This matter of the variation in price is a very important one, and it has an important influence in checking business prosperity. Men are far less apt to engage in an enterprise, if they cannot calculate closely on prices and profits. But the main point, after all, is the waste which is due to competition. It is for the interest of the public at large that the papermakers should devote all the energies which they give to their business to making the best quality of each grade of paper with the least possible waste of labor and material.

Take for a third example two railway lines doing business between the same points. We have fully pointed out the practical working of this sort of competition in the chapter devoted to railways. It is plain that the general effect is a fluctuation of rates between wide limits, an enormous waste of capital and labor, and ultimately, the permanent death of competition by the consolidation of the two lines.

In comparing now the above three cases, the most noticeable difference in the conditions is in the number of competing units. There were in the first example three million competitors; in the second, three hundred; and in the last, but two.

The first difference in the competition which existed is in intensity. In the case of the producers of corn, competition was so mild that its very existence was doubted. In the case of the papermakers it was vastly more intense, so that it caused those engaged in it to take steps to restrict and finally abolish it. In the case of the railroads it was still more intense, so that it was not able to survive any length of time, but had to suffer either a temporary or permanent death very soon. Let us state, therefore, as the first law of competition, this: In any given industry the intensity of competition tends to vary inversely as the number of competing units.

We also saw that among the producers of corn there was virtually no waste of energy from competition. Among the paper makers there was a large waste. And in the case of the railroads, the whole capital invested in the rival railroad, as well as the expense of operating it, was probably a total waste. Let us state, then, for a second law of competition: In any given industry the waste due to competition tends to vary directly as the intensity. As an additional example to prove the truth of these laws, take the competition which exists between buyers. In the case of ordinary retail trade the number of buyers is very great, and the competition between them is so moderate that we hardly remember that it exists. It is difficult to see how there could be any waste from this competition among buyers, at least of any amount. Expressed in the language of the laws we have found: The number of competing units is so great that competition is neither intense nor wasteful.

From these two laws and a study of the examples we have given, it is easy to deduce a third. We have seen that when competition became very wasteful, monopoly arose; indeed, we have noted the working of this law all through our investigation. The principal cause assigned for the formation of the linseed-oil trust was the waste which intense competition had caused. The third law is, then: In any given industry the tendency toward the death of competition (monopoly) varies directly with the waste due to competition.

We might now combine these three laws to deduce the fourth law, which is: In any given industry the tendency toward the death of competition (monopoly) varies inversely with the number of competing units. But this law is also proved independently. Look back over all the monopolies we have studied, and it will be seen that one of the most important conditions of their success was the small number of competitors. Fifty men could be brought together and organized, and made to bury their feuds and rivalries, when with a thousand the combination would have been impossible. We have seen, in the case of the farmers, how their great number alone has prevented them from forming combinations to restrict the competition among themselves.

It should be said that these laws, like all other laws of economics, are not to be taken in a narrow mathematical sense. We cannot study causes and effects dependent on the caprice of men's desires and wills with the minute exactness with which we solve numerical problems. Taken in the broad sense, however, the study we have made in the preceding chapters is sufficient proof of their truth.

The common expressions of trade afford still further evidence. We often hear the expression: "A healthy competition." But the very existence of the phrase implies that there may be an unhealthy competition, and if so, what is it? Is it not that competition whose intensity is so great that it causes a large waste of capital and labor in work other than production; whose intensity is so great that, like an animal or a machine working under too great a load, it labors intermittently,—now acting with great intensity and forcing prices far below their normal plane, now pausing in a reaction, when a temporary combination is formed, and allowing prices to spring back as far above the point indicated by the relation of supply and demand; and finally reaching the natural end for unhealthiness—death. In fact, a recent economic writer declares that especially intense competition should be called war, as, indeed, it frequently is called, rather than competition.

Looking about us for other causes of variation in the intensity of competition we discover a fifth law: The intensity of competition tends to vary directly in proportion to the amount of capital required for the operation of each competing unit, especially when the interest on the capital invested forms a large proportion of the cost of production. Take, for example, the case of a railway line. All the capital invested in it is wasted unless the road is in operation. Hence it will be better to operate the road, so long as receipts are any thing more than the expense of operation, than to abandon it. An enterprise in which no capital is invested will cease operations when receipts do not exceed its expenditure and there is no prospect of betterment. But in the total expense of operating a railroad, a large item is the interest on the capital invested, which is as truly a part of the total cost of carrying the traffic as is the daily labor expended in keeping the road in good repair. (In railway bookkeeping only an arbitrary line can ever be drawn between capital account and operating expenses.) Now, in order to pay operating expenses and fixed charges, railways must secure traffic. We suppose that they are doing this by competition, and that they have not yet combined to form a monopoly. Let us suppose that this competition cuts down receipts to a point where they are just sufficient to pay the whole cost of carriage. In an enterprise in which no capital was invested some of the competitors would be sure to fall out when profits disappeared; but here there is no such chance of relief; and though the competition keeps on until the receipts are only enough to pay the operating expenses, still the road is not abandoned because then the capital invested, in it would be a complete loss. Changes in productive processes often lessen the demand for a line of goods; but the owners of the capital invested in factories and machines for making these goods may often cause them to be continued in operation at a loss rather than lose all that they have invested, and because they hope for better days and a renewal of the demand.

For the sixth law of competition we have: In any given industry the tendency toward the death of competition (monopoly) varies directly with the amount of capital required for each competing unit. This law is proven in part by the preceding laws; for when a large capital is required for each competing unit, the number of competitors will be small and the tendency toward monopoly will be strong; but it may also be proven independently. Business men, before they form a combination, are certain to ask whether new competitors are likely to enter the field against the combination. Now, as we have seen in very many cases in the preceding chapters, when there is a great amount of capital required, new competitors will be very unlikely to enter the field. If there is but little capital required, they will be very apt to do so, being tempted by the prospect of large profits at the monopoly's prices. But they know that the combination will concentrate its strength to fight them in every way; and if they must invest a great deal of money in buildings, plant, etc., to start operations, they will be apt to think twice before they take the field against the combination.

The seventh law of competition is: In any given industry in which natural agents are necessary, the tendency toward the inequality of competition (monopoly) tends to vary directly with the scarcity of available like natural agents.

The influence of limited natural agents in promoting the growth of monopolies is a matter of the greatest importance. That the law is true, is evident upon slight investigation. For if some especial gift of Nature is a necessity to any industry, and those who are engaged in that industry can secure all the available gifts of Nature of that sort, there is no opportunity for new competitors to enter the field.

It is to be noted that in this seventh law we have used in apposition with the term monopoly, the term "inequality of competition" instead of "death of competition," as in the preceding laws. We are now in need of a definition of the term monopoly. Webster defines it as "the sole control over the sale of any line of goods"; Prof. Newcomb says "a monopoly is the ownership or command by one or a limited number of persons of some requisite of production which is not solely a product of human labor"; Sturtevant says "a monopoly is such a control of the supply of any desirable object as will enable the holder to determine its price without appeal to competition." To the first definition we object that it is both narrow and indefinite. The second seems to omit such important classes of monopolies as the combinations to limit competition; and Sturtevant's definition is unscientific in this: Hardly any monopoly exists whose holders can without limit determine the price of its product. If the price continues to rise, competition in some form will appear. Take, for example, the business of transporting goods from New York to San Francisco; if all the railway lines combine to form a monopoly, the competition of ocean steamers via Panama would eventually stop the rise in rates, if no other outside competition stopped it before. The owners of a rich mine have a real monopoly, though they cannot raise the price above a certain point without being undersold by the owners of poorer mines or those more remote from market. Consideration of these facts lead us to construct the following definition: A monopoly in any industry consists in the control of some advantage over existing or possible competitors by which greater profits can be secured than these competitors can make. For the law of monopolies we have: The degree of a monopoly depends upon the amount of advantage which is held over existing or possible competitors. When the advantage of the monopoly is so great that no other competitor will try to do business in competition with it, we may rightly say that competition is dead. The great share of the monopolies which are based on this seventh law of competition, those due to the control of natural agents, only restrict competition by the attainment of an advantage over their competitors, and do not destroy it.

The principal natural agents which are necessary to production, and whose supply may be so limited to cause an appreciable monopoly, are: (1) Land for agricultural purposes; (2) land for purposes of manufacture or commerce; (3) transportation routes, such as mountain passes, room for railway tracks in a city street, or for gas-and water-pipes beneath its surface; (4) natural deposits of minerals and metals; (5) sources of water supply or water power. (The latter is unimportant now compared with a score of years ago, because of the lessened cost of its competitor, steam.)

