This is probably the best statement of the present status of the common law upon this subject now extant. But what a path to endless litigation does it open! Who shall draw the line where a contract to restrain competition ceases to be beneficial and lawful, and becomes an injury to the public welfare? Must this be left to judge and jury? If so, the responsibilities of our already overburdened Courts are vastly increased.
In contrast with such a policy as this, the plan before presented certainly promises definiteness in the place of uncertainty; and treats all contracts in restraint of competition with impartiality. It is believed that the effect of its enforcement would be a great reduction in the tax now levied on us by monopolies.
There is yet one way, however, in which all these monopolies that we have found it so difficult to devise a plan to deal with—the manufacturers' trusts—may be quickly and certainly reduced. Our heavy tariff on imported goods, by protecting manufacturers from foreign competition, and thus reducing the number of possible competitors, has undeniably been a chief reason why trusts have appeared and grown wealthy in this country before any other. The author has purposely refrained, as far as possible, from reference to the relation of the tariff to monopolies; for the question has been so hotly fought over, and the real facts concerning it have been so garbled and distorted, that people are not yet ready to consider it in an unprejudiced way. This much, however, no one can gainsay. We hold in our handsthe means to at any time reduce the prices and profits of practically all our monopolies in manufacturing to a reasonable basis, by simply cutting down the duty on the products of foreign manufactories. Now, if after our plan just described is in force, the managers of any monopoly choose to be so reckless as to raise its prices to a point where its published reports will show it to be making enormous profits, thus tempting new competitors to enter the field and breeding public hostility, all honest protectionists and free-traders will be quite apt to unite in a demand that the "protection" under which this monopoly is permitted to tax the public be taken away.
If only we could find in any possible plan so excellent a solution of the problem of labor monopolies as a reduction of the tariff offers us in the case of trusts! The question is so complex a one that it is hardly possible to consider it here, except very briefly. Certainly, if we legalize combinations to restrict competition among capitalists, we should among laborers as well. Indeed, the decay of the old common-law principle, that such contracts were against public policy, and that such combinations were punishable, has been more marked in the case of trade unions than anywhere else. Besides this, as long as employers have the right to kill competition in the purchase of labor, workmen should certainly have the right to avoid competition in its sale. But to prevent by force other competitors from taking the field, if they choose, against any labor combination, is an infringement of the personal liberty guaranteed to every man by the Constitution, and can by no means be lawfully permitted.
If workingmen only understood how much the apparent gain when they win in a strike is overbalancedby their loss in the higher prices which they have to pay for the necessaries of life, and in the reduced demand for labor, they would be as anxious to protect capital as they now are—some of them—to injure it. The strikes make timid the men who have capital to invest. They will not loan their money to business men, builders, manufacturers, or any one who wishes to use it to employ workmen, except at a higher rate of interest, to pay for the increased risk.Hence, the cost of the capital used in production is greater, and the price the public has to pay for the product must be greater.
Again, when men have to pay higher rates of interest for the money they borrow they are slower to engage in new enterprises. Mr. A. a builder, intended to put up a block of a dozen houses this season, which would have tended to reduce rents; but the fear of strikes, with their attendant damage and loss, has prevented him from borrowing money at less than 8 per cent. interest. He concludes that, on the whole, this will eat up so much of his profits that he will not build. Is it not too plain to need proof that themoral influencealone of the strikes has robbed the workmen at every point? And this is one of a thousand cases in a hundred different industries.
The plans we have discussed for the treatment of monopolies have for their object a benefit to the people at large, by enabling them to purchase the products of industry and of natural wealth free from the tax now levied upon them by monopolies. If we can effect this, we shall not have a millennium; there will still be injustice and suffering enough in the world; but we shall have reduced the pressure upon the men who work with their hands for their daily bread, enough so that we shall no longer see the strange spectacle of over-production andhunger and nakedness existing side by side. Men's desires were made by an All-wise Creator to be always in advance of their ability to gratify them. And the commercial supply of that ability—the supply of men willing to work—ought always to be behind the demand for men.
It seems beyond dispute, then, that whatever will remove these obstructions to the wheels of production will increase the demand for labor, as well as increase the wages of labor by lowering the prices of the necessaries of life. This the plan we have discussed promises to do, and it also promises to benefit the whole people by lowering the cost of monopolized articles.
The men and women who work with their hands, and those dependent on them, form 97 per cent. of the population of the country. Instead of combining to stop production in this shop or that factory, why not join hands to work for reforms in the interest of the whole people? Be sure that in so doing, organized labor will have the hearty co-operation, and leadership if need be, of the best men in every class of society.
