Cyclopædia of Political Science, Political Economy, and the Political History of the United States

Edited by: Lalor, John J.
(?-1899)
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First Pub. Date
1881
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New York: Maynard, Merrill, and Co.
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1899
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Includes articles by Frédéric Bastiat, Gustave de Molinari, Henry George, J. B. Say, Francis A. Walker, and more.
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MONOPOLIES

II.326.1

MONOPOLIES. Until political economy had established as a fundamental truth, and political science accepted as a rule of action, that each individual in a community is naturally free to pursue his own happiness as in his judgment he may deem most expedient, limited only by the like right on the part of his neighbor, it was almost impossible to arrive at any clear ideas upon the subject of monopoly. Roman jurists as well as English common law lawyers, after magna charta. formulated declarations of rights, which vitiated claims of monopoly and declared them to be contrary to natural justice; yet so long as government was arbitrary and unlimited in its sovereignty—the very fountain and source of all power over the individual subject, without restraint and limitation—it certainly was difficult to establish axiomatically and philosophically any limitation upon the right of the government to create monopolies. It is only when terms are set to the power of encroachment by the government itself over individual enterprise or the pursuit of happiness, that the principle can be invoked, that that impairment of individual liberty which government itself can not justly work it can not authorize others to bring about. For instance, the constitutions of the several states all contain provisions that the public burden shall be borne equally, and that no man shall be deprived of his life, liberty or property except by due process of law, and some of the state constitutions contain, in express terms, the provision of magna charta that "no man shall be deprived of his free customs and liberties," in other words, he shall not be deprived of the right to devote himself to any legitimate occupation, and to reap the natural reward of success therein. It is, therefore, clearly incompetent for a government so limited to create an artificial organism, or to permit the growth of an artificial organism, which would in effect distribute the public burdens unequally, or which in its practical effect and working prevents persons from reaping the natural reward of industry and superior intelligence in any vocation which they may have chosen. In modern times, beginning with magna charta, government thenceforth became, as to English-speaking people, not an arbitrary imposition upon a people, but a trust to be exercised for the benefit of the citizen, within the terms of limitation set by the people to the power of government. That there were great interregnums of arbitrary power exercised in England is not to the purpose. because English lawyers have long regarded the expressions of judicial opinions during the reign of the Tudors and some of the Plantagenets as nonauthoritative common law doctrines as to the rights of English citizens.

II.326.2

—We can only get rid of much loose talk which ordinarily surrounds the subject of monopoly and anti-monopoly by defining what is meant by a monopoly. The derivation of the word shows that its original meaning implied the exclusive right to sell a commodity. Its derivative meaning can no longer be strictly defined, but is applied to many forms of social manifestations, which all come under one or the other of the following heads, or under several of them. 1. Any grant by law to an individual or combination of individuals, to perform a particular service or supply a commodity, and the exclusion of others from performing or supplying the same. 2. Any grant by law to any particular person or combination of persons, to perform a particular service which in its nature makes it impossible for others to render a like service or an equally efficient service. 3. Any legal exemptions of natural or artificial persons from the burden or duties which are imposed upon other persons or corporations in the commonwealth. 4. Trade marks, copyrights and patents. The foregoing are legal monopolies.

II.326.3

—Qualified or incidental monopolies, arising from the organization of modern society, are: 1. The engrossing of a business by an individual or combination of individuals, who, by means of the vastness of the capital invested, drive out competitors, not by a superior service, a better commodity or lower normal price which is the operation of the natural law of competition, but by losses deliberately incurred which they can bear and the competitor can not, to be recouped by excessive charges when the competitor is made harmless. 2. The exclusive possession or occupation of certain peculiarly favorably situated portions of land. 3. All industrial enterprises of a community involving expenditure of large capital for plant used in the supply of any article which is consumed or devoted to service rendered at the place and in connection with the plant or machinery by which it is supplied. and the supply of which article or convenience or service can be indefinitely increased without a proportionate increase in plant and capital. 4. The natural or cultivated aptitude or faculty to supply a commodity or render a service so far superior to others that the competitive standards of price are no longer applicable. Great artists, orators, lawyers, actors, etc., come under this head of personal monopoly. 5. What may in course of centuries grow into a monopoly, and that of an extremely burdensome character, is the individual ownership of land.