Let us be especially careful not to confound this seventh law of competition with a certain doctrine which is now receiving more and more credence, which is, in brief, that the private ownership of the gifts of Nature used in production should be abolished. The grounds in opposition to this doctrine we will discuss in a later chapter. The law we have stated says nothing of the right or wrong of the private ownership of the gifts of Nature. What it does say is, that when any of these are limited in amount, those who control them are given an advantage over other would-be competitors, which constitutes a monopoly.

In considering the natural agents enumerated above, we can easily see the truth of the law. Agricultural lands, the most important of natural agents, are in this country so abundant that their rental is entirely fixed by competition. In England, where they are so much more limited in area, rent is fixed by custom. As regards land for purposes of manufacture or commerce, we have already pointed out the cases in which monopolies are prominent, as also for transportation routes. As regards mineral wealth, deposits of iron are so numerous and widespread that no monopoly has ever yet succeeded in controlling competition in the manufacture of pig-iron to any great extent. But the rarer metals, like copper, tin, nickel, and others, are largely controlled by monopolies.

Now, while this seventh law says nothing as to the right or wrong, the expediency or inexpediency of the private ownership of natural wealth, it does follow from it that this private ownership generally constitutes a monopoly, as we have defined it. For of no class of natural agents is it true that their richness and availability are absolutely equal. Those competitors who have the richest and best natural resources to work with have an advantage over their competitors which is essentially a monopoly. Thus the owners of fertile lands near a large city have an advantage over the owners of less fertile lands far removed from markets, which is of a monopolistic nature. If any one doubts this, let him say how this case is logically different from that of the ownership of a mine of native copper so near to New York City that the cost of laying it down in the market there will be half what it is from any existing mine; or, for a second case, take the New York Central railway, which has the control of such a valuable pathway between the Mississippi Valley and the Atlantic seaboard that it has an advantage over all competitors in the business of transportation between those points.

We have now to turn our attention to other variations in competition besides the variation in intensity. We need to distinguish the different species of competition. That competition which is in daily operation in most branches of industry we may call actual competition. That competition which would spring up in any industry in case an increase in profits called it out, we may call potential competition. The third class is instanced in the letting to the highest bidder a franchise for city water or gas-works, or street-car lines. Here competition acts at a single time to fix the price for perhaps twenty years. We may call this, for want of a better name, franchise competition. It possesses the evident advantage that it avoids both the waste of competition and the fluctuation of prices. It has the disadvantage that, unless the owners of the franchise are held strictly to their contract, quality is apt to be sacrificed; also that if the purchase is for a term of years, cheapening in processes may result in undue profits to the franchise holders. The discussion of this matter, however, does not properly belong to this chapter.

Arranging in their logical order the laws of competition which we have found, we have the following diagram:

In any given industry the tendency toward monopoly increases:

(1.) As the waste due to competition increases.

The waste of competition increases in proportion to its intensity.

(1.) The intensity of competition increases as the number of competing units decreases.

(2.) The intensity of competition increases with the amount of capital required for each competing unit.

(2.) As the number of competing units decreases.

(3.) As the amount of capital required for each competing unit increases.

(4.) As the number of available natural agents decreases.

The preceding diagram sets plainly before us the three great salient causes from which have grown the long list of monopolies under which our civilization labors. First, the supply of natural agents of which new competitors in any industry may avail themselves has been largely exhausted, or has been gathered up by existing monopolies to render their position more secure; the world has not the natural resources to develop that she had a century ago. Second, the concentration of all the productive industries, except agriculture, into great establishments, while it has enormously lessened the cost of production, has so reduced the number of competing units that a monopoly is the inevitable final result. Last, the enormous capital required for the establishment and maintenance of new competing units tends to fortify the monopoly in its position and render the escape of the public from its grasp practically impossible. These terse statements contain exactly the kernel of potent truth for which we are seeking; MONOPOLIES OF EVERY SORT ARE AN INEVITABLE RESULT FROM CERTAIN CONDITIONS OF MODERN CIVILIZATION.

The vital importance of this truth cannot be over-estimated. For so long as we refuse to recognize it, so long as we attempt to stop the present evils of monopoly by trying to add a feeble one to the number of competing units, or by trying to legislate against special monopolies, we are only building a temporary dam to shut out a flood which can only be controlled at the fountain head.

The facts of history testify to the truth of this law. Monopolies were never so abundant as to-day, never so powerful, never so threatening; and with unimportant exceptions they have all sprung up with our modern industrial development. The last fifteen years have seen a greater industrial advancement than did the thirty preceding, but they have also witnessed a more than proportionate growth of monopolies. How worse than foolish, then, is the short-sightedness that ascribes monopolies to the personal wickedness of the men who form them. It is as foolish to decry the wickedness of trust makers as it is to curse the schemes of labor monopolists. Each is working unconsciously in obedience to a natural law; and the only reason that almost every man is not engaged in forming or maintaining a similar monopoly is that he is not placed in similar circumstances. Away, then, with the pessimism which declares that the prevalence of monopolies evidences the decay of the nobler aspirations of humanity. The monopolies of to-day are a natural outgrowth of the laws of modern competition, and they are as actually a result of the application of steam, electricity, and machinery to the service of man, as are our factories and railways. Great evils though they may have become, there is naught of evil omen in them to make us fear for the ultimate welfare of our liberties.

To the practical mind, however, the question at once occurs, what light have we gained toward the proper method of counteracting this evil? Can it be true that the conditions of modern civilization necessitates our subjection to monopolies, and that all our vaunted progress in the arts of peace only brings us nearer to an inevitable and deplorable end, in which a few holders of the strongest monopolies shall ride rough shod over the industrial liberties of the vast mass of humanity? Were this true, perhaps we had better take a step backward; relinquish the factory for the workshop, the railway for the stage-coach. "Better it is to be of an humble spirit with the lowly, than to divide spoil with the proud." But the law we have found commits us to no such fate. We cannot, indeed, abolish the causes of monopolies. We cannot create new gifts of Nature, and it would be nonsense to attempt to bring about an increase in the number of competing units and a decrease in the capitalization of each by exchanging our factories and works of to-day for the workshops of our grandfathers. But while monopolies are inevitable, our subjection to them is not inevitable; and when the public once comes to fully understand that the remedy for the evils of monopoly is not abolition, but control, we shall have taken a great step toward the settlement of our existing social evils. To discuss the details of the remedy, so far as it can be done in a volume of this sort, belongs properly to a later chapter. Before undertaking it, however, it seems well to devote some further attention to the evils which the attempt to abolish monopolies and adhere to the ideal system of universal competition has brought upon us, and to make, also, some further study of the general evils due to monopoly.



XII.

THE EVILS DUE TO MONOPOLY AND INTENSE COMPETITION.

It is a strange thing when we come to analyze the various social evils which demand our attention, and which every true man longs to cure, to find how great a proportion can be traced back to the one great evil of faulty competition. As a preliminary to a survey of these evils, in order that we may understand the necessity that all good men and true should exert themselves in applying the remedy, let us see just what conditions of our industrial society we should seek to work toward. What is the theoretical perfection of human industry?

Probably all thinking men, whatever their belief and practice, will acquiesce in the proposition that the end we should aim to secure is "the largest good to the greatest number." As we are discussing here only economic questions, this means that the end to be sought is that the largest number of people should have secured to them the greatest possible amount of the necessaries and comforts of life; or, more simply, that the total of human happiness to be derived from the world's production of wealth should be the greatest possible. Now for our present purpose we may assume that since all men desire wealth, the greater its production, the greater will be the number of human desires gratified. From this it follows that our social organization should be such as to increase to the greatest possible degree the world's stock of wealth.

There is no easier or safer way of studying questions of economics than to consider the community as a unit, and see what is for the interest of the people as a whole; what conduces most to the "common wealth"; and if we do this, whenever the question concerns production alone, the task is simple, because the interests of the people as a whole are judged in the same way as the interests of a single person. Whatever tends to increase the total amount of wealth in the world, therefore, benefits the community as a whole; and whatever diminishes the supply is an injury. All work of every sort which tends to aid in the economical production of wealth and its transfer to the consumer is a benefit to the community; and any thing which destroys wealth, lessens its production, or hinders men from exerting themselves to produce it, is an economic injury.

What, then, are we to say of the condition known as over-production? Is it not a fact that some lines of industry are so overdone that the production is far in excess of the demand, and is not this an evil rather than a benefit? Do not periods of business depression occur when all industries stagnate for want of a market for their goods? The true answer to this question is: Over-production is not a fault of production, but of distribution. It is true that, in special industries, a surplus of production sometimes occurs, due to over-stimulation, or too rapid growth; but over-production as commonly spoken of, refers to a general state of trade, in which demand for all sorts of goods seems to fall far below the market supply. But this lack of demand is not due to lack of desire. The desires of men are always in excess of their abilities to supply them; it follows, therefore, that the condition known as over-production consists in a lack of ability to purchase goods rather than in a lack of desire to purchase them. This lack of ability has evidently to do with the distribution of wealth rather than its production.