But while the reforms proposed promise great and important benefits to the workers on whom the tax laid by monopoly falls most cruelly, the question, "What shall fix the rate of wages, if competition cannot?" is still left undecided. The best answer the author can make to this is as follows: The monopoly formed by the trade unions in the sale of labor is unnatural, because the number of competing units is great instead of small. As new competitors must continually arise, the monopoly can never be successful without the use of unlawful means. If it raises the price of labor above what free competition would determine, it as truly lays a tax on the whole peopleas did the copper monopoly. On the other hand, we must recognize the fact that competition is now often absent in thepurchaseof labor, and this is a chief and sufficient cause for the existing attempts to kill competition in its sale. But this is largely due to the fact that the supply of labor is now in excess of the demand. When instead of signs everywhere, "No one need apply for employment here," we see placards, "Men wanted; high prices to good workmen," then competition will assert itself in the purchase of labor.
In regard to the first class of industries, those utilizing natural agents, which we proposed to place under the care of the state, it is evident that we can permit no strikes there. Our transportation lines, our mines, our gas-works, our water supplies, are to be operated for the benefit of the whole people, and no labor monopoly can be permitted to stop them. The plan that might be adopted to prevent interruptions in these industries has been already referred to. The author would suggest a similar plan for the benefit of labor in general. Suppose that in the charter of a manufacturing corporation, a certain portion of the stock in small-sized shares was set aside for the employés required to operate the mill. Let each employé berequiredto hold a certain number of shares in proportion to his wages; to purchase them when he begins to work, and to return them when he leaves the service of the corporation; the price in all cases to be par. In case he leaves without giving a certain notice, he should forfeit a certain proportion of his stock. If, on the other hand, he is discharged without an equal notice, he should receive the full amount of his stock, and a sum in addition equal to the penalty which he would have incurred had he broken the contract.Who will deny that such a move would be vastly to the interest of both parties, the employer and employed. Is not a protection needed by the workman against the power of the employer to turn him adrift at any time without a penny?
Finally it must be said that the labor question, more than any other connected with monopoly, needs solution through the influence of the principles of Christian fraternity. In the last analysis, every man sells to his brother men his service and receives his food, clothing, and shelter in return. We may execute justice never so well, and regulate never so nicely the wages of men by the law of supply and demand, there will still be special cases demanding and deserving to be treated by the rules of brotherly charity. The strong were given their power that they might aid the feeble; and they who fall behind in the struggle for position are not to be blotted out by the brute law of the survival of the fittest, but cared for as the noblest instincts of humanity prompt.
I am well aware that the indictment which conservative critics will be apt to bring against the plans for the equitable control of monopolies presented in this chapter is that they are too novel, and that they require too much of an upheaval of existing institutions for their accomplishment. The conservative man is invariably in favor of getting along with things as they are. The answer to be made to this is, that no candid man who will make a thorough study of the present status of monopoly and of the attempts to control it can be conservative. The present status of monopolies is just neither to their owners nor to the public. They are plundering the public as much or as little as theychoose; and the sovereign people are submitting to it and taking their revenge by passing retaliatory laws intended to ruin the monopolies if possible. These legislative "strikes" are thus especially well calculated to foster extortion on the part of the owners of monopolies, who naturally wish to make what profits they can before some piece of legislation is put through to destroy the industry they have built up.
In contrast to this are the plans proposed in this chapter. They offer to establish a definite relation between the public and the monopolies, and a permanent and stable foundation for each industry they affect in place of the present fickle and ever changing one.
There is another class of critics who may complain that the plan proposed leaves too much power still in the hands of the monopolists, and gives the government too small a part in their management. The answer to this is very evident. We have found the cardinal value of the system of individual competition to be that it tends by a process of natural selection to bring the men of greatest ability into the control and management of our industries; while the vital weakness in the management of industry by government is the fact that the sovereign people does not choose the wisest and most honest men to control its affairs. Men may well say that if they are to be robbed it had better be by a corporation, where innocent stockholders will receive part of the benefit, than by dishonest officials of government.
The ultimate remedy for the evils of monopoly, therefore, lies with the people. When they will choose to control their affairs the men of greatest wisdom and honor; when each man will exercise the same care in choosing men to care for the public business that hedoes in caring for his own private interests, then we can safely trust far greater responsibilities to our government than is now prudent.
There is no more important lesson to impress on the minds of the toiling millions who are growing restless under the burdens of monopoly than this: The only remedy for monopoly is control; the only power that can control is government; and to have a government fit to assume these momentous duties, all good men and true must join hands to put only men of wisdom and honor in places of public trust.
There is a virtue which shone in all brightness when this nation was born, not alone in the hearts of the commander-in-chief and his brother heroes, but in the hearts of the men and women who gave themselves to their country's service. It glowed with all fervor when, a quarter of a century ago, the North fought to sustain what the fathers had created, and the rank and file of the South gave their lives and all they had for what they deemed a righteous and noble cause. Though the robust spirit of partisanship may seem for a time to have crowded out from men's hearts the love of their country, surely that love still remains; and in the days of new import which dawn upon us, in the virtue ofPATRIOTISMwill be found a sufficient antidote for the vice ofmonopoly.