II.326.4

—At the very outset we must recognize the fact that the greatest, monopoly of all existing in society is the monopoly of government. This monopoly arises from the primal necessity of human beings for security, and government is the only furnisher of security, and allows no one else to attempt to meet the same want. It levies its own remuneration on its own conception of right, in the shape of taxes for the service performed by it; questioning its authority is deemed to be treason; and, in addition to furnishing security, government seems to have a standing option to perform whatever other services it sees fit for the community, at such prices as it may see fit, and in many instances, even in the United States, avails itself of this privilege. Thus, in addition to rendering the service of security which involves the establishment of executive and legislative offices, the organization of a judicial and police system, the building of forts and the maintenance of an army and navy, it undertakes to facilitate the opening of intercommunication between people by the building of highways and canals, deepening harbors, carrying letters and packages, and furnishing educational facilities. It claims and exercises the right to be the exclusive supplier of coined money and currency, and by tariff, bounty and tax regulation and impositions, rearranges and readjusts all the commercial and industrial occupations of the people, and for many peoples supervises and regulates the religious beliefs and institutions as well as their temporal interests; and yet all governments are frequently compelled to extend their own monopoly into new fields, for the purpose of diminishing corporate and personal monopolies which exist in the community, the pressure of which may be more burdensome because less equally distributed than that which is exercised by governments.

II.326.5

—Although theoretically the people of the United States are masters of the situation, and determine upon the objects and expenditure of government, the will of the people is acted and reacted upon by so many influences, and is expressed by so many volunteer spokesmen upon the rostrum and in the press, and political parties that claim to be composed of the whole people are so viciously organized, that what is the true will of the people can as vet not accurately nor even approximately be ascertained. The will of the people is so often entrapped, misconstrued and misstated by interested parties who find their profit in explaining public opinion by manufacturing it or vending a spurious article, and our political methods are so defectively organized, that there is as yet no way to arrive in a populous community at a veritable expression of the popular will. It becomes, therefore, of much importance to consider, in the case of any particular movement against an industrial or natural monopoly, whether it will result in the destruction of the monopoly, or in its becoming changed into a governmental monopoly, which is as yet, even in the United States, a very different thing from giving back to the people the power which theretofore had been absorbed by the monopoly.

II.326.6

—Monopolies were instituted originally as part of the prerogative of the sovereign, either to reward favorites or as a means to replenish the exchequer. Even the grants to municipal corporations of courts-leet and the right to raise their own taxes, "to pay scot and bear lot," were frequently granted in return for a mere money remuneration. Frequently the grants arose to humble the power of some great nobleman in whose territory the burgh or city securing municipal rights was located, not because his exactions pained the royal heart, but because it made the lord of the manor too powerful a subject. Trade monopolies were granted during the middle ages because, in the first place, arbitrary regulations were the rule. All mundane as well as religious matters were supposed to require regulating. Liberty was regarded as the most baneful of influences, and wherever it existed it was immediately eliminated, and the persons who theretofore exercised some free trade or free calling were subjected to stringent regulations. In that way every avocation was subjected to artificial bands; the number of persons permitted to pursue it was limited, and the governments of Europe down to the middle of the eighteenth century far surpassed our modern trades unions in the minuteness and unreasonableness of the regulations they constantly prescribed and enforced. Another reason for regulating trades by monopoly grants during the middle ages, was because the persons following them could thus be subjected to a stricter inquisition as to their modes of life and their habits of thought; and as ecclesiasticism was the most potent stimulant of governmental activity during the middle ages, the regulating of the trades was a correlated part to the regulating of the faith. These restrictions. however, being universal, almost wholly lost the nature of monopolies, because, in a nation where all is regulated and all circumscribed, though there is an immense waste of energy and probably stagnation in enterprise and a checking of the growth of wealth, monopoly conditions can scarcely be said to exist, except in so far as certain special trades or avocations may be more remunerative than others, and a limitation of the number engaged therein result in extraordinary gains. A survival of such trade regulations is the limitation of the number of persons who are permitted in France to follow the calling of stock brokers. And likewise in Germany surviving limitations in exceptional employments and functions indicate what was the universal condition during the middle ages.

II.326.7

—Of trade monopoly Bentham says, "I know of but one opinion relative to it: oppression in the instance of the individuals excluded from the occupation thus engrossed, and excessive earnings in the instance of the partakers of the privilege; whence the alternation of penury with excessive plenty in a rank of life where sensual excesses supply the demand for occupation in a vacant mind, and enhancement of prices in every article connected with the subject matter of the monopoly; such appear to be the consequences to the several parties interested, to individuals excluded, individuals favored, and the community at large."