While it is easy to formulate laws to govern the theoretically perfect production of wealth, to whose justice all men will consent, we cannot go far in the details of the ideal distribution of wealth without reaching points upon which the views of different parties are diametrically opposed. Some foundation principles, however, let us state, believing that in their truth the great majority of men will concur.

In the chapter on the theory of competition we saw that, if we conceived the results of the labor of the whole community to be placed in a common storehouse and gave to each man the right to draw from it an amount just equal to the benefit derived from the goods which he had placed within it, the ideal of a perfect system of distribution of wealth would be realized. No human judgment, however, is, or ever can be, competent to measure the exact industrial benefits which each person confers upon the community at large. We must inevitably permit men to measure the result of their own work by securing for it such an amount of the results of others' work as they can induce them to give in exchange. But while we cannot measure exactly the benefit which each person confers, we can see cases in which the reward received is manifestly out of all proportion to the benefit conferred. Consider the fortunes which have been accumulated by some of our Midases of the present decade. It is quite certain that the benefits which Cornelius Vanderbilt, for instance, conferred on the community by his enterprise and business sagacity, by his work in opening new fields of industry, forming new channels for commerce, etc., were so valuable that he honestly earned the right to enjoy a large fortune. It is equally certain that a great part of his gains had nothing whatever to do with any benefit conferred upon the community, and that the fortune of $100,000,000 or so which he accumulated was an example of inequitable distribution of the products of the world's industry. Stating this in the form of a general principle, we should say: The amount of wealth which any man receives should bear some approximate relation to the benefit which he confers upon the world.

We have already stated that, by the law of supply and demand, the rewards of each worker are regulated in theory even more perfectly in accordance with our ideas of liberty than they could be on the basis of actual benefit conferred. For it is inconceivable that people would submit to pay for what was beneficial to them instead of what they desired. A man who prefers to purchase wines instead of books with his surplus money would think it a great injustice if he were prevented from doing as he preferred with his own. But so long as every one is at liberty to use his income in buying whatever he desires most, demand—the willingness to pay money for the gratification of the desire—will exist, and so long as demand exists it will be met by a supply, furnished by those who are desirous of money and what it will bring. It is inconceivable, then, that any juster arrangement than this law of supply and demand can ever be practicable for regulating the compensation of each individual. The man who can drive a locomotive will receive larger wages than the man who shovels the earth to form its pathway, because the supply of men competent to drive an engine is small in proportion to the number of men who are wanted for that work, while almost any man can shovel dirt. Let us state, then, for our second principle: The amount of wealth which any man receives should depend on the ratio between the demand which exists for his services and the supply of those able to render like service. Farther than these statements of the ideal principles governing the economical production and equitable distribution of wealth we need not go at present.

Let us turn now to examine the result of a violation of these principles in some of the crying evils of the present day which are wholly or in part due to the growth of monopoly and the waste of competition.

Every candid man will acknowledge that the enormous congestion of wealth in a few hands which exists to-day is a danger to be feared. We have had it constantly dinned in our ears that in this free land the ups and downs of fortune were such that the rich man of to-day was apt to be the beggar to-morrow; also that almost invariably a rich man's sons were reckless spendthrifts. These things, aided by the abolition of primogeniture and entails, it was said, were to prevent the growth of a moneyed aristocracy in this country. The propounders of this amiable theory never explained how the community received reparation for the destruction of wealth which the spendthrift sons were to carry on; but so long as the theory has failed to work in practice, that does not matter so much.

A few years ago it was a favorite occupation of newspaper paragraphers to estimate the Gould and Vanderbilt fortunes; but lately they seem to have given them up as beyond the limits of even their robust guessing abilities. Some idea of the latter's fortune may be gained, however, by realizing the fact that the Vanderbilt railway system now has a total extent of nearly 12,000 miles, the total value of which can hardly be less than one thousand millions of dollars. Probably not less than half of the securities of these companies are owned by the Vanderbilt family, and it is well known that their investments are by no means confined to railways. The important fact is, that this fortune grows so fast now that it is sure to increase; and will double itself every fifteen or twenty years, because all that its owners can spend is but a drop in the bucket toward using up their income. But this fortune, while the largest which is still under one name, is but one of many enormous ones. The names of Gould, Flagler, Astor, Rockefeller, Stanford, Huntington, and a host of others follow close after the Vanderbilts. In the days of our grandfathers, millionaires were no more plentiful than hundred-millionaires are to-day.

We have next to show the present and prospective evils which result from this congestion of wealth. The first and most obvious one is its injury to the remainder of the people of the country, by the diversion from them of wealth which they have rightfully earned and which they would receive were it not for the tax of monopoly. It is obvious that a certain amount of wealth is annually produced by the industry of the country from which the whole wants of the country must be supplied. This amount may be greater, indeed, when a Gould or a Flagler or a Crocker directs the enterprise; but for the most part it is indisputable that the owners of these colossal fortunes have made them, not by any stimulus of the production of wealth by their owners, but by a diversion of the produced wealth in the general distribution from others' pockets to their own. In short, all other men are poorer that these many times millionaires may be richer. To show how these fortunes have in many cases been obtained, I cannot do better than to quote a writer not at all likely to err by undue severity to our millionaires, as he is himself the president of a railway system a thousand miles in extent:

The great majority of the phenomenal fortunes of the day are the result of what may be called lucky gambling.... Man is a gambling animal by nature, and modern methods have enormously developed both its facilities and its temptations and have opened large fields in which gambling is not held to be disreputable.

Under such stimulus is it wonderful that its growth has been phenomenal? Wall street is its head-quarters, and millions upon millions of dollars are accumulated there to meet the wants of the players. Railroad stocks are its favorite cards to bet upon, for their valuation is liable to constant fluctuation on account of weather, crops, new combinations, wars, strikes, deaths, and legislation. They can also be easily affected by personal manipulations.... Money makes money, and money in great masses has its attractive power increased. The aspect of phenomenal fortunes, therefore, is a social problem of some importance. Their manner of growth and their manner of use are to be observed, and what restrictions, if any, should be placed on their accumulation should be considered.[5]

[5] "Railway Practice." By E. P. Alexander, President Central Railroad and Banking Co. of Georgia.

The fact pointed out by General Alexander in the above quotation is one which is far too lightly appreciated. The evils of railway management by which the owners of the stocks and bonds of the company are victimized to enrich stock speculators are much too complex and numerous to be described here. The state of affairs can be briefly summed up, however, with the statement that our present system of conducting corporate enterprises results inevitably in the gravitation of their ownership into the hands of the holders of large fortunes. The railways of the country are an instance in point. Time was when the stocks and bonds of railways were owned by people of small means all over the country. But after many severe lessons in the shape of stocks wiped out, and bond interest scaled down, these small holders were taught the folly of investing their savings in business over which they had practically no control, and thus placing them at the mercy of irresponsible corporate officers. Broadly speaking, the railway property of the country is owned by men worth their millions; and the small holdings are being rapidly absorbed every day. But the case is not true of railways alone. Telegraph lines, telephone, and electric light plants, our mines, and to a large extent our factories, which were once held by private owners, are now controlled by corporations whose shares are quoted on the exchanges and are consequently subject to a forced variation, dictated according as "bull" or "bear" has the ascendancy. And when the ownership of a property is once brought into this channel, it is no longer a suitable investment for the man of small means. It is the prey of men who practically make bets as to what its future price will be, and manipulate the price, if possible, to win their bets. If it is ever again held for investment simply, it is when it is locked in the safe of some modern Croesus.

We have shown now the extent to which the congestion of wealth has gone. We have shown that other men are poorer that these men may be richer. We have explained that these great fortunes have been made, not by legitimate enterprise, but largely by "lucky gambling." And finally we have seen how the transfer of each enterprise to the control of stock speculators adds it eventually to some already overgrown fortune. The connection with the subject of the present volume is obvious. The cotton-seed oil mills of the South, once held by private owners, are now in the hands of a trust whose certificates are quoted on the stock-exchanges, and are held only by men of large capital, or by stock gamblers. This is a typical example of the change which is everywhere occurring. Private enterprise gives way to the stock company, and that in turn gives way to the trust. The salient fact, then, we may express in similar terms to those of our first law of competition, as follows: The congestion of wealth tends to increase inversely with the number of competing units.

The facts we have stated make it impossible for the greater monopolies to defend themselves, on the ground that their profits inure to the benefit of any great number of people. But this is not an innocuous state of affairs. It is one of serious injustice and evil. The workman who struggles hard to save a hundred dollars a year can receive only a paltry three dollars and a half of interest or less, if he deposits it in a saving-bank. But the capitalist who is clearing a hundred thousand a year may make twice or thrice that interest from his investments. In short, the charge is: That monopoly and intense competition, with the variation in price which they cause, have shut out the small capitalists of the country from the ownership of the most profitable sorts of property; and by confining them to other lines, have decreased their possible income from their investments.

