroad monopolies and trusts and labor monopolies, we will see what the general problem of monopoly is, and what is the general nature of the remedy that should be applied; the details applicable to each case will, of course, be different; but the underlying principle must be the same.

But if we examine our problem a little more closely we see that the word monopoly seems to be only a negative, expressing the fact that competition is absent. We will therefore direct our studies to competition itself, and will consider first its action as the basis of our social system.

In the most primitive condition of man which we can imagine, each person provided for his or her own need. The competition which then existed was not competition, in the sense which we use the word in this volume, but was a struggle for existence and a gratification of the baser desires, of the same sort as that which now prevails in the brute creation, resulting in a "survival of the fittest." With the introduction of the family relation, the principle of the "division of labor" was utilized, the female doing the hard and menial work, while the male devoted himself to hunting and fishing, or subsisting on the results of his helpmate's industry. As men's wants increased and they became more industrious in supplying them, this division of labor was extended. The man most skilful in fishing neglected the use of the bow and spear, and his surplus of fish he exchanged with his neighbor for the fruit of the chase. The very same principle applied to different tribes brought about the first commerce. A pastoral tribe, with large flocks and herds, exchanged their surplus products with less civilized tribes who continued to live by the chase, or with a more civilized people who had begun to till the soil.

It is plain that these were first steps in civilization. Man, so long as he supplies only such of his wants as he can supply with the labor of his unaided hands, must remain in a half-fed, half-clothed, and untaught condition, because his strength and skill, when diverted in the many directions which his wants require, are not enough to enable him, even when he spends all his time at work, to supply himself with more than the barest necessaries of life. It would be interesting to trace the development of this principle of action through its various stages down to the present time, when we see men everywhere working at various trades and occupations, and always to supply some want of their fellow-men. Every person in the community is absolutely dependent upon a multitude of others, most of whom he knows nothing of, for the supply of almost all his wants. Human society is thus growing more and more interwoven and interdependent. The motto of the Knights of Labor is a true one, apart from the altruism involved in it. "An injury to one is the concern of all," because the mass of humanity is connected and woven together by such strong ties of self-interest, as well as fraternity, that a calamity to any class or country is felt in some degree throughout the civilized world. This is vastly more true now than it was a half-century ago. Under such conditions as existed then, the doctrine of laissez-faire, that the government should confine itself to the prevention of violence and crime and the maintenance of national honor and integrity, letting alone the industries of the country to develop and operate according to natural laws, was not liable to do harm. But the conditions now are wholly changed. The interdependence of the community involves a moral inter-responsibility, and the time has come when we must recognize this by making it a legal responsibility as well.

We are now ready to consider in detail this inter-relationship of society, and to examine the natural laws which govern it. We have already stated the fact that, broadly speaking, each man is engaged in supplying the wants of his fellow men, because in that way better than in any other he can supply his own wants. We shall find this an easy matter to understand if we conceive that every man puts the products of his labor, of whatever sort it be, into a common public stock (offers it for sale), and takes out of this common stock (buys) the various articles which he wants. He does the first simply that he may do the second, not because he desires to benefit his fellow-men. The money which he receives (as we do not propose to consider here any questions regarding the currency) we may regard as simply a certificate that he has done a certain amount of work for the world, the measure of which is the number of dollars he receives; and on presentation of that certificate, he can obtain other articles which he desires.

We have next to consider the fact that there is a great variation in the amount which a man can take out from this common stock. One man is able to provide himself from the common stock with a host of luxuries, while another may only take out a scant supply of the barest necessaries of life. If this distribution operated with perfect equity, a man would be permitted to take out of this common stock exactly in proportion to the benefit which the world at large received from that which he put in. No human judgment, however, is competent to fix, with even an approach to precision, the relative actual benefit which each member of society renders to his fellow-men as a whole. But our social system effects that for us better than it could be fixed by any arbitrary human judgment. This it does by a law known as the law of supply and demand. Instead of the actual benefit, this law takes what people choose to consider as benefit, which is the granting of their desires, whether they desire things hurtful or beneficial. It is these desires for things which others can produce which constitute demand. It is to be borne in mind that this is a broad term, and includes not only desires for food, clothing, and actual things, but for service of every sort, in short, demand is the desire for any thing whatever for which people are willing to pay money. But when there is this demand—this willingness to pay money for any article—people begin at once to supply it, because the money they receive allows them to take goods which they wish from the common stock. Evidently, if there is an unlimited supply of any thing, people will not pay money for it. People will not pay money for fresh air to breathe when they are out-of-doors, and the supply is unlimited; but when indoors, the supply may be limited, and they will spend money to have ventilators and air-pipes built to supply them with fresh air. Or take the contrary case: The supply of some commodity, say flour, falls very short. Evidently less flour must be used by the world than was used in the years of a more plentiful wheat harvest. But no one will wish to be the one to go without, and most people will pay a little more rather than do so. Therefore the price rises.