II.326.8

—Notwithstanding the general justice of Bentham's criticisms of trade monopolies, it must nevertheless be conceded, when viewed historically, that their existence for a limited period is not only explicable but justifiable. At the times when the seas swarmed with pirates, and the navies of Europe had not yet successfully made head against them, it required extraordinary inducements to venture capital in trades beyond the high seas; and nothing short of a monopoly or exclusive privilege would tempt men, in international commerce involving shipments by sea, to take risks which can scarcely be realized by business men in these days of bills of exchange and commercial bills of lading, of insurances and steamers, and safety upon the high seas from all possible attack except that of the elements.

II.326.9

—It must also be remembered that the merchants' companies opened at the outset their corporations to all who were willing to bear with them equal risks, and that therefore, while trading was prohibited, in such cases as the Dutch and East India companies, with the countries over which their dominion extended, to all persons not members of the merchants' companies, yet as they extended the benefits of their operations to those who were willing to share with them their risks, it was scarcely in the nature of a monopoly. It was necessary that all trades should be done under the merchants' flag because, notably in the case of the East India company in England, the company protected its traders by an army, and considerably contributed toward the expenses for the maintenance of a fleet to protect merchandise on the inward and outward passages.

II.326.10

—The greatest abuse connected with monopolies of a trading character were those which arose from the necessity for revenue on the part of kings. Precisely as offices were sold to the highest bidders, trade privileges were sold to the highest bidders, and numberless monopolies arose and continued long after the period of necessity that had given them birth had passed away, eating out, by exactions and taxations, the commercial life of the people. The East India company had become in time so powerful, so many of the returned rich India merchants interested in the profits of the India company were sent to parliament, and the influence of their wealth permeated so many different strata of society, that the struggle to deprive that company of its exclusive privileges and to throw the empire of India open to free trade lasted almost a hundred years. The Hudson's Bay company still exercises, in a modified form, the privileges that have been granted to it, on the theory that such exclusive privileges were necessary; they doubtless were, at first, to induce men to venture their lives and their capital in so desperate an enterprise as the trapping and capturing of fur animals in the inhospitable territory of British America, thousands of miles from the protection of the British fleet or British soldiers, among hostile Indians and savage animals.

II.326.11

—Under the head of grants by law to an individual or combination of individuals to perform a particular service, and the exclusion of others from performing or supplying the same, may be enumerated such industries of a country as are fostered and "protected" by means of a tariff so high as to exclude foreign competition. Although the inhabitants of the country as to which such a system of protection prevails are free to engage in such industry, yet exclusion by law, of sources of supply from countries more favorably situated for production, operates, as to the increase of price in the protected article, as a monopoly, in the same manner as a patent or a positive prohibition against the non-protected from purchasing the same commodity at a lower rate. In time, competition between the protected manufacturers or producers tends to lower prices, but this is an incident which is true of almost all monopolies. however onerous, not confined to a single individual. The Paris stock exchange, limited by law to sixty members, produces the same result as to competition between those members in enabling persons who desire to deal in stocks to get their business done at a rate that is not so exacting as to deter them from making operations. Monopolists scarcely ever charge what it is possible to charge even when in combination, simply because they would thus destroy the source of their business, because substitutes for their protected article or service would come into existence, or people would be content to do without it.

II.326.12

—Under the second class of grants by law to persons or combinations of persons, to perform a particular service or supply a commodity which in its nature makes it impossible to others to render a like or an equally efficient service, many disguised monopolies are granted in all countries. If a company or combination of individuals is organized for the water supply of a city, for gas supply, or for the building of warehouses along the river front, with special privileges to condemn land for such purposes, the possession of the field in the case of water and gas companies, and the power to select at the outset the most favorably located points for warehouses of which there may not be many at the river frontage of a city, may each in itself give to such persons or company an exclusive right, although in terms the law does not make it exclusive. The same would be true of a bridge company, if there were but one or two eligible points along the river where such a bridge or bridges could be constructed. Although other companies might come into the field, they would do so after the first company had possession of the more eligible sites, and under such disadvantages that the first company, unless properly controlled by law, has a perpetual monopoly in having that power of oppression which the second or other company can not enjoy.