A further evil resulting from the congestion of wealth is what is commonly spoken of as over-production. We are confronted of late years with the strange spectacle of factories and mills shut down for months at a time, of markets which, at various times, are glutted with every sort of commodity. All sorts of causes are given; all sorts of remedies are suggested and tried. Where is the true one? With the exception of a few special cases, the fault is not that there are no people who want the goods. Probably ninety-nine families out of every hundred would buy more if they had the money to buy with. In many cases the lack of money to buy with is due to the fact that the bread-winners are out of employment because of the glutted markets and idle mills. In this way the evil tends to perpetuate itself and grow worse. Now combine this fact with the fact that the holders of monopolies are in the receipt of incomes so great that, in many cases, they are quite unable to spend them. Also, that this income is largely locked up to wait the chance of profitable investment, or is used in speculation. Is it not obvious, now, that the reason why people cannot afford to purchase the goods, with which the storehouses are glutted, is that too large a proportion of profits has been diverted to swell fortunes already enormous? Have we not in this way accounted for a large amount, at least, of the over-production which is throwing out of employment thousands of workmen, rendering useless a vast amount of valuable capital, and affecting from time to time the business of the whole country with a veritable paralysis?

The facts bear out this theory. For, at many times when producers in every industry are complaining of dull times because people who buy have no money to spend, there is an abundance of money to be had for investment. Fortunately, the evil seen from this aspect must, to a certain extent, be but a temporary one, and will tend to work its own cure. For as the world's stock of invested wealth continues to grow, there is less opportunity for its profitable investment in improving undeveloped natural resources. The greater portion of our wealth we save and invest, the faster will the rate of interest tend downward. But, as this occurs, the operators of mills and mines have to pay less out of their receipts as interest on their borrowed capital, and can, therefore, pay more to their workmen.

There is another way in which monopoly works to cause over-production, with its attendant evils. Suppose a trust is formed in some manufacturing industry, where the working capacity is just equal to supplying the demand. The first work of the trust is to raise the prices perhaps 20, 30, or 40 per cent. Of course this causes a falling off in the demand, and the trust has to shut down some of its mills to ward off over-production. The true cause of over-production in this case is, that the prices are not in equilibrium with the relation between supply and demand. Let prices come down, and the demand will increase. The working of this special case gives us an idea of the way in which general over-production is caused. For it is well known that monopolies have raised the prices and reduced the consumption not of one, but of hundreds of articles. If the men who are made idle by the over-production in these industries flock into other occupations to secure work, they reduce wages there; so that, in any case, their purchasing power is reduced, and this tends to perpetuate and increase the evil. Of course it is not pretended to claim that all industrial depressions have been due to over-production, or the local congestion of the world's income. But that a large part of it may be justly laid to this cause, seems to be beyond question.

We have shown that the congestion of wealth is very largely due to the growth of monopoly, and we have discussed the more immediate evils that result from this congestion of wealth. But when we attempt to describe the evils and abuses which follow close after, as a result of the power which monopoly has placed in the hands of a few, we may well pause at the task. The whole array of perplexing social problems comes before us, and we realize more and more what a curse monopoly has become. The philanthropist tells us that poverty, and all the distresses that follow in its wake, are largely due to the fact that our workingmen under present conditions must live from hand to mouth, must rely on charity for aid in every emergency, and must, therefore, decrease in manliness and self-reliance and the ambition to better themselves, as the practical impossibility of success is comprehended.

Good men are lamenting because the Church has, to a great degree, lost its hold on the laboring classes, and are casting about on all sides for a remedy. Will they ever find one as long as the wage-worker carries in his bosom a rankling sense of injury done him? Injury which he feels that the Church is merely seeking to drug with charity instead of wishing to cure it with justice? There is great need that the Church, not alone by the sermons of its most enlightened thinkers, like Dr. Heber Newton, but by the daily practice of the rank and file of its membership, should recognize, as it never yet has done, the great principles of human fraternity, and move intelligently and earnestly to remedy the great evils that menace us.

Even the evil of intemperance can be traced back to a connection with monopoly. Who shall blame the tired laborer, if after a week with sixty hours of unremitting toil, he takes refuge from the dreariness and lassitude of physical exhaustion, the hopelessness of ambition-quenched life, and perhaps the discomforts and disquiet of the place he calls home, in a long draught of that which does, for the time, create in him an image of exhilaration, strength, self-respect, and manhood? It is but an image, indeed, and to all but the victim it is a caricature; but when a man cannot hope for the reality, to only imagine for a brief hour that he is indeed a king of men, and that care and woe and degradation are no longer his lot, is a refuge not to be despised.

There is indeed a class of philanthropists who say, with some truth, that the laboring classes as a whole have now more than they will spend for their own good, and declare that higher wages means merely more spent on sprees and debasing sports, of different sorts but universally harmful. On the other side, the wise philanthropists who are trying to help their fellow-men in that best of all ways, by teaching them to rely on themselves, testify that their efforts to make men independent are largely hampered because it is so extremely difficult for a workingman to live in any other way than from hand to mouth, especially in our large cities. The true solution seems to be that all these reforms must go hand in hand. We must teach men how to make nobler uses of their incomes and themselves, while we endeavor to bring about reforms that shall give them greater comforts and more leisure to use for either self-improvement or self-debasement.

Much more might be said of the indirect effects which result from the taxation which monopolies inflict upon the community for their own profit; but they are now so generally realized and understood that we can devote our time more profitably to the investigation of other evils.

Under the ideal system of competition which we studied in Chapter X., we found that all occupations were competing with each other; so that if, from any cause, one calling became especially profitable, men would flock to it and bring down the profits to a normal point. Monopolies have seriously interfered with this important and beneficent law. How often do we hear the complaint of the great difficulties that beset young men on their first entrance to business or industrial life in securing a situation. The monopolized industries shut out new competitors by every means in their power. The trade-unions limit the number of apprentices which shall be allowed to learn their trade each year. The result is, first, a most deplorable tendency to idleness on the part of young men just at the time when they should be most active; and, second, a still larger increase of men in the professions and non-monopolized callings, tending to still further increase the competition in those callings, where returns are already inferior to what they should be. Surely, we must begin to appreciate how vitally important to every person in the land is this matter of competition and monopoly.

The evils which we have thus far considered pertain to the distribution of wealth. Let us now turn our attention to the production of wealth. Our second law of competition stated that the waste due to competition varied directly as its intensity. We have frequently referred to this waste of competition; let us now inquire more fully concerning its amount and effect. In the first place, however, let us settle the question, once for all, that waste or destruction of wealth of any sort is an economic injury to the community. We have, indeed, already explained this in the first paragraphs of the chapter; but while all authorities on economics agree on this point, the general public is still seriously infected with the fallacy that waste, destruction, and unprofitable enterprises are beneficial because they furnish employment to labor. If this were merely a theory, we could afford to ignore it; but the trouble is that it is acted upon, and works untold evil and damage to the world. To take a typical case, people reason that damage done by flood or fire or storm is not a total loss because employment will be furnished to many in repairing and rebuilding after the devastation. They do not stop to reflect that so much wealth has been wiped out of the world, and that instead of the destruction furnishing so much additional employment, it has only changed the direction of the employment. For money nowadays is always spent, either directly, by its owners, or by some one to whom he lends it. And wherever money is spent it furnishes employment. Therefore, if the money which was used in repairing and rebuilding had not been required for that work, it would have been spent in some other direction and furnished employment to labor there. Understanding, then, that the economic interests of the community are best served when each one of its members exerts his energies with the greatest result and with the least waste in producing wealth, let us see to what extent intense competition and monopolies have violated this law.

In his interesting book entitled "Questions of the Day," Prof. Richard P. Ely, of Johns Hopkins University, refers to the building of two great railways with closely paralleled roads already in operation, the Nickel Plate, and the New York, West Shore and Buffalo, and says:

"It is estimated that the money wasted by these two single attempts at competition amounts to $200,000,000. Let the reader reflect for a moment what this means. It will be admitted that, taking city and country together, comfortable homes can be constructed for an average of $1,000 each. Two hundred thousand homes could be constructed for the sum wasted, and two hundred thousand homes means homes for one million people. I suppose it is a very moderate estimate to place the amount wasted in the construction of useless railroads at $1,000,000,000, which, on the basis of our previous calculations, would construct homes for five millions of people. But this is probably altogether too small an estimate of even the direct waste resulting from the application of a faulty political economy to practical life. When the indirect losses are added, the result is something astounding, for the expense of a needless number of trains and of what would otherwise be an excessively large permanent force of employes must be added. Of course, nothing much better than guesswork is possible, but I believe that the total loss would be sufficient to provide a greater portion of the people of the United States with homes."

