The second remedy is the one towards whose adoption we are rapidly working. State and Interstate Commissions have already been established to regulate railway monopolies; and in general it is true that the people who feel the burden of monopolies are looking to the government for relief, and expect it to take positive action for the control of other monopolies as it has for the control of railways. It will be seen that we have now arrived by a study of the various possible remedies for monopoly at the same irresistible conclusion to which we were brought by our study of the laws of competition. The proper remedy for monopoly is not abolition but control. It seemed necessary to conduct this independent investigation in order that no blind adherence to individualism and no thought of the possible efficacy of other remedies might lead us to doubt this important truth.
We have next to consider the fact that the government can control monopolies in two ways. It can either permit the monopoly to remain under private ownership, and regulate its operations by law and by duly appointed officers; or it can itself assume the entire ownership and control of the monopoly. Which of these plans is the better, is a question of public policy over which future political parties are likely to dispute. One party will hold that when it is necessary for the government to interfere to protect those whom it represents from the oppression of monopoly, it should assume at once the whole ownership and management of the monopoly. Their opponents will argue that government should interfere only to the extent needful to maintain the rights of the public; and that it is far better that industry should be directed by the private individuals whose interests are at stake than by government officials. To discuss fully the arguments for each of these two principles of our future practice in dealing with monopolies, would be beyond the intended scope of this volume. It can only be briefly said that the arguments presented will certainly indicate that the conditions surrounding each given monopoly will have great weight in determining which policy is the most advantageous. It would be manifestly unwise, for instance, to place our postal facilities under the direction of a corporation, even though its operations were regulated by government. It would be even more unwise to place the operations of the flouring mills of the country in the hands of a department of the government. The important factors to be considered in deciding any given case are, first, the importance and necessity to the public of the service, and, second, the question whether production in the given case is likely to be carried on more economically by the government or by private enterprise. The former has an advantage in that it can secure its capital at a lower rate of interest. The latter, an advantage in that it secures greater efficiency from the labor it employs. Other circumstances being equal, it would appear wisest, then, for government to take direct charge of those monopolies in which the greatest amount of capital is invested and the least labor is employed, leaving to private enterprise under government regulation the operation of monopolies in which the opposite set of conditions prevails.
As already stated, however, the question is complicated by the social and industrial effects which might follow a large transfer of enterprise from private to governmental direction; and these effects we will not now discuss.
XV.
THE SOVEREIGN RIGHTS OF THE PEOPLE AND OF THEIR REPRESENTATIVE, THE GOVERNMENT.
We have now at last deduced the important facts, that the only remedy for the evils of monopoly must come from the popular will, expressed in direct action by the government; that the government may possibly keep competition alive by checking its intensity, or can certainly allow events to take their natural course and permit monopolies to be established. It can then protect the public, either by assuming itself the ownership and operation of the monopoly, or by taking the less radical step of placing the monopoly under official supervision and control while permitting its private ownership to continue. This conclusion is of the utmost importance, for it marks out one single direction as the one in which relief from the evils which vex us may be found. If we can once make the thinking people of the country understand the effect which monopolies have upon their welfare, and that the evil will not cure itself and cannot be cured by attempts to create competition or by any remedy short of direct action by the government, we shall have made a great advance.
But with this goal reached, new questions at once present themselves. Can the interference of the government with private industries be defended? How shall government exercise its control, so as to protect the people without infringing vested property rights and discouraging private enterprise? It may be objected, too, that, while our preceding discussion has fully proved the weakness of other methods of dealing with monopoly, compared with that by the direct action of government, it has not been shown that the latter is practicable, or that it would not be likely to result in more harm than good to the people at large.
These questions are coming before the people in a thousand practical forms. They are being fought over in courts and legislatures and councils, and are destined to be fought over at the polls. How important their right decision is, we have already seen. Let us make some attempt to find what this right decision is.
In taking up first the question of the rights of private property holders, we touch a point over which there is likely in the future to be serious dispute. A certain faction vigorously contend that past precedents are no ground on which to base future action, and that little attention need be paid to the rights of private owners if the public interest is at stake. A far stronger and more influential faction are jealous of every thing which seems to question their right to hold and use their property in whatever way they see fit. But certainly, if their claims are just, they need not fear the result of that investigation which every idea we have inherited from former generations has in these days to receive. It would be beyond the scope of our investigation to make any exhaustive study of this subject, but it is necessary to note some of the important facts in connection with property rights as light upon the question at issue.