II.326.13

—A legal exemption from the burdens that all citizens naturally should bear, such as taxation, the bearing of arms, or the performance of other duties as citizens, operates precisely in the same manner as a grant of special privileges. It is immaterial, in fact and in principle, whether the person has the special privilege of taxation either through the power of charging more for a commodity than it is worth or for a service than can be obtained for it under the law of competition, or whether the person or persons or corporation is exempted from the duty which others are called upon to bear, because in either case an inequality is created which gives to the privileged class opportunities for development and for the acquisition of wealth which others do not equally enjoy, and which is counter to the fundamental principle as embodied in magna charta, that "no man shall be deprived of his free customs and liberties." In this country such exemptions have been granted in years past to banks, and more recently to railway corporations, and are most generally granted to educational and religious institutions. That there is no difference in principle between a direct grant of money and such exemptions is capable of mathematical demonstration, and yet in many states where the requirement of the constitution is that taxation shall be equal, that there shall be no state church, and that there shall be no privileged class, such exemptions have been held to be constitutional exercises of power, either from want of courage on the part of the judiciary to offend the powerful interests which enjoy such immunity, or from want of sufficient politico-economical knowledge to enable the judicial mind to see that such immunities are in point of fact of the nature of monopoly grants.

II.326.14

—In the case of trade marks, copyrights and patents, the state grants legal monopolies on an entirely different theory from the grant of monopolies of a trading character. A trade mark is a property which even at common law has been recognized as a matter capable of individual ownership on the part of him who has created a good will therein; and although copyright (the right of an author to the exclusive possession of his intellectual product) is supposed to exist by virtue of law alone, yet even in such a case it is doubtful whether a careful analysis would not show that while the thoughts embodied in the author's works are, from the instant they are divulged, the common property of mankind, yet that form in which the author sees fit to put those thoughts is the special property of him who has given those thoughts that form. Kant insists most ingeniously that there is a natural right of property in an author's work independent of law, on the ground that a man has a right to make his speech to the community and that he alone can make it, and that no man may make it for him. When he prints that speech he simply multiplies his message to society, but he does not change the nature of his right. He alone is authorized. no matter in how many copies, to make that speech; and the publisher to whom he deputes that right is his mere agent in the multiplying of the speech; and while others may make speeches of a similar nature, no man can put the author's name to a speech that he did not make or did not authorize the making of; and therefore there is a natural right of property in the author to the speech as long as the author's name is connected therewith. Hence, if Kant's position is correct, copyright is the mere giving of legal sanction to a natural right of property, and does not partake of the nature of monopoly.

II.326.15

—Patents, while they give a monopoly of the process or device to the inventor, on the other hand, destroy monopolies to a much greater degree than they create them. A man's right to his secret or trade is a well-recognized common law property right. In the absence of patent laws, every one making an invention would swear his employés to secrecy, and would attempt as long as possible to keep the advantage of his process or his invention within the knowledge of those only on whose loyalty he can depend. This right he has at law; the inadequate protection, however, that the law can afford to such secrets of trade, and the injurious effects upon the industrial progress of the world which the maintenance of such secrets has had, have induced society almost everywhere in the civilized part of the world to say to the inventor, "Publish your discovery to the world to the fullest possible extent; if you tell the whole truth as to your discovery we will secure to you the exclusive right to its use for a certain number of years, so that the world may have the benefit of the knowledge of the discovery or invention." Though doubts have been entertained at times as to the wisdom of patent laws, their utility, weighed as against the inconvenience of their absence, has on the whole been conceded by the leading publicists of the world.