But it seems quite possible to make a closer estimate of the wealth wasted by the construction of unneeded railways than the general one above. There are now, in round numbers, 158,000 miles of railway in the United States. The two lines named above have a total extent of nearly 1,000 miles; and while they are the most flagrant examples of paralleling in the country, there is no small number of other roads in various parts of the country which, except for their competition with roads already constructed, would never have been built. Considering the fact that the paralleling has been done in regions where the traffic was heaviest and where the cost of construction was greatest, it seems a conservative estimate to say that 5 per cent. of the capital invested in railways in the United States has been spent in paralleling existing roads. But the total capital invested in the railways of the United States is about $9,200,000,000, 5 per cent. of which is $460,000,000. It is also to be remembered that this 7,500 miles of needless road has to be maintained and operated at an average expense per mile per annum of $4,381, or a total annual cost of nearly $33,000,000. Taking Prof. Ely's estimate of $1,000 as the cost at which an average size family can be provided with a comfortable home, and we find that the cost of these unneeded railways would have provided 460,000 homes, sufficient to accommodate 2,300,000 people. Say that 3 per cent. of the cost of these homes is required annually to keep them in repair, then this could be furnished by the $33,000,000 now paid for the operating expenses of needless railways, and an annual margin of about $19,000,000 would be left, or enough to provide each year homes for nearly 100,000 more people in addition. Of course, this is merely a concrete example of what possible benefits we have been deprived by wasting our money in building needless railways.

As a matter of fact, the money we have spent on unprofitable railways, as well as those totally useless, has wrought us an amount of damage far in excess of their actual cost. It is generally agreed by financiers that the periods of industrial depression during the past score of years have been largely due to excessive railway building. For in a period of active railway construction, roads are built whose only excuse for existence is that they will encroach upon the territory of some rival. The capital invested fails to make a return. The loss of income which ensues decreases the purchasing power of the community; and this combines with the sudden loss of business confidence caused by the failure of the enterprise to bring about a general panic and crash which affects the whole community; and by checking enterprise and industry, damages the country ten times the amount of the original loss.

The waste of competition is by no means confined to railways. The Sugar Refiners' trust has raised the price of sugar and thus reduced its consumption so much that they have permanently closed several of their factories. Yet Claus Spreckels is now building a great refinery in Philadelphia, the output of which is to compete with the trust. All this capital invested in that which is not needed by the community is an injury to the public. The French Copper syndicate so raised the price of copper that it became profitable to work old mines of poor ore, which under ordinary circumstances could not be worked at all at a profit. Capital was expended in opening and refitting these mines, and in preparing them for working; while other mines, able to produce the metal at much less cost, were reducing their output because of their contract with the trust.

In various cities of the country, millions have been wasted in tearing up the streets to bury the unneeded mains of competing gas companies. The electric light competitors are stringing their wires over our heads and beneath our feet, and by covering the same district twice or three times, double and treble the attendant evils as well as the cost.

The waste due to intense competition in trade may be avoidable or unavoidable; but it is certainly of enormous magnitude, although the fact of its being a waste is still little appreciated.

The waste due to labor monopolies is much better understood. The strikes which paralyze industry and send want and distress in ever widening circles are universally recognized to be a waste of wealth whose annual amount is enormous. The cost to employers and workmen of the strikes in the State of New York in 1886 and 1887, was $8,507,449. Reckoning from this as a basis, it is probable that the total annual cash cost of strikes in the United States is twenty or twenty-five million dollars. The results of these strikes in decreasing the purchasing power of employes and thus causing overproduction, and in discouraging enterprise and increasing the cost of capital, serve to spread their effect throughout the whole industrial community and thus cause an actual loss and injury many times that borne by the parties directly engaged.

It is thus evident that the waste due to the intense competition which the concentration of productive enterprise has brought about in modern times is a matter of startling proportions. We are wasting and destroying wealth all the time sufficient to go a long way towards abolishing all the poverty in our midst; and the blame for this state of affairs we are now able to place where it belongs.

Surely with a full appreciation of these evils, every honest and patriotic man must be willing to use every endeavor to strike at the root of the evil. The public indeed is, and has long been, a unit in its opposition to monopoly; but in endeavoring to defeat monopoly it has taken just the course which could give no permanent gain. Cities have beggared themselves to aid competing railway lines only to see them consolidated eventually with the monopoly which it was expected to defeat. The multitude regard Claus Spreckels as a benefactor—and will till he forces the Sugar Trust to divide their 25 per cent. profits with him in return for the control of his refinery.

It is no benefit to us if in steering away from the Scylla of monopoly, we be wrecked on the Charybdis of wasteful competition. We have been trying for a score of years now to defeat monopolies by creating competition; but in spite of a universal public sentiment in favor of the reform, and notwithstanding the millions of wealth which we have poured out like water to accomplish this object, monopolies to-day are far more numerous and powerful than ever before. The people who are groaning under their burden of oppression are anxious for relief. The remedy they have so long and faithfully tried to apply has but made a bad matter worse; and it is small wonder that, despairing of other relief, they are adopting false and injurious plans for bettering themselves which serve merely to extend the monopoly policy into all industrial affairs.

We are threatened with a state of society in which most of the principal industries will be wholly given over to monopoly. Those in each occupation will band together to secure the greatest returns for themselves at the expense of all other men; while the few occupations which cannot thus combine in a monopoly—farming, and the different sorts of unskilled labor—will be filled to overflowing with those crowded out of other callings. Those who follow them will do so only because the monopolized occupations are closed to them. Thus will our farming population degenerate into a peasantry more miserable than that of Europe, and our laborers be ground down to a level lower than they have yet known. Is there a probability that such a state of affairs will come to pass? There might be if the public were not keenly alive to the curse of monopoly. But as it is, the greater danger is that through ignorance a wrong course may be adopted for the cure of our present evils, which will aggravate instead of curing them.



XIII.

AMELIORATING INFLUENCES.

If pure selfishness were the only motive influencing the masses of mankind, the evils which we have considered in the preceding chapter would be wholly unbearable. All men would be waging an industrial warfare with each other in their greed for gain, just as the barons of feudal times fought to satisfy their thirst for power and possessions; and as motive is the great force which determines character, we would be, as far as moral excellence is concerned, in the same category as the uncivilized savages.

Fortunately for the happiness of the race, there are important influences at work counteracting, modifying and ameliorating the social evils that threaten us. These influences are not cures for these evils, though they are so considered by very many people. But they are very important palliatives. They are certainly of inestimable value in the lack of real remedies; but it is better to consider them as palliatives merely; for necessary, as they are and always will be, to soften and relieve the ruggedness of human laws and human administration of law, in the present condition of humanity they cannot effect a cure of the evils which burden us.

The first of these palliatives has a purely selfish origin. It arises from the desire of the managers of every monopoly to make the greatest possible profit from its operations. Let us take, for example, a street railway monopoly which is at liberty to charge such rates of fare as it chooses and which has no competitors. If it fixes its fare at 10 cents, very many people will prefer to walk or take some other mode of conveyance, who, if the fare was at 5 cents, would patronize the road. Thus it may very likely happen that 5-cent fares will yield it the greatest net income. It is often said that it is competition which has brought our rates of railroad transportation down to their present low point. While this is largely true, it is also true that the tendency to foster the growth of traffic by making a low tariff has been a large factor in bringing rates down to a reasonable point. Another example of this principle's operation is in the case of monopolies protected by the patent laws. In this case the collection of only a moderate royalty will generally result in greater profits to the inventor than he would secure by exacting a large fee, because of the greatly increased sales in the former case.

It should not be understood, however, that this principle has its only application in cases similar to the two mentioned. There is hardly an industry, monopolized or competitive, into which it does not enter to effect important results. It is to be noted, however, that it is least effective where the demand for the monopolized article is least sensitive to a variation in price. This fact should be considered by those who are fond of arguing that this principle alone is always sufficient to prevent monopolies from doing much harm. While it is powerful in the case of such monopolies as we have mentioned, where the demand for the commodity furnished varies greatly with the price, in the case of the great copper trust or of the quinine trust or of any monopoly controlling the great staples of human consumption, it seems plain that it can have little effect. Nor do we need to base our proof that this principle is not a sufficient remedy upon this ground alone. Grant it to be true that a certain monopoly makes the greatest net profit when its rates or prices are at a certain point; then will it not be apt to set them slightly above that point, where they will give nearly the same profit with a considerable decrease in the volume of business transacted and in the corresponding labor and responsibility? And, again, the point where it makes the greatest net profit is considerably above the point where it is of the greatest possible benefit to the community at large. This latter end is attained when it uses its facilities to their full capacity for the benefit of the public. The rates should be fixed at such a point that this full capacity will be utilized, or as much higher as may be necessary to pay the monopoly a fair profit on its operations.

