Competition; Monopolies -- United States; Trusts, Industrial
In closing our discussion of the monopolies in trade, there is an
important point to be noted. In the lines of industry considered in the
preceding chapter, the monopoly was easy of maintenance because it held
full control of the source of production, or of some necessary channel
through which commerce must pass. No gift of nature assists to maintain
a monopoly in trade. It must be wholly artificial, and it relies for its
strength simply on the adherence of its members to their agreement to
maintain prices. Its degree of power can never be great, compared with
monopolies which control the original sources of production; for if it
is attempted to put up prices inordinately, competition will start up
outside of the combination, or the consumer will be led to deal directly
with the producer.
Because of this weakness, the temptation is great for these monopolies
to strengthen themselves in ways quite indefensible on any score. The
alliance of trade monopolies with trusts, in order to strengthen
themselves, we have already considered. But the trust which makes such
an alliance must plead guilty to the charge of _discrimination_ as well
as _monopoly_. It is bad enough to raise the prices of the necessaries
of life, and force the whole community to pay the tax; but it is worse
to add to this the crime of discrimination against certain persons in
the community, at the instance of a minor monopoly.
But the trade monopoly does not confine its sins to tempting the
stronger monopoly to practise discriminations. It practises
discrimination itself in some very ugly forms. A combination among
manufacturers of railway car-springs, which wished to ruin an
independent competitor, not only agreed with the American Steel
Association that the independent company should be charged $10 per ton
more for steel than the members of the combine, but raised a fund to be
used as follows: When the independent company made a bid on a contract
for springs, one of the members of the trust was authorized to underbid
at a price which would incur a loss, which was to be paid for out of the
fund. In this way the competing company was to be driven out of
business. It is often argued that combinations to advance prices can
never exist long, because of the premium which the advanced price puts
upon the entrance to the field of new competitors; but the weapons which
this trust used to ruin an old and strong competitor are even more
effectual against a new-comer; and the knowledge that they are to meet
such a warfare is apt to deter new competitors from entering the field.
The boycott was once deemed rather a degrading weapon of warfare; but
now the term has grown to be a familiar one in trade circles. Even the
great railway companies do not scruple to use the boycott in fighting
their battles. One might imagine that both the thing and the name filled
a long felt want.
VII.
MONOPOLIES DEPENDING ON THE GOVERNMENT.
Public-domain text, read in full here on John Shaqi.
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