The competition which we have chiefly considered is the rivalry which exists between the men who supply the same sort of goods; but there is a rivalry among buyers as well. Speaking generally, every buyer is trying to purchase for as little as possible, and every seller is trying to dispose of his goods or services to the world for as much as possible, which each has a perfect right to do.

We have already seen that prices vary with the relative proportion between supply and demand, rising as demand rises or supply fails, and falling as supply increases or demand falls off. But to complete the wonderful perfection of the mechanism, the reciprocal relation is introduced, so that supply and demand vary with price. If the price rises, fewer people can afford to buy and more will be anxious to sell; while if the price falls, more people will wish to buy and fewer people will be willing to sell.

We can now easily see why some men are able to take out from the world's common stock of product so large an amount, while most men can take but a meagre allowance. By the law of supply and demand the price is far higher for the service which one man renders to the world than another. Let us take the operation of a large machine shop, for instance. Only one superintendent is needed, and he should be a man who has devoted much time to mastering all the details of the business, and is experienced and competent to so govern the work that a large product will be turned out at a small expense. There is a demand in the country, let us say, for 5,000 such men; but out of the 5,000 who are filling such places, there are perhaps 50 who seem almost faultless in their skill and industry, there are 500 who are with one or two exceptional faults, almost equally efficient, there are 3,000 who are fairly good men, and the rest may be classed as those who hold their positions because better men for the place cannot be had. So with the skilled machinists, the relation of supply and demand is such that the price of their labor is kept up to perhaps $4.00 per day. But of common laborers the supply is so related to demand that the price of their work is very low. Thus the three classes take very unequal amounts from the common stock. The superintendent, perhaps, is able to take five thousand dollars' worth of goods each year. The skilled workman can spend perhaps one thousand five hundred dollars, while the laborer can spend but five or six hundred dollars. Thus the men who secure the greatest amount of wealth in return for their services to the world, secure it because people are willing to pay it rather than pay less for men of less ability. This is not the same as rewarding a man according to the actual benefit which he does to the community, but it is an approach to it; and it seems to be as close an approach as is possible by human methods.

This social system is not the creation of any man or set of men, but has grown of itself out of the tendency among men to secure the things they wish for with the least exertion. And its theoretical working is marvellously perfect. Any thing which men desire sufficiently to exert themselves to secure it, can be bought with a small part of the time and labor, measured in money, which would be required if each made it for himself. Not only this, but the aim of every man is to do the greatest service to the world and best meet its desires, thus securing in return the greatest rewards for himself. Rivalry among purchasers constantly tends to increase the rewards of the producers, while competition among the latter tends toward the furnishing of a better article at a smaller price. These two forces hold each other in stable equilibrium, for a variation tends always to bring things back to their normal condition.

Let us look more closely at the theory of the competition among producers. We see that, speaking broadly, all occupations are competing with each other. If changes in the supply or demand raise the rewards in any calling, men will leave other work to engage in it. Men by the pressure of competition are forced to seek out the easiest and most direct methods, and to learn how to secure the greatest results with the least expenditure of labor and material.