This influence just considered has its origin in the selfishness of men. The second, and by far the most important influence tending to ameliorate the evils due to monopolies and intense competition arises from that essentially noble trait of human character whose province it is to seek the welfare of others before that of self. It is not to be wondered at that the large benevolence of our noblest Christian thinkers rebels against the inflexible laws of competition, or rather at their stern application to modern conditions of life. Under our social system, indeed, each man is striving to do his utmost to benefit his fellow-men, but only so far as it benefits himself. Christianity goes far beyond this. It teaches the Fraternity of Man, the Fatherhood of God, and thus the duty of all men to care for and love their brothers' happiness and welfare. It is in accord with the noblest and most exalted desires of the human soul. It teaches a man to seek to benefit others for their own sake, not for the sake of the reflex benefit on himself.

The burden of Christ's sermon on the mount was that golden rule of action, "Whatsoever ye would that men should do to you, do ye even so to them"; and the whole of his teachings glow with the spirit of fraternity; the strong bearing the burdens of the weak; the rich cast down and the poor exalted; brother sharing with brother, according to their needs. We are accustomed to make ourselves complaisant with the reflection that these were figurative expressions, and not meant as literal commands. But if we consider candidly, we must confess that if it is the spirit of its Master's commands which the Church means to follow, it is very far, as a body, from reaching up to their full import. The love for one's fellow-men which Christ taught was certainly meant to be expressed in great, noble acts of brotherly kindness. Consider the want, the suffering, the distress, the misfortune, the inequality by which a thousand families have hard work and scanty fare while one revels in luxury. Are these thing repugnant to the spirit of Christianity, or not? Every one knows that they are. It is because Christian men in these days are prone to follow their own ease in common with the rest of the world, and are accustomed to make their Christian code of morals to fit that which public opinion declares to be sufficiently advanced, that Christianity as a remedy for social evils has fallen into disrepute with the laboring classes. But men, both in and out of the Church, who are better informed as to the grand and noble spirit that lies at its foundation, are coming to look more and more toward Christianity as the only deliverance from the evils that threaten us.

Our social system, say the devout among these men, is based on the selfish desires of men, their wish to get the most for themselves with the least service to their fellow-men. It is inconceivable that a system founded on any thing less than the noblest attributes of humanity can be intended as a permanent basis for society. The system founded on competition was adapted to the conditions of men during the formative period of civilization: but modern inventions, processes, and methods are revealing a strange want of elasticity in its action. It is leading us to such grave evils that men everywhere are looking for an escape from it. We are brought face to face with the fact that the law of competition, the cruelly terse "survival of the fittest," was never meant to control the wondrously intricate relations of the men of the coming centuries. And if selfishness is not to control, it is because unselfishness is to reign in its stead. It is because there will grow up in the hearts of men a fraternal love, such as the world has not yet seen, which will make them gladly share a common inheritance with each other, as they do a common Fatherhood. Men will then labor for others' welfare as now; but each with the thought of others' benefit, not of his own.

Nor are these men alone in their belief. Earnest thinkers outside of the Church, who are familiar with the evils which intense competition and extortionate monopoly are constantly pushing into our notice, discern a tendency in our social organism to pulsate with stronger and more rapid beats in its convulsions of strike and boycott and commercial crisis. And in these mighty vibrations, like the swing of a gigantic pendulum, there is danger that it may swing so hard and so far as to break its controlling bonds and leave humanity in chaos.

Anarchy means more than the reign of individualism. It means such a ruin of the world's wealth, the storehouses and fields and factories which supply its wants, that nine tenths of the population of the globe would be swept off its face by actual starvation. Some social organism there must be if our civilization is to continue. What can adjust the delicate relations of man to man when the bond of selfishness which holds us together breaks? There are many men, even now, whose greatest desire and strongest purpose is to benefit their fellow-men; and if we can extend and strengthen this noble principle so that it will govern the great mass of humanity, why may we not cease to measure and bargain and weigh with our brother men?

Such is the argument for what we may appropriately call Christian communism. Who shall say what shall be possible with a new and nobler generation of men? When the great mass of the race has Altruism for its governing motive, then it may be possible to use that trait of character as the basis of industrial society. But to-day the governing motives of mankind are largely selfish. Society must govern men in their dealings with each other, not by arbitrary force but by their inner motives of action. When men at large begin to heartily desire to benefit others more than themselves, then the system of selfish competition will begin to disappear, and the system of fraternal devotion will arise to take its place. This will come about naturally. It will be an effect which can only be brought about by producing the cause. When Christianity shall have so regenerated mankind that its governing motives are noble and generous, then the social problems we are discussing, as well as many others, will be forever happily solved.

Every one will say, God speed the attempt to implant such noble motives in the breasts of men; but we recognize at the same time the vast change which must be wrought before mankind at large will reach this high standard; and in the centuries which will be required to effect this, we must have other forces to govern society. Thus, while not denying the possibility that the Christian principle of Altruism may be the final solution of the problem of society, it seems best for us to regard it at the present day as what it is,—an influence tending to smooth over the inequalities and soften the asperities of our social system, and to transform the warfare of competition into a peaceable and friendly emulation.

It is not easy to overestimate the valuable work which this Christian principle of human fraternity is thus doing at the present day. It is recognized in many ways so common that we cease to think of them as what they are—expressions of the common brotherhood of man. Our vast public charities supported by law are an instance. It is recognized now by all civilized countries that it is a duty for the State to care for those who are so poor or unfortunate as to be unable to care for themselves. Private charities, too, are as much more enormous now than they were a century ago as private fortunes are, compared with those of that day. In fact, beneficence has come to be recognized as an important duty of the very wealthy; and churches, schools, hospitals, and the like bear witness everywhere to the benevolence of wealthy men. All this public and private benevolence has certainly accomplished wonderful results in relieving the want and misfortune of men, and making their lot a bearable one.

The above beneficences require outright giving; but there are many ways in which the fraternal spirit of men works to cause men to treat each other in business affairs more liberally than they would if competition were the only governing motive. In very many cases of the employment of labor, the wages paid are higher than the rate which competition alone would fix. It is true that this is largely due to a selfish motive. The men are more contented and industrious than when their wages are lower. There are always plenty of applicants for any vacant position. The men are not prone to find fault with their pay, knowing that plenty would be glad to fill their places. At the same time, it is certainly true that in many cases a principal motive for giving higher wages is the desire to be liberal and generous with the workers whose labor brings income and profits. Again it is very frequently the case that mills and mines are kept in operation in dull times, when goods must be sold at a loss, if sold at all, simply to keep the employees from the destitution and suffering consequent upon idleness. Cases of especial personal benevolence are still more common. There are tens of thousands of working people to-day rendering service whom their employers well know to be unprofitable servants, but who are retained because their youth or age or incapacity renders them proper objects of assistance in this way, a sort of charity far better than outright gift.

In business enterprises, again, the spirit of fraternity is widely diffused. As we have seen, it has been one principal cause of the formation of trusts and combinations to limit and restrain competition. There are also a growing number of enterprises which are purely philanthropic, such as the provision of cheap and healthy homes for working men and women.

In the conduct of business, too, public opinion does not approve of the man who exacts the utmost farthing, and weighs and measures to the closest fraction. The most grasping creditor, who precipitates the ruin upon the bankrupt, and the landlord or money-lender, who exacts pitilessly and turns a deaf ear to the call of a brother for mercy, are also condemned at the bar of public opinion.

These and many other considerations lead us to some knowledge of the inestimable value of the principle of fraternity to correct the harsh and inequitable working of the industrial organism. It remains only to be said that in this sphere of action its influence is but a small fraction of what it ought to be and what it promises to become.

It is through their conscience, as well as through their innate sense of justice and right, that men are coming to see how the extortion by monopolies and the waste of competition in which they have engaged are an injury to the common weal and an expression of might rather than of right. It is in this way that we are beginning to discern the faults and imperfections of our present industrial system and to recognize that progress toward better things is to be found by recognizing, not covering, these faults, and doing all in our power to remedy them. In this work the Christian Church should be in the lead; and a large proportion of its pastors, accustomed to an earnest and sympathetic appreciation of social evils, are among the foremost to second the efforts of modern reformers. Of the rank and file of the Church, however, it is to be regretfully said that they are eminently conservative; and that, with very many notable exceptions, they are certainly not in the lead in the efforts to equalize the injustices which have grown up under the laws of competition. It is largely because the course of Christians is in this respect so inconsistent with their professed belief in that grand doctrine of man's divine origin and universal brotherhood, that the Church, is losing the respect of the laboring classes. Nor will it regain that respect until it shows by unmistakable evidence to the men who toil with their hands that it is alive to the questions of the day,—alive to the injustice of society to-day; and that the love of the Church's great Master for their souls is echoed by a longing in the hearts of his followers for their temporal welfare.