II.326.16

—As to all monopolies created by law, whether created in terms by the law or incidental to the law, it is the duty of the state to see to it that they do not become oppressive. An adherent, be he never so blind a one, to the laissez-faire doctrine of political economy, can not insist that in case of monopolies created by law the state shall let such monopolies alone. It is the constant duty of the law-making power to circumscribe the special organisms which it calls into being, for the purpose of keeping them within proper bounds and to prevent their too rapid and mischievous growth. Cases of greater difficulty, however, arise as to how society shall deal with monopolies which are qualified or incidental, and arise from the social organization. Where a business has grown to such proportions in the hands of certain individuals or combination of individuals that they can crush out competition by losses deliberately incurred by them, and which they can easily bear by reason of their enormous accumulation of capital, and which, therefore, drives out of business those who, though equally capable of rendering the service of supplying the commodity, are incapable of bearing the losses thus imposed, presents a problem which has not as yet been solved by modern society. The most flagrant and at the same time the most conspicuous example in this country, is that which is known as the "Standard oil combination." Originally a corporation with a capital not larger than that of many of its competitors, its managers, by securing special freight rates from the great trunk lines to the seaboard for their crude petroleum and the refined article, which was then manufactured by them at Cleveland, Ohio, obtained so great an advantage over their competitors that they had, on the one hand, the producer in their toils, and, on the other, so effectually destroyed their rivals in the business of refining that 90 per cent. of the enormous business done in refined petroleum in the United States, and which amounted in 1880 to 367,000,000 gallons, representing a value of $31,000,000, was engrossed and monopolized by the Standard oil combination. It is idle, because it is wide of the truth, to say that they were either superior refiners or superior producers. They simply were less scrupulous or more alert than their neighbors in making combinations with the railways, who, in violation of all proper business interests connected with transportation, and of their duty to the state, entered into a compact with them to deprive of a market others equally favorably situated for production and refining, so that the Standard oil company could purchase other refineries at any price they saw fit to pay for them, and in numerous cases purchased them simply to dismantle them so as to prevent production. When this combination, by such methods, became so powerful as to control a capital variously estimated at from ten to twenty millions of dollars, and now estimated at something like fifty millions of dollars, they openly dictated terms to the railways which prior to that time they had been in collusive combination with, and obtained exclusive control over their transportation facilities from the producing points to the seaboard. Not content with that condition of affairs, they determined to abandon the railways altogether, and constructed their own pipe lines to tide waters. Here is an industrial monopoly not created by law, which has no legal sanction for its performances or exactions, but which, nevertheless, operates precisely in the same manner as though a law had been passed placing the producers of oil in their possession, to be taxed at their own will, requiring the railway companies to charge them but such rates as they see fit to pay, prohibiting other people from engaging in the business that they are engaged in, and dismantling and destroying the works of those already engaged therein. Were such a law proposed to be enacted, the community would cry out that it was monstrous, far exceeding, in tyrannical outrage upon the community, anything that had ever been attempted by the Tudors. Yet in this free country, where all trades and occupations are supposed to be open to competition, this mischievous result has been achieved. It is clearly, therefore, the duty of the law-maker, under the principle of salus populi suprema lex, to insist that it is no part of the law of competition that men shall use their capital deliberately to ruin other people, and the legislator should prevent the existence of conditions which enable such unfair advantages to be obtained, to check them when they are likely to be obtained, and to undo the mischief if, by reason of the neglect of the law-maker, it has been permitted to be created. The state has a right to step in, and does step in, to protect all classes of the community who are supposed not to deal on equal terms with those with whom they are thrown in contact: clients as against lawyers, wards as against their trustees, infants as against persons of full age. Therefore some kind of protection must be afforded by law to industries which are likely to be subjected to an influence, under the guise of competition, so baneful and sinister as the one which has been exercised by the Standard oil company.

II.326.17

—Many other sinister combinations have existed and do exist in this and other countries. That of certain chemical manufacturers may be instanced, in which by losses deliberately incurred they have driven competitors out of the field and have maintained for a great number of years the monopoly of a market and extraordinary prices for their products, simply because they had incidentally acquired so vast a capital before their competitors came into the field that that which was a small percentage of loss on their whole business for a given year would result in utter ruin and bankruptcy to such competitors. In the rapid growth of capital in modern society these sinister forms of the exercise of its power must be carefully watched, and should become the subject of preventive legislation.