It is this principle which lies at the very root of our industrial development. Men have so striven to meet each other's competition and outstrip each other in the production of superior goods at low prices, that the cost of the staple articles of consumption, measuring by the labor required to produce them now and the labor required by the clumsy tools and hand work of a century ago, is from a tenth to a hundredth of the cost in those days. It must be remembered, too, that this system of competition is in accordance with the sense of inalienable personal rights which is implanted in the breast of every man. The work of my hands and brain are my own. In disposing of it for a price, I have a right which none may deny to obtain such a sum as I can induce any one to pay me. If I choose to sell it for less than my neighbor, it is my right. In short, the open market is open to all; and every man has a right to sell there his labor, his skill, or his goods, of whatever sort he can produce, at such a price as he can obtain. The same is true of the buyer. I have a right to go into the open market and secure such goods as any one wishes to sell me at the lowest price for which he will part with them. A curious illustration of this sense of personal right is the custom duties on imported goods. It is an evidence of this inherent feeling of a natural right that both public opinion and the law hold that it is a much less serious crime to smuggle than to steal. There are a dozen people who would smuggle, if tempted to do so, to one who would steal. Another illustration is the opposition shown to sumptuary laws on the same grounds.

It is to be said that the fact that competition lies at the foundation of our industrial civilization, tersely expressed in the saying, "Competition is the life of trade," has long been known, and, to a certain extent, appreciated. The common law, based on the decisions of men most eminent for wise insight and sound judgment, has always held that combinations to restrict competition and establish a monopoly were contrary to public policy, and the protection of the law has invariably been refused, whether they were combinations of labor or of capitalized industries. The establishment of labor combinations, indeed, was long a criminal offence, as we have pointed out more fully in the chapter devoted to that subject. It must be said, too, that the principle has come to be generally, though rather blindly, understood by the masses of men. It is recognized, though perhaps not very clearly, that competition lowers the prices of goods, and that this benefits every consumer. Let a proposition to build a competing railroad line, or a competing electric-light plant be submitted to popular approval, and, under the impression that they are benefiting themselves, hard-working men will cheerfully assume heavy burdens of taxation to aid the new enterprise. So blind and unreasoning indeed, is this popular abiding faith in the merits of competition, that it has been responsible for some of the greatest wastes of wealth in unproductive enterprises that have ever been known.

We have now examined the theory of universal competition as commonly accepted at the present day, and it is rightly considered a fundamental principle of society. It is the practice of most economic writers of the orthodox school to lay great stress on the importance of this fundamental principle, and enlarge upon its various manifestations. The many attempts to limit and destroy competition, which we have studied, they consider merely as abnormal manifestations which are opposed to law, and so not worth while considering very fully. But we have seen clearly to what extent the destruction of competition has gone on; and, with this knowledge, the question almost inevitably occurs to us: Is not this decay and death of competition, this attempt to suppress it under certain conditions, too wide and general a movement to be treated as merely a troublesome excrescence? Is it not likely that there are certain fixed laws regarding competition which determine its action and operation, and sometimes its death? If this be so, it is of the highest importance that we find and study these laws; and to that purpose we will devote the following chapter.



XI.

THE LAWS OF MODERN COMPETITION.

Thus far in our study, we have assumed that we knew what competition was. Now, however, as we are to study it scientifically, we are in need of an exact definition, that we may know just what the term includes. Prof. Sturtevant, in his "Economics," says: "Competition is that law of human nature by which every man who makes an exchange will seek to obtain as much as he can of the wealth of another for a given amount of his own wealth." Simmer this down to its essence, and we have simply: Competition is selfishness. To the other evident faults of the definition we need not allude. It is a much more satisfactory definition which Webster's Dictionary gives us, for it includes the idea that competition necessitates two or more parties to exercise it: "Competition is the act of seeking the same object that another is seeking." But this is too broad a definition for our purpose. It takes in competitions for fame, social standing, etc., with which we have nothing to do.

Failing to find a satisfactory definition, let us make one, as follows: Competition is that force of rivalry between buyers or between sellers which tends to make the former give a greater price for the commodity they wish to secure, and tends to make the latter offer better commodities for a less price.

That competition is a force, even in the popular estimation, is evidenced by such common expressions as "the pressure of competition," "a strong competition," and indeed, "the force of competition." But these very expressions show us as well, what we have already found to be true in the preceding chapters, that it is not a constant force but a variable one. What, then, are the laws of its variation?