But it should be also said that, save as they assume it, the responsibility of those within the Church is not greater than of those without. All men alike are brothers; and it is more, far more, than a selfish tie that binds us together in civilized society. Legal rights are based largely on the system of competition under which our industries have grown up; but the moral duties of all men go far beyond this. It is the duty of all men alike to supplement the working of the law of selfish competition with the acts of a fraternal love for the welfare of all men. Too much stress cannot be laid on this. There can be little doubt that if it were not for the charity and beneficence and for the strong spirit of humanity, which lives in a strange strength, even in the hearts of the debased and evil-minded, the industrial warfare which our modern competition has come to be would have wrought tenfold more evil than it has, and would have already arrayed class against class with other weapons than those of peaceable industry. May Heaven grant that the time shall never come when the growth of the principle of human fraternity shall not far outstrip and overtop the growth of human selfishness, whatever forms the latter may take.

In concluding this chapter it seems eminently proper to call attention to one practical application of this great principle of fraternity which ought to go a great way towards saving us from the results of mistakes in our attempts to remedy the evils which have grown up. The fraternal principle should lead men to judge charitably the men who are engaged in monopolies and in wasting the world's wealth in intense competition. The more especially as these evils are due, not to the malignity of any person, but to our system of industry, which causes them to spring up. The investigation which we pursued in the first chapters showed very clearly that monopolists are simply striving, like all other men, to protect and advance their own interests by what they consider legal and honorable means. And our study of the laws of competition has shown us that the evils of monopoly and unhealthy competition are the natural outgrowth of the great revolution in modern industries by which the number of competing units has been reduced from many to few.

Unfortunately there is a great tendency to make these evils worse by recrimination. It is very common to hear those engaged in monopolistic enterprises, whether as owners or managers, denounced as unscrupulous villains, double-dyed rascals, scoundrelly enemies of the people, or perhaps in terms less blunt but more scathing. Now, what are the facts of the case? Speaking broadly, it is a fact that the men who own and manage our modern monopolies are as a class far more large-hearted in their sympathies than the average of men. It is only because they do not realize the consequences of their acts that they seem to those who do realize them and those who suffer by them to be incomprehensibly brutal. The same man who at a corporation meeting may do his part toward throwing a thousand men out of employment or wasting a million dollars of the world's wealth to effect some monster "deal," may stop as he leaves his office to help a crippled beggar regain his feet; and when he hears of the destitution that his own official act has helped create, he will give with a lavish hand to relieve it. When we come to questions between labor and its employers, more than this is true. The employers of labor as a class are closely in sympathy with the honest desire of their men to better themselves, and the constant increase in the employment of arbitration to settle difficulties, the experiments in co-operation and profit-sharing, and the furnishing of cheap and good houses to the workers are all evidences of this fact.

The truth is, that it is circumstances, not men, which have created monopolies. For to tell the truth, there are but very few men who, if put in the place of the stigmatized monopolists, would not have done as much or more, as their abilities permitted, to achieve a fortune as have these men. All men strive in general to make as much as possible out of their fellow-men, and to gain the most possible with the least labor. The monopolist only goes further on this road than most other men can go.

On the other hand, a still more common error exists with reference to the monopolies of labor. The newspaper press seems strangely fond of repeating the statement that all labor organizations are kept up by idle and turbulent labor agitators, who wish to live off the proceeds of their fellows' labor. A little candid thought and investigation will convince any one that this is an out-and-out lie, and as such deserves the condemnation of all honest men. Granted, indeed, that labor monopolies are an evil, as we have fully shown, and that the men who have charge of them are far from perfect, and make many mistakes, they have far more to excuse them than have the men who form monopolies for the purpose of adding to fortunes already plethoric. The truth is, that if the men who are so incomprehensibly unjust in their estimate of the work of labor organizations were put in the place of the laborers at the bench or in the mill, they would be foremost in securing their own rights by organizing their fellow workmen. It would be a great thing for the world's peace if men would try to look at their brother's failings through their brother's eyes. Before you criticise a man too harshly, candidly consider whether you would do any better if you were in his place.

We hear much said of the folly and wickedness of stirring up and reviving the sectional animosity between the North and the South; and all patriotic men rejoice in burying past issues and inaugurating the era of a united nationalism. But those who, by personal attacks upon monopolists, whether they are millionaire monopolists or hard-handed workingmen, cultivate animosity and hatred between social classes already too widely separated and too prone to hostility, are sowing seed whose fruit may be reaped in a social strife far more destructive and fatal than any sectional strife could be. In discussing remedies for the evils we have been investigating, we should always keep the fact in mind that our remedy should seek, not to punish, but to cure. Personal or class enmities never yet helped the world to advance. It will be fortunate if men can be taught to see how useless such enmities are in this case; and how little revenge and reprisal can ever do to heal a wrong.



XIV.

REMEDIES FOR THE EVILS OF MONOPOLY.

We have now investigated the nature of all the different classes of monopolies and combinations for the suppression of competition. We have studied their working and their effect upon the different classes of society. We have discussed the foundation principles of civilized society as seen in abstract theory and as seen in the actual practice of to-day, with the evils which intense competition on the one hand and extortionate monopoly on the other have brought upon us. Finally, we have considered the influences which tend to lessen and ameliorate these evils, and the extent to which we may rely on them to benefit the condition of society. We are now fully prepared to consider the remedies which are proposed for these evils, and to see in what direction our hope lies for the improvement of the condition of mankind.

It would be a far larger task than we propose to attempt, however, to discuss all the schemes which have been proposed for bettering the condition of society. They have been numerous ever since the dawn of the idea of popular liberty, have accompanied it all through its centuries of growth, and to-day, despite the fact that the amount of the comforts of life accessible to the masses of the people is far greater than ever before, plans for further betterment of the condition of society, the more economical production and equitable distribution of wealth, are being pressed forward and advocated more strongly than ever. Nor does this fact furnish any ground for pessimism. We shall have far more occasion to deplore when men become so conceited over the advancement which the race has already made,—so numb to the evils which still oppress them,—that they will no longer take part in the agitation of plans for further advancement.

In considering now the plans proposed at the present day by those who wish to remedy the evils of monopoly, we shall find it profitable to consider first two great opposing principles, which we will designate as individualism and societism. Upon one or the other of these principles almost every scheme for bettering the condition of society is based.

The doctrine of individualism has for its foundation the absolute industrial liberty of each individual. By this is meant that every person shall have "the free right of contract,"—that is, the right to sell his labor or property or purchase that of others as he chooses. It holds that in all matters where the production and distribution of wealth is concerned, the desire of each man to advance his own interests will, alone, in the long run, result in the highest good to the greatest number. It asks the government to "let alone" the industrial affairs of the country, and leave private enterprise to take its own course. Its adherents are fond of asserting that each man knows his own wants and can direct his own business affairs much better than any government can direct them for him. It declares that free competition is the best possible agent to regulate all industrial affairs, and it ascribes all economic evils to the fact that free competition has been thwarted or destroyed.

The opposing doctrine of societism holds that the waste in the production of wealth and the inequities in its distribution, which afflict mankind to-day, are due to the extreme application of the doctrine of individualism. Its adherents analyze competition and declare it to be but another expression of a law of savage nature, tersely expressed as "the survival of the fittest." A system which brutally forces the weaker to the wall, say they, is unfit to govern the inter-relations of civilized human beings. Condemning thus the principles and practice of their opponents, they would go to the opposite extreme and place the control of the production and distribution of wealth in the hands of organized society or of local and central governments, to be by them administered for the common benefit.

The first and most obvious commentary upon these two opposing doctrines is that either of them is impracticable; and that if either of them were given the entire control of our industries, the whole people would unite in condemning it. Lest there should be any mistake as to what is meant by this, it is well to say that we now refer to neither the individualism nor the societism which is practically advocated at the present day, but rather to the essence of the two opposing principles.

To see most clearly the practical failure of either of these principles when applied without modification by the other, consider our present social system, which is based on both individualism and societism. If the principle of individualism were to be fully applied and societism were to be entirely abolished, a first step would be the relinquishment by the government of all the enterprises it now carries on; and they would be left for private enterprise to take up or leave alone as it chose. This means, for one thing, to bring the matter plainly home, that the whole national postal system would be wiped out, and we should depend on some private company or companies to collect, carry, and distribute our mails. The government would also abandon all its work in keeping clear and safe the natural waterways of the country, as well as all the harbors, light-houses, etc. Municipal governments would give up all their systems of water supply to private companies, as well as their sewerage systems, and even paving, street cleaning, etc. Indeed, the maintenance of our whole system of highways would be given over to private enterprise. Is this too much? It is only a legitimate application of the principle that government should leave to private enterprise all matters connected with commerce and industry.