FOOTNOTES[1]It should be explained that the above is not given as abona-fidestatement of facts concerning this especial trust, but as a vivid description of the organization and plans of a typical trust, from the standpoint of its owners and managers.Probably, too, few or no existing trusts have tried to benefit themselves in so many different ways as we have supposed this imaginary trust to have done. But to shorten our investigation, the author has purposely extended the scope of this trust's action, to bring out clearly the variety and importance of the methods by which a trust reaps profits, aside from any advance in the price of its product.[2]Since the above was written the collapse of the copper syndicate has taken place. The causes which brought this about were the failure to complete the contracts for restriction of production, and lack of funds to meet the current liabilities. The reason for both these must be largely ascribed to the fact that it had come to be generally realized how great and how obnoxious the monopoly was; and capitalists rightly feared that government interference would be interposed to check the monopoly's operations. If the syndicate had made its long-time contracts at the start, or if it had been bold and shrewd enough to have inveigled speculators on the bear side of the market into operating against it, M. Secretan and his associates might have won as many millions as they could have wished. It is a significant fact that the downfall of the syndicate was not followed by the reëstablishment of free competition. Instead there was at once talk of another syndicate being formed to hold the copper stored up by theSociété, and keep the price up as long as possible. On this side of the water the question was at once canvassed whether a combination could be formed among the different American companies to prevent competition and support the price. Evidently the failure of this scheme has not discouraged the makers of monopolies.[3]Compiled from "The Coal Trade," 1888, (H. E. Saward), and "Poor's Manual of Railroads," and partially estimated.[4]From the "Compendium of the Tenth Census of the United States," Part II., pp. 1378 and 1384.[5]"Railway Practice." By E. P. Alexander, President Central Railroad and Banking Co. of Georgia.[6]It should be explained that it is only proposed to base therates as a wholeupon the cost of service. As regards the relative rates on different commodities, the author, in common with all who have given careful study to the question, recognizes that the only equitable principle for proportioning rates is the much maligned one of "charging [in proportion to] what the traffic will bear." The argument against this principle is so very plausible that, until he had given the subject thorough study he held a diametrically opposite opinion.To make plain to the reader that this is really the only equitable principle, the following illustration may serve: A coal-mine operator and a sewing-machine manufacturer build together a railroad to carry their respective products to a market. They will fix the total rates of freight at such a point as to just pay the cost of service; but it is required to find what relative rates each should be equitably charged on the shipments from his works. Evidently, to have the rates perfectly equitable, they must be in exact proportion to thebenefitwhich each party derives from the use of the road. But this benefit which each derives ismeasuredby the profits which each makes from his business; and this profit, in turn, is the measure of the amount each can afford to pay for the use of the road,—that is to say, "what the traffic will bear."Q. E. D.
[1]It should be explained that the above is not given as abona-fidestatement of facts concerning this especial trust, but as a vivid description of the organization and plans of a typical trust, from the standpoint of its owners and managers.Probably, too, few or no existing trusts have tried to benefit themselves in so many different ways as we have supposed this imaginary trust to have done. But to shorten our investigation, the author has purposely extended the scope of this trust's action, to bring out clearly the variety and importance of the methods by which a trust reaps profits, aside from any advance in the price of its product.
[1]It should be explained that the above is not given as abona-fidestatement of facts concerning this especial trust, but as a vivid description of the organization and plans of a typical trust, from the standpoint of its owners and managers.
Probably, too, few or no existing trusts have tried to benefit themselves in so many different ways as we have supposed this imaginary trust to have done. But to shorten our investigation, the author has purposely extended the scope of this trust's action, to bring out clearly the variety and importance of the methods by which a trust reaps profits, aside from any advance in the price of its product.
[2]Since the above was written the collapse of the copper syndicate has taken place. The causes which brought this about were the failure to complete the contracts for restriction of production, and lack of funds to meet the current liabilities. The reason for both these must be largely ascribed to the fact that it had come to be generally realized how great and how obnoxious the monopoly was; and capitalists rightly feared that government interference would be interposed to check the monopoly's operations. If the syndicate had made its long-time contracts at the start, or if it had been bold and shrewd enough to have inveigled speculators on the bear side of the market into operating against it, M. Secretan and his associates might have won as many millions as they could have wished. It is a significant fact that the downfall of the syndicate was not followed by the reëstablishment of free competition. Instead there was at once talk of another syndicate being formed to hold the copper stored up by theSociété, and keep the price up as long as possible. On this side of the water the question was at once canvassed whether a combination could be formed among the different American companies to prevent competition and support the price. Evidently the failure of this scheme has not discouraged the makers of monopolies.
