Competition is nature's method. Blades of grass in a field are competitors of one another for food. In the dead saplings of a forest you see a relic of the fierce struggle in which the trees have engaged to maintain life and growth. All wild animals compete.
fiercely with one another for the available food sup ply. The well-known result of all this competition in vegetable and animal life is a survival of the fittest and the ultimate destruction of the unfit. Competi tion among men has the same result and to many, therefore, seems cruel, ruthless and irrational. Can we retain,the advantages of competition and gradually eliminate the evils? Shall society abandon the com petitive regime and adopt some other method of con sumption and production, or would it be wiser by means of education, training, to lessen the number of the unfit and seek -Him legislation to give them greater security of occupation and income? These are questions on reform for the solution of which an understanding of economics is absolutely essential.
13. Monopoly.—Unrestricted competition logically tends toward monopoly. The fact that in any in dustry the strongest survive leads to the inevitable conclusion that the industry will finally- be controlled by the one strongest man or strongest group of men. Such has been the actual course of events in nearly all countries during the last one hundred years. Es pecially since 1880 in all civilized countries there has been a fuller realization of the advantages of large scale production and of large combinations of capital, and as a result there has been a lessening of competi tive opportunity in many industries. The fear of monopoly and a desire to keep competition open, free, and fair have led to the enactment of many laws in different countries, all having for their aim the pro tection of the weak from exploitation by the strong. The trust problem of the United States is to be found in one form or another in every civilized country. What people really fear and seek to destroy is monopoly which is the opposite of competition. A monopoly has the power to regulate the supply of the article it produces and is therefore in some measure able to regulate the price which it may exact from the consumer. Under the common law of Anglo Saxon peoples any attempt to create a monopoly or to lessen the possibility of competition in an indus try is illegal. In the United States and Canada spe cial legislation has been enacted for the suppression of monopoly. This is an important subject and is fully treated in Volume 24 of the Modern Business Texts.
A monopoly exists whenever a single man or a group of men acting in concert are able to regulate the production of an article to such a degree that they are in some measure able to control the price. If a
monopoly's control of production is due to its owner ship of certain natural resources, it is called a natural monopoly ; if due to its possession of certain legal privileges or to a patent it is known as a legal monop oly. A street railway with an exclusive franchise for operation of certain streets may be regarded as both a natural and legal monopoly. So may a tele phone company if its charter or franchise excludes competition. If a corporation obtains virtual monop oly thru its command of large capital it is often spoken of as a capitalistic monopoly, altho commonly called a trust.
Only occasionally does a monopoly- have absolute control. More often it has only a partial control, be cause in most instances there can be some substitute for the article which a monopoly owns. This ques tion of control depends, however, upon the supply, whether it is increased with difficulty or with ease. The area of a monopoly may be local, national or in ternational.
14. Forms of organization.—Every enterprise has four phases, namely, production, accounting, selling and financing. In small businesses all four .of these phases are frequently looked after by a single man, but the use of steam and electricity, making possible great improvements in the means of transportation and communication, brought about the development of industries requiring capital and resources beyond the means of a single individual. As a result men have combined their pesources and abilities in various ways; first, in a partnership, then in a joint stock company, later in a corporation and finally in the great indus trial combination known in the United States as the trust. The great advantage of the corporation un der the laws of' the United States is the limited liability of the stockholders. In America the principle of limited liability was developed early, for capital needed encouragement. As far back as 1835 char ters were granted to corporations in the United States in which the liability of a shareholder was expressly limited. In England the principle was not taken up as quickly. Even the English railway charters prior to 1879 contain no mention of limited liability. On the continent of Europe, the liability of a share holder of a corporation is usually limited. These various forms of organization constitute the subject matter of Volumes 3 and 11 of the Modern Business Texts.