Let us see what we can learn by a study of three typical examples of the force of competition. Let us take first the business of growing corn. There are perhaps three million farmers in the United States engaged in producing corn, and each one of these competes with all the others. Is this doubted? We have defined competition as a rivalry that tends to make the sellers offer better goods for a less price. Now at first sight it may seem that there is no rivalry at all. Neighboring farmers work together in all harmony; and no man thinks that because his neighbors have raised a large crop of corn, he is in any way injured. And yet this tendency to give better goods and lower prices exists and is plainly felt. Suppose a new and superior variety of corn were introduced, which buyers preferred. Some farmers would at once begin to raise it, so that they might be more sure of a market and perhaps of a better price, and other farmers would be obliged to follow suit to meet the competition. Again, consider that the supply and demand adjust themselves to each other through competition. For suppose, at the ruling price, the demand to be less than the supply; then to increase the demand, the price must fall; and the cause of the fall in price is simply that the farmers compete with each other for the market, and lower their prices in order to secure a sale for their crops. Note, however, that the rivalry in this case never becomes a personal one. Each farmer recognizes that an increased supply lessens the price for his goods; but his neighbor's extra acreage is such a drop in the bucket, that he never thinks of it as being really a rival of his own crop.

Take as a second example, the wholesale paper trade. Here are perhaps three hundred men, each knowing personally many of his competitors and probably hating some of them cordially. Each striving to secure for himself all the trade possible, and to gain, if he can, his rivals' customers. He sends out his salesmen with instructions to, "Sell goods! For the best prices you can get, but sell them, anyhow." These "drummers" are sharp, active business men, they might well be employed in directing some productive process; but they go out and spend their time in inducing customers by all the means in their power to buy their goods. They spend money in various "treats" to secure the good-fellowship of the man with whom it is desired to trade, and use his time as well as their own. Another item of expense is for advertising and for keeping the firm name prominently before the purchasing public. All these things cost money, as any wholesale merchant engaged in a business where there is sharp competition can testify. It may be thought that a firm which would have the courage to do away with all these expenses and give the money thus saved to their patrons in reduced prices and better goods, would be able to keep its trade and even gain over its competitors. But it is hardly so; most men are more likely to be wheedled into taking slightly inferior goods at a slightly greater price.

Another matter to be considered in this connection is the variation in price. In the case of the producers of corn, we saw that prices were practically uniform at any given place, being fixed by the ratio of supply and demand in the chief markets of the world. But in making sales of paper, the sharp, close-dealing buyer is generally able to secure a better price than a buyer not posted in regard to the condition of the paper trade.

As competition becomes more intense, its burdens become more heavy to carry. Perhaps two of the largest houses in the trade, who are able to force prices lowest, come to a sort of tacit understanding that their salesmen "will respect each others rights a little and not force prices down beyond all reason." It is plain that here the foundation is laid for the establishment of a monopoly. Yet the agreement certainly seems to be nothing more than these two firms have a right to make. Its result is seen, however, in a slight increase in the price their customers have to pay. Soon the tacit agreement becomes a formal one. Then other firms are taken in. The first seed has borne fruit. The combination grows larger and stronger. The number of producing units is growing less. Finally it includes practically all the paper manufacturers in the country. Whoever wants paper must buy of the combination, there is no other source of supply. Competition is dead.

If the combination is strong enough and is managed well enough, it may be permanent; and prices of paper will be regulated by other laws than the law of competition. But suppose that the number of paper makers is so great and that they are so widely scattered that the combination proves difficult to maintain; local jealousies creep in, and charges are made of partiality on the part of the managers. The combination finally breaks up. Can we expect a perfect return to the old system of free competition? When men have once reaped the enormous returns that are yielded by the control of a monopoly, the ordinary profits of business seem tame and dull. There will surely be attempts to form the monopoly anew on a stronger and more permanent basis; and even if these attempts do succeed in producing only short-lived monopolies, the effect will be to keep the whole trade and all dependent upon it in a state of disquiet and uncertainty. Prices will swing up and down very suddenly between wide limits; and it is everywhere recognized that stability in price is a most important element in inducing general prosperity. A perusal of the trade journals for the years 1887 and 1888 will convince one of the truth that when a combination is once formed, its members are loth to try competition again. A considerable number of combinations which were formed in 1887 were soon broken up, often from the strength of old feuds and jealousies. But in almost every case they have been formed anew on a stronger basis after a short experience of competition.