[2]Since the above was written the collapse of the copper syndicate has taken place. The causes which brought this about were the failure to complete the contracts for restriction of production, and lack of funds to meet the current liabilities. The reason for both these must be largely ascribed to the fact that it had come to be generally realized how great and how obnoxious the monopoly was; and capitalists rightly feared that government interference would be interposed to check the monopoly's operations. If the syndicate had made its long-time contracts at the start, or if it had been bold and shrewd enough to have inveigled speculators on the bear side of the market into operating against it, M. Secretan and his associates might have won as many millions as they could have wished. It is a significant fact that the downfall of the syndicate was not followed by the reëstablishment of free competition. Instead there was at once talk of another syndicate being formed to hold the copper stored up by theSociété, and keep the price up as long as possible. On this side of the water the question was at once canvassed whether a combination could be formed among the different American companies to prevent competition and support the price. Evidently the failure of this scheme has not discouraged the makers of monopolies.
[3]Compiled from "The Coal Trade," 1888, (H. E. Saward), and "Poor's Manual of Railroads," and partially estimated.
[3]Compiled from "The Coal Trade," 1888, (H. E. Saward), and "Poor's Manual of Railroads," and partially estimated.
[4]From the "Compendium of the Tenth Census of the United States," Part II., pp. 1378 and 1384.
[4]From the "Compendium of the Tenth Census of the United States," Part II., pp. 1378 and 1384.
[5]"Railway Practice." By E. P. Alexander, President Central Railroad and Banking Co. of Georgia.
[5]"Railway Practice." By E. P. Alexander, President Central Railroad and Banking Co. of Georgia.
[6]It should be explained that it is only proposed to base therates as a wholeupon the cost of service. As regards the relative rates on different commodities, the author, in common with all who have given careful study to the question, recognizes that the only equitable principle for proportioning rates is the much maligned one of "charging [in proportion to] what the traffic will bear." The argument against this principle is so very plausible that, until he had given the subject thorough study he held a diametrically opposite opinion.To make plain to the reader that this is really the only equitable principle, the following illustration may serve: A coal-mine operator and a sewing-machine manufacturer build together a railroad to carry their respective products to a market. They will fix the total rates of freight at such a point as to just pay the cost of service; but it is required to find what relative rates each should be equitably charged on the shipments from his works. Evidently, to have the rates perfectly equitable, they must be in exact proportion to thebenefitwhich each party derives from the use of the road. But this benefit which each derives ismeasuredby the profits which each makes from his business; and this profit, in turn, is the measure of the amount each can afford to pay for the use of the road,—that is to say, "what the traffic will bear."Q. E. D.
[6]It should be explained that it is only proposed to base therates as a wholeupon the cost of service. As regards the relative rates on different commodities, the author, in common with all who have given careful study to the question, recognizes that the only equitable principle for proportioning rates is the much maligned one of "charging [in proportion to] what the traffic will bear." The argument against this principle is so very plausible that, until he had given the subject thorough study he held a diametrically opposite opinion.
To make plain to the reader that this is really the only equitable principle, the following illustration may serve: A coal-mine operator and a sewing-machine manufacturer build together a railroad to carry their respective products to a market. They will fix the total rates of freight at such a point as to just pay the cost of service; but it is required to find what relative rates each should be equitably charged on the shipments from his works. Evidently, to have the rates perfectly equitable, they must be in exact proportion to thebenefitwhich each party derives from the use of the road. But this benefit which each derives ismeasuredby the profits which each makes from his business; and this profit, in turn, is the measure of the amount each can afford to pay for the use of the road,—that is to say, "what the traffic will bear."Q. E. D.
Transcriber's Notes & ErrataSome tables have been reformatted for clarity.The following typographical errors have been corrected:57particularlyparticular1051888,1888.127succcessfulsuccessful169ascendencyascendancy174quencedquenched178accomodateaccommodate246owershipownershipThe following words were found to be variably hyphenated. The figures in parentheses are the number of times each has been found.bond-holders (1)bondholders (1)midle-men (1)middlemen (2)over-estimate (1)overestimate (1)over-production (16)overproduction (1)
Some tables have been reformatted for clarity.
The following typographical errors have been corrected:
57particularlyparticular1051888,1888.127succcessfulsuccessful169ascendencyascendancy174quencedquenched178accomodateaccommodate246owershipownership
The following words were found to be variably hyphenated. The figures in parentheses are the number of times each has been found.
bond-holders (1)bondholders (1)midle-men (1)middlemen (2)over-estimate (1)overestimate (1)over-production (16)overproduction (1)