Public Policy in Respect to Monopole I 1

PUBLIC POLICY IN RESPECT TO MONOPOLE' I 1. Moral judgments of competition and monopoly. $ 2. Public char acter of private trade. 3. Evil economic effects of monopolistic price.

4. Common law on restraint of trade. 5. Growing disapproval of combination. 6. Competition sometimes favored regardless of results.

I 7. Increasing regard for results of competition. I 8. Common-law remedy for monopoly ineffective. if 9. Federal legislation against mo nopoly. 10. Policy of the Sherman Anti-Trust Law. $ 11. Policy of Monopoly accepted and regulated. $ 12. Field of its application.

II 13. The industrial trust,—a natural evolution? I 14. Artificial versus natural growth. $ 15. Kinds of unfair practices. $ 16.

Growing conception of fair competition. 17. The trust issues in 1912. I 18. Anti-trust legislation of 1914. 19. Guiding principles of the new policy. 20. Some early fruits.

§ 1. Moral judgments of competition and monopoly. What should be the attitude of society toward monopoly! Is it good or bad as compared with competition! Some very strong ethical judgments bearing on practical problems are found in the popular mind connected with the ideas of com petition and monopoly. Competition usually is proifounced bad when viewed from the standpoint of the competitors who are losing by it, and good when viewed from the stand point of the traders on the other side of the market who gain by that competition. Competition among buyers thus ap pears to sellers to be a good thing; that among sellers appears to themselves to be a bad thing (and vice versa). Many per sons are moved by sympathy to pronounce competition among low-paid and underfed workers to be bad, and each worker is convinced that it is so in his own trade. Yet nearly all men are of one mind that competition is a good thing in most 522 industries, those that are thought of as supplying the "gen eral public." Monopoly is believed by public to be wrong in such cases, and competition to be the normal and right condition of trade. Yet there are some men interested in

"lam business" who look upon competition as bad, and upon monopoly as having essentially the nature of friendly co-. operation. The roots of these opinions, or prejudices, are easily discoverable in the theoretical study of the nature of monopoly.' Yet often different men or groups of men feel so strongly on this matter, viewing it from their own stand points, that they are quite unable to understand how any one else can feel otherwise. There is thus a great deal of con troversy to no purpose.

§ 2.

Public character of private trade. Any such gen eral judgment as that of the public, though it may be mistaken in some details, is likely to be a resultant of broad experience. There is in competitive trade a public, a social character, which monopoly destroys. Even in a simple auction, when the bidding is really competitive, price depends far less on shrewd bargaining, on bluff, or on stubbornness, than is the case in isolated trade. Each bidder is compelled by self-in terest to outbid his less eager competitors, and thus the limits within which the price must fall are narrowly fixed. The auction-sale is less a purely personal matter, takes on a more public aspect, has a more socialized character, than isolated trade, depends more on forces outside the control of any one man, and results in a price fixed with greater definiteness. The price in a more developed market results from the play of impersonal forces, or at least from the play of personal forces which have come under the rules of the market.' This price, men are ready to accept as fair. It has a democratic character, whereas the gains of monopoly price arouse resent ment as being the work of personal power and felt to be des potic. Monopoly price is a bad price to the one who pays 1 See Vol. I, especially pp. 74 and 75.

2 See Vol. I, pp. 59, 68, 70, 71.

it, not only because it is a high price but because it bears the character of personal extortion.