II.326.18

—An exclusive possession of certain peculiarly favorably situated portions of land is one of those monopolies which it is extremely difficult to deal with under the modern theory of absolute ownership in land, modified only in so far as the right of eminent domain may justify its being taken for public use. The owner of a piece of property in Wall street or Broad street, New York, or upon the river frontage, has a perpetual monopoly in higher rentals, of the enjoyment of which it is difficult to deprive him without shaking one of the very foundations of society—the recognition of property in land. In most instances the burden borne by the community for the rental of such favorably located spots of land does not appear onerous, because the landlord adjusts the burden somewhat to the profits which can be made by occupation, whole or partial, of such bits of land. It is easy, however, to imagine a case where a peculiar spot of land may give its individual owner such power of exaction over the community that it is not to be borne. Should the harbor of New York fill up in such a manner that but few docks are accessible to ships of heavy draft, and those few docks belong to private individuals, it might then become necessary, for the purpose of preserving the commerce of the country or the city for the community to step in and exercise right of eminent domain, take the land at a valuation and give it to the public at a moderate rate, or to apply the doctrine laid down by Lord Ellenborough, in a case decided in 1811, where the question of "reasonable charges" came before him on the part of the warehousemen on one of the London docks. Lord Ellenborough in that case determined, that wherever a man had so peculiarly favorably situated a piece of property that he had power to exact monopoly rates, it was part of the doctrine of the common law to limit him to reasonable rates so as to prevent him from taking an undue proportion of other men's wealth, because the policy of the English law frowned upon monopoly and favored freedom.

II.326.19

—That enterprises such as railways have a tendency to become monopolies, although their building is quite free in the United States, arises from the nature of such enterprises. The proportion of fixed charges to mere operating expenses dependent upon the rate of business is so great in the railway, that it may almost indefinitely increase its business without at all in proportion increasing its expenses after it has once been constructed. The existing line can, therefore, almost always outbid a competitor for business as to the rate at which it sees fit to do it. As the service is consumed at the spot where it is created, and is rendered without a relative increase of expenditure for the purpose of rendering it, there is in such a case, in the nature of things, a monopoly created which demands the constant exercise of legal restraint. Although railways may be increased in number from given points, yet even when an active competition for a time prevails, the number of those railways will necessarily be so few that their interest to combine, as against their tendency to compete, will outweigh competition, and combination becomes the general result of almost all competitive railway building. After combination has been effected, the community is confronted with the fact that its service is no cheaper than it was before; that its business is done by two or three lines instead of one which previously rendered the service; that one line would have sufficed to have done the whole business, and that there is a loss of capital to the community represented by the building of the second or third line. This capital is lost because the community has failed to do its duty to limit the charges of these transporting corporations, which are enabled to earn extravagant rates of charge by the growth of the community, upon a limited business; and so large is the income, as compared with the cost of the same, that new capital is tempted into the same field for the purpose of dividing the business with the existing line, not because there is any necessity for the rival line because the existing line is incompetent to perform the work, but simply because of the profit made by the existing line upon the work performed by it; so that upon a given amount of business yielding on an expenditure of ten millions of dollars a million and a half a year profit, it will pay capitalists a fair rate of interest to expend another ten million dollars for the purpose of taking seven hundred and fifty thousand dollars net profits out of the existing line and dividing it upon the ten million newly invested. If the community were to reduce the profit of the existing line, by legal enactments, it is clear that the ten millions of dollars invested in the building of the second line would not be so invested, but would be available to the community for other purposes. No service is done to the community by the building of the new line between two given points, if prices remain the same to the community, and the business is subsequently divided between the two roads, but the ten millions of capital are diverted from other employments. If in consequence of competition between the two lines the price of carriage is reduced, the community is the gainer to the extent of such reduction; but if, after the new line is built, a combination is made between the two roads to maintain prices so that both may earn dividends upon their capital, the community has lost for other purposes the ten millions unnecessarily invested—a very serious loss indeed. This has so frequently been the case that it is no longer a hypothetical illustration, but one taken from facts within the knowledge of every man who has observed the course of railway construction and railway wars and railway combinations in the United States; and while it is true that a competing line does touch, at intermediate points, territory which is not touched by the line previously existing, and thus incidental benefits are conferred, those incidental benefits by no means outweigh the enormous waste of capital which has been occasioned by railway construction for mere purposes of dividing business, with combination as to rates.

II.326.20

—Gas companies and water companies stand precisely in the same relation to the community as railway companies. They have the power to exact monopoly rates simply because the plant once supplied gives to the persons or corporation who supply it an extraordinary power over others who propose to come into the business. Those who come into the business, come not to supply a superior article at lower rates as in ordinary business, but to divide the field; and they soon discover that to divide the field profitably they must maintain rates, and therefore two mains are frequently laid side by side in large cities by gas companies where one would suffice to supply all the necessary gas. The community is no better served; the same rates are maintained as to gas that have existed theretofore, and the same poor commodity furnished, because the individual householder does not stand in a position of equality with the corporation that supplies him, and the injustice to which he is subjected is so small to him individually, although amounting in the aggregate to great profits to the corporation, that it scarcely pays him to conduct a fight. The community, therefore, in such cases is generally the loser, as to capital, of all that portion of plant which occupies the same field that is already occupied with means of abundant supply on the part of the existing corporation before the competitor came in.

