Nor does the Fourteenth Amendment preclude a State from granting exclusive privileges in the exercise of its police power.
The State may thus grant monopolies for the sale of liquor, or the sale of lottery ticket:, or the erection of a slaughter-house, or the conduct of a slaughtering business within a city. See CALLING: CONSTITUTIONAL LAW; POLICE POWER.
The United States Constitution expressly con fers upon Congress the power of granting copy rights and patents to authors and to the origina tors of useful inventions. No other power to create monopoly is expressly vested in Congress, and it is probable that it is without such power, except when incidental to the exercise of powers expressly granted by the Constitution, as, for example, the power to regulate commerce, bor row money, or collect duties and imports.
Natural monopolies exist where the Conditions of the enterprise are such as to preclude com petition. In a general way, economists some times speak of the possession of land as con stituting a natural monopoly. As monopoly im plies a lack of eompetition as well as special privilege, the term strictly applies only to cases in which the ownership of the privileges is centred in one person, or at least a very few persoas capablo of acting in harmony. Land and other natural resources, such as water power and mineral wealth, are so widely diffused that monopoly in a strict sense rarely arises from their ownership. The most important instances of the so-called natural monopolies arise in con nection with certain public services, particularly in cities, and are usually connected with the right of way through public highways. Such services are the furnishing of gas, water, trans portation, and communication in cities. As the right to make use of the city streets to lay gas and water pipes. (decide conduits, or to build tramways cannot be granted to all, competition in furnishing such services is practically ex cluded. In some respects, particularly as con cerns the right of way through munieipalities, steam railroads belong in the same class. Com petition among them is possible on a larger scale than among street railways, but they un doubtedly possess sonic elements of natural mo nopoly.
As the policy of the law has eliminated from our economic life legal monopolies which do not conform to the principle of public interest, so then- is a growing demand that these natural monopolies shall be administered in the public interest. In its extreme form it calls for the municipalization of such enterprises. while many
who are unwilling to accept this solution demand far greater caution in the granting of franchises and a much stricter supervision of the manner in which such franchises are used than has here tofore been common in Ameriean munieipalities.
MoNoroLY PRICE. It can hardly be said that the price of the commodities or services con trolled by a public monopoly is subject to any general law. The Government may fix prices below cost of service, or it may purposely make them so high as to discourage consumption. Pri vate monopolies, on the other hand, naturally aim to secure the greatest net profit; and the price which will yield the greatest surplus above cost may be termed 1110110poly price. The deter mination of such a price is a difficult matter in practice, since a large number of factors have to be taken into account. If the monopolized commodity is a necessity of life, as, for example, salt, the price may he fixed very high, since high prices would not greatly diminish consumption. lf, on the other hand, the commodity is an article of luxury. or one out of a group of commodities which satisfy the same want, a material rise in price will greatly limit con sumption, so that while a large profit may be made on each unit sold, small sales will reduce total profits. Again, it may be that an increase in the quantity of service performed or goods produced will by no means demand a propor tional outlay. In that ease the monopoly may hest subserve its own interests by keeping prices low. Thu: a street railway company can gen erally double the number of passengers carried without doubling the cost of service; and may therefore find it profitable to lower fares. See TRUSTS; PATENT; COPYRIGHT.
BIBLIOGRAPHY. The most satisfactory recent Bibliography. The most satisfactory recent general discussion of monopoly is Ely's Monop olies and Trusts (New York. 1000). For a concise discussion of monopoly price, consult Marshall. Principles of Economics ( London, 1895). pp. 533-5I7. A scholarly discussion of the theory of monopoly is Schiiffle's Thcoric der aussehlicssenden Absatzrrrhiilinisse (Tfibingen, 1SC 7 1. An interesting discussion of a fiscal mo nopoly is Wicksett, Studien fiber dos &ler rciehische Tabaksmonopol (Stuttgart, 1897 . Con sult, also, King, "Alcohol Monopoly in Switzer land," Economic Rericur (1893), and Ratralovich, "State Monopoly of Spirits in Russia." Journal of the Stalislicul Nocicly of London (1901). See bibliography under article TRUSTS.