Little need be said to prove that a similar application of the principle of societism to our industrial system would result even more disastrously. As a general thing, the necessary formality and expense of administration when business is carried on by the government, causes the final cost of production to be much greater than under private management, even when conducted with all honesty. But the chief reason why the principle of societism is impracticable and unwise for universal application, lies in the fact that the men who administer our governments are neither the wisest nor the most honest of men. The competition among those engaged in private business tends by a process of natural selection to bring the men of greatest business ability into control of affairs. But by any form of government yet tried, popularity rather than merit, and excellence in the arts of the politician, rather than experience and capacity as a statesman and business man, are the qualities which place men in positions where they can control public affairs. Not that very many wise and good men do not now hold office, and that many unprincipled and vicious men do achieve success in private business. But, as a general rule, the statements just made hold good.

It seems plainly apparent, then, that neither the principle of individualism nor the principle of societism can be taken as an infallible guide for determining the control of our industry. It would be as manifestly unwise to take a step toward abolishing existing societism by placing our postal department under the control of a private company, as it would be to make a move toward abolishing individualism by having the government assume the management of all the farms in the country. Both of these principles are necessary.

There is, indeed, a marked tendency toward an increased reliance on the principle of societism as civilization progresses and our life becomes necessarily more intense and complex. A community of plain farmers, isolated from each other, can live their individual lives about as they please, without any interference of the government becoming necessary to protect the rights of each man from infringement by his neighbors. But the resident in a large village must submit to certain restrictions for the common good. He must not carry on any kind of business likely to become a public nuisance. His cattle may not graze in the streets. He must give part of his earnings toward maintaining a water supply for a protection against fire. The citizen of a great city is subject to far more restrictions. The government assumes the control of education, charities, the care of the public health, the drainage of the streets, the collection of offal, and a multitude of other duties which in a less intense civilization each family performs for itself.

The advance in science and the arts, too, has brought about a revolution whose effect we must recognize. A hundred years ago almost every community, and to a large degree every family, was industrially almost independent of every other, as we have already shown. To-day each man relies on a million others to supply him with the commonest necessaries of life. The armored knight was proof against all foes, save the few antagonists similarly clad. To-day my life is dependent on the fidelity and vigilance of ten thousand men, and every man I meet has me in his power. Given the malignant will and fiendish cunning necessary, and one single man can kill a thousand human beings and destroy a million dollars at a blow. To sum up, each advance in civilization makes men more dependent upon each other, and increases the advantage and necessity of having industries most important to the common welfare controlled by society as a whole instead of by individuals.

It is contended by some that from the increased interference of government with private affairs, there is danger that the liberties of the people will be curtailed, and that their rights will be so hedged about by restrictions that the result will be evil instead of beneficial. To this it must be answered that the people themselves are the source of the government's authority and power of restriction, and that in no case will a restriction of the government be long maintained which does not benefit far more in conserving the rights of men than it injures by infringing them. Apply this rule to any case of government action in industrial matters. A city government, for instance, constructs a system of sewerage. All taxpayers must contribute something towards its expense, and their right to spend that money in such other ways as they choose is abridged; but, at the same time, the more important right of having healthy and safe drainage for their houses is conserved. In a similar way, the government may pass laws of various sorts to restrict and control what seems to be at first sight purely private business, such as the sale of explosives, spirituous liquors, poisons, drugs, and many other articles. In every instance, this is done on the ground that the interference of government is necessary to protect the rights of the community as a whole, even though the liberties of certain classes are abridged.

The study of these facts brings to our attention an important principle of governmental action, which should always be remembered when in any industrial matter we find that the principle of individual action is producing unsatisfactory results, and conclude, therefore, to ask the government to take some part in its control. This principle is as follows: government, as the representative of the will of the whole people, should in general, attempt the regulation, or control, of industrial matters only to benefit the people as a whole.

Of course it cannot be said that all government action for the benefit of special classes of the community is wrong. The granting of pensions to those defenders and upholders of the government who deserve it, is a case in point where special legislation is justifiable and proper; and many other cases exist. Nevertheless, the shaping of legislation to effect the interests of special classes of the community is one which is now working the nation serious injury; and it has obtained so firm a bold that it will take a long time for us to throw it off. It causes men of all classes to consider the government as a paternal benefactor, whose duty it is to aid them, either in their schemes for getting rich or their struggles to earn a living; when its real office is to protect all citizens in their individual rights, undertake only such industrial enterprises as can manifestly be better and more economically conducted by it than by private enterprise, and enforce restrictions upon industry only as they are needed to protect personal rights or the interests of the community as a whole. Worst of all, the use of government to advance special interests places a premium on the efforts of those who seek to corrupt the expression of the popular will in its every stage, from the voters at the polls to the chief rulers in the seats of government. For by combining to accomplish their mutual purposes, they are able to turn aside all departments of government from their legitimate work and occupy them with measures to advance special interests, some commendable enough, others a mere excuse for stealing from the public treasury, but all alike claiming attention and action, while the business of the people goes all awry.

It has seemed necessary to thus briefly discuss these two opposing theories of society, individualism and societism, in order to show the impracticability of either when applied to the society of to-day without limitation and modification by the other; and that in adopting or rejecting any remedies that may be proposed for the industrial evils which we have discussed, we should be guided by the facts as we find them, and not by blind adherence to abstract principles.

Let us now gather up the salient decisions which we have reached in all our past investigation. We have discovered that a great industrial revolution is in progress, by which manufacturing, mining, and transportation to a very great extent, and other industries to a considerable extent, have been and are being concentrated in the hands of a very few competitors. We have found that by the laws of competition this reduction in the number of competitors greatly increases the intensity of competition and the resulting waste and instability of price, and finally brings monopoly into existence. This monopoly we have determined to be a serious infringement on the rights of the people, and we have found that the losses due to intense competition and the fruitless attempts to defeat monopoly by adding new competing units have wasted the wealth of the nation in uncounted millions. We are now to consider the remedies proposed for these evils.

The most obvious remedy for monopoly, and the one which has been tried and persevered in with the most remarkable faith, is the creation of new competitors. Does a railroad monopoly oppress us? Build a competing line. Is the gas company of our city charging us $3 per thousand for gas which cost but 50 cents to produce and deliver? Let us start another gas company and tear up all our pavements again to lay its mains. Has the sugar trust put up the price of sugar two cents per pound? Well, "sugar can be produced anywhere by the expenditure of labor and capital," the Trust's lawyers say, and so we will "trust" that some enterprising manufacturer will take the field against the combination. But if we do any of these things, we have added only one competitor to the number in the field. And with only two competitors in the field, competition is sure to be so intense and wasteful that the formation of a new monopoly is a matter of but a short time.

This is the conclusion to which the theory brings us; and the more one studies the history of actual attempts to create competition in this way, the more thoroughly convinced he must be that the inevitable result will be the same,—the tacit or formal combination between the old monopoly and the new competitor, resulting in the re-establishment of the absolute reign of monopoly. The author has thoroughly studied the actual working of hundreds of schemes, in every part of the United States, whose object was to create competition in railroad transportation. It is a most astonishing fact to see the eagerness with which thousands of municipalities, all over the country, which have taken great loads of debt upon their shoulders to secure "competing lines," and have seen these lines swallowed up by their rivals, are still anxious to repeat the folly and assume new burdens to aid in building new lines, which will inevitably be absorbed like those which they preceded. If the people as a whole learn wisdom by experience, they seem to learn with painful slowness. The first great lesson for the people who are groaning under the burden of monopoly to learn, then, is that when we try to defeat monopoly by creating new competing units, the remedy is worse for the community at large than the disease, and effects at best but a temporary relief.

Another class of remedies against monopoly seek to accomplish their purpose by opposing the tendency to a reduction in the number of competing units. There are not wanting people who, having gained a dim perception that monopolies are an inevitable result of the modern concentration of industry, conclude that, after all, "the former days were better than these," and that our wisest course is a retrograde one. Fortunately, however, these people are comparatively few. It is a fact so plain that even the dullest can hardly fail to perceive it, that the consolidation and concentration of industry which have gone on everywhere have wonderfully cheapened the cost of production,—made it possible for us to make better goods with a less expenditure of labor and material. The revolution in our industries could not be undone without a more radical action toward vested property rights than could be countenanced now; and as already seen, it would work to the detriment of every person in the community. We cannot go back to the stage-coach, the workshop, and the hand-loom of our ancestors; we cannot, if we would, undo the growth of a century in civilization; and it is well that it is so.