Tobacco Company, decided in 1911, the results being absurdly futile.
A sec ond policy may be called that of monopoly accepted and regu lated. This is represented by the Interstate Commerce Act (at first weakly, and more vigorously after its amendment), and by the great mass of state legislation putting the local and interurban public utilities under the control of regula tive commissions. For some decades after these industries developed, the public faith was in competition as the effective regulator. If monopolistic prices were too high, another com pany was chartered to build a parallel railroad or another horse-car line on the next street, or to lay down another set of gas-pipes in the same block. Almost from the first, some students of the subject saw the wastefulness and futility of this kind of competition, and nearly a half-century later the public reluctantly came to•this view. Still, sad to relate, the same history had to be repeated in regard to the telegraph and telephone industry, and in some quarters the ultimate outcome is not yet recognized. The Interstate Commerce Act itself, with odd inconsistency, contains an anti-pooling provision (Section 5), the purpose of which seems to have been to compel competition as to rates, which is now practically im possible under the other provisions of the law. The policy of "monopoly accepted" 'was seen to involve as a necessary feature public regulation of rates to the point, if necessary, of absolutely fixing them. The principle has come to be ac cepted that wherever competition ends there public regula tion of prices and service begins. Monopolistic enterprises are ipso facto quasi-public institutions.
This policy, gradually ex tending in practice, came to be applied to the class of indus tries which, for lack of a better name, are called local utili ties. The one characteristic that they all have in common is that the service, or product, which is sold requires for its delivery some special use of public highways and an expen sive, permanent, physical plant, such as gas-pipes, water pipes, poles and wires. The telegraph, the telephone, electric
lighting, street railways, regular steam railroads, and some other minor industries all answer to this test." Beginning about the year 1900, one state after another enlarged the powers of its state railroad commission or cre ated a new corporation commission to regulate these "local" or "public utilities." 10 They have accomplished much, but the development of this kind of regulation has not proceeded in many cases beyond the adjustment of relative rates and the abolition of discrimination among the different individ uals and classes of customers. Experience has shown the great difficulty of determining what is a fair absolute level of charges. A new science of accounting has been develop ing to assist in the solution of a problem the complexity of which transcends the agencies at hand to deal with it. With this policy applied to the local utility (and railroad) phase of monopoly, there remains still the problem of the industrial trusts in the manufacturing enterprises.
The industrial trust—a natural evolution? The policy that one is inclined to favor regarding industrial trusts depends very much on one's answer to the question: Are or are not industrial trusts natural growths? In this bare form the question is somewhat vague, but the thought of those who answer it in the affirmative is positive if not always entirely clear. They (at least, the extreme representatives of this view) declare that trusts have been, are, and will continue to be the results of a "natural evolution" of business condi tions, as inevitable as the great changes in the physical world. If this is so, man and society must recognize the facts, must waste no efforts vainly in fighting against fate, but must accept the trusts and realize their possibilities for good. And these are declared to be great, for it is assumed that without the trusts all of the economies of large production must be 18 See further, oh. 32, I§ 5-9.