II.326.21

—The same rule applies as to water supply. Hence, in all such cases it is the duty of the community. through its law-making and judicial powers, to prevent waste of capital. This can be accomplished by regulation as to price and regulation as to quality of commodity or service to be supplied. The ground of such regulation is not simply that some of these corporations exercise the right of eminent domain, but is based on the principle well recognized at common law from its earliest development, that where parties do not stand in equal position to make a contract it is the duty of the state to see to it that the contract is fair, and where parties who do not stand toward each other in equal position, from the nature of circumstances are compelled to make a contract, it is the duty of the state to prescribe the terms of such contract. A trader along the line of a railway is compelled to make his contract with the railway corporation from the nature of his business and the nature of the business of the railway. It is the duty of the state to see to it that he is not unjustly discriminated against, and that others do not obtain terms which he himself does not get.

II.326.22

—During the great railway investigation in the state of New York the on underlying principle as to traffic charges which the managers of the two great leading railways of this country insisted upon during the whole course of that investigation was, that they had a right to charge what the traffic would bear; in other words, that they had a right to charge all that they could under the given circumstances enforce the payment of. Throwing aside all question of the fact that the railway corporation exercises the right of eminent domain, and that it is a common carrier, it is peculiarly and specially subject to legal restraint on the grounds mentioned by Lord Ellenborough in his decision already referred to, that its position is one of advantage toward the person dealing with it. The parties do not stand in equal relation as to contract. This is a doctrine which, even in private businesses where the parties do not stand on equal ground at the time when the contract is made, prevents contracts from being enforced in favor of the superior who made the most of his situation. In the middle of the night a citizen needs the service of a doctor to save the life of his child. There is but one physician within miles, and before he can secure the services of another his child may die. He is a rich man. Were the doctor to exact, as the condition of his leaving his house, half of the wealth of the man, "because that is what that service might bear" under those peculiar circumstances, and the victim were willing to make a contract to give it to him, any properly constituted court of equity would give him relief, and if he had paid the exorbitant demand he could recover it back. But so little restraint have industrial and carrier corporations in the United States been subjected to, that not only have they in the past but they even now claim that they are to be regarded as entirely private enterprises to be left free from legal interference, and that as the basis of their treatment of the traveler and freighter they will, when they can, apply the monstrous doctrine that they have the right to take advantage of their position as against them, and exact the last farthing of the amount that the traffic will bear.

II.326.23

—Monopolies of this industrial character are more difficult to deal with in the United States than in any other part of the civilized globe. Not only have they already attained such proportions that the legislative machinery of many states is under their control, but they also have extended their influence into the business of politics. and so largely control the politicians of the country that every attempt to subject them to proper supervision has, because of that overshadowing influence which they have already acquired, proved thus far well nigh fruitless. Their influence does not rest, however, only in the fact that they have the machinery of politics under their control. The public press, particularly in metropolitan centres, is in part owned or controlled by persons holding large interests in such enterprises, and thus public opinion is vitiated upon these subjects to a degree not easily understood. Another difficulty in subjecting them to proper control and exercising the right of the public upon these subjects, is the well-grounded suspicion of the community that the monopoly of the politician is one not less dangerous than that of the industrial and carrier enterprises, and that to subject to governmental control the great corporations in the state, involving hundreds of millions of dollars of capital. is simply to substitute a master no more scrupulous without capital in the place of one which is at least restrained and made conservative by the possession of capital. One of the reasons why the reform of our civil service, reform of our methods of legislation, and reform in our representative system, are so imperatively demanded, is because such reforms lie at the basis of all other reforms, and that under existing conditions the public will not and can not trust its law-making, executive and judicial powers so long as there is a feeling that they are not free from corruption, and that the power that they exercise will be exercised for their personal ends and not for the public weal. There is scarcely a state in the Union in which the adjournment of its legislative body is not hailed with delight, nor its convening regarded with dread by the citizens of the state, and so long as this feeling is justified, it is almost hopeless to clothe such legislative bodies with power sufficiently great to hold other sinister powers in check. Such a transfer of power is quite fairly regarded as making a leap into the dark.

