The Principles of Economics, with Applications to Practical ProblemsFetter, Frank A. (Frank Albert)
General
The Principles of Economics, with Applications to Practical Problems
Fetter, Frank A. (Frank Albert)
Economics
5. _The responsibility for either the rise or the decline of trust
prices cannot always be determined._ Prices are changing constantly
under competitive conditions. In this active, moving world, changes of
demand, the exhaustion of sources of supply, new processes, expiration
of patents, opening up of new lines of transportation, affect prices in
a multitude of ways entirely independent of organization.
Trust-controlled industries are open to all these influences. Economic
forces cannot be isolated as can elements in a chemical laboratory, and,
therefore, trusts claim the credit for all the reductions of price that
have occurred. By such a calculation the trusts usually make a showing
of progress, as, until 1896, for twenty years the tendency of prices in
most lines was downward. Always getting the highest price they can under
the market conditions, they yet pose as benefactors. They would claim
that the economies possible only under trust organization cause even a
monopoly price to be less than a competitive price would be. Critics of
the trusts, on the other hand, charge them with causing all the increase
that occurs, and with checking the decline in prices. The critics
compare the percentages of decline in price during the decades before
and after the combination was formed, and as it is impossible for a
geometric rate of decrease in price, as a result of improvements, to be
long maintained, this showing is very unfavorable to the trusts. A
method has been found, however, of testing, in the case of a few leading
industries, the effects they have had on the price of their portion of
the productive process.
§ II. HOW TRUSTS HAVE AFFECTED PRICES
[Sidenote: Trusts raise prices]
[Sidenote: The oil trust]
Public-domain text, read in full here on John Shaqi.
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