II.326.24

—Another difficulty in the United States, in dealing with the existing industrial enterprises, is fundamental. Railways extending from state to state, from one side of the continent to the other, overleaping state lines and disregarding them, renders each state powerless to deal with corporations of this character as a whole, and it can only deal with the section it happens to have control over, and the power of the United States has as yet not been sufficiently concentrated to deal with the subject adequately. In our loose organization of government—intentionally made loose at the time of the adoption of the constitution of the United States—as the monopoly power that was then to be apprehended was that which arose from government itself, government was. therefore, intentionally and deliberately weakened, and it has therefore become a prey to almost any powerful interest that sees fit for the time being to capture it; and thus while the framers of the constitutions took great care that there should be no laws of primogeniture, that perpetuities shall be prohibited, that no nobility should be created, so that capital, honors, fame and even distinguished services shall give to their possessor only a temporary benefit, and that such capital, honors and fame shall all be again distributed by the natural process of death into the body of the community, they did not foresee that the great moneyed corporations of the community would prove more attractive than patents of nobility, would be more potent than the fame of leaders of armies, would concentrate capital more powerfully and continuously than by the process of mortmain and perpetuities, and would be more dangerous to the body politic as to its freedom than an aristocratic class.

II.326.25

—With power to exact monopoly rates incident to that kind of superior personal ability embodied as to oratory in a Webster, as to art in a Meissonier, as to acting in a Rachel, as to forensic ability in a Choate, no quarrel can be made. These phenomenal abilities commanding phenomenal prices for their services are entitled to what they earn, because no man is required to pay who does not think he will obtain what he deems an equivalent service or pleasure. Monopolies which arise from natural advantages we can therefore dismiss from the purpose of this article. With the exception of trades union regulations we know of no human society or class of men who object to the remuneration which these masters receive in their respective professions. Of course these advantages are of infinite gradation; exist between two bricklayers as well as between two lawyers; but it is only in the case of great special aptitudes that command attention that these distinctions become so characteristic that they partake of a monopoly element, and as the monopoly dies with the individual who possesses the power, and frequently exists but for a short span of years, it is one, as we have said, with which we can find no fault and which does no harm.

II.326.26

—As to the subject of ownership in land, which has recently again come up for discussion as a monopoly, by the revamping of arguments which Proudhon presented with most esprit, suffice it to say that the individual monopoly in land is in the present organization of society the only possible condition on which land can safely be held. The only alternative which is or can be presented by those who object to the monopoly in land on the part of the individual, is that of the ownership by the community. The ownership by the community means the ownership by the government. The ownership by the government means substantially the control of such ownership by those who have for the time being possession of the reins of government; and government is as yet so utterly defectively organized, so little even in free countries does it represent either the will or the interest of the whole people, and so far are the incumbents of official positions from subordinating their own personal interests and the interests of their families and friends to that of the public weal, that such ownership by the public, which in other words means control by the politician of all the landed property of the community, would create a tyranny so burdensome and so intolerable, and create unequal taxation so monstrous, that nothing in modern history would at all form a parallel. Imagine Tweed and his gang of thieves, when they had control of the treasury of the city of New York, at the same time controlling every lot of land in the city of New York as to who was to occupy it and at what rental, and picture the utter impossibility of dislodging him and them from power, and how such ownership by the state or community as represented by Tweed and his junta would have been exercised. Indeed it appears to the writer to be the vainest of occupations during any period of time about which we need to give ourselves any concern, in a country where land is still so easy of attainment, and at so cheap a price, to speak seriously of monopoly of land as being likely to become burdensome; and to suggest public ownership as an alternative, against the monopoly of private property, before an entirely different condition of political morality will prevail, seems puerile. It may be conceded at the outset that the ownership of land is a monopoly, but it is a monopoly which society is compelled to recognize from the necessity of the case so as to prevent a much worse monopoly from taking its place. We need not, therefore, shut our eyes to the fact that in the remote future the time may come when individual ownership in land may become a burdensome monopoly. It is to be hoped, however, that when that time does come, those who then are uppermost in the field of politics and of government will be so vastly superior in character and mind to the present prevailing politicians and so-called statesmen that the ownership in land may then safely be transformed from a personal into a governmental monopoly.

SIMON STERNE.

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