If it be true that there are no monopolies save law-created monopolies, it only remains for the state to undo the work it has done. The means by which the state, consciously or unconsciously, has fostered monopolies may be removed, and a new, and up to this time untried, method for remedying the evils of trusts be set in motion.
Before we can agree to this, however, we must understand what monopoly is. Briefly stated, it is the power to charge more than a competitive price for a commodity or service. This power can be permanently secured by the favor of Government, and in no other way. An agreement between individuals cannot accomplish it, since such agreements, even if they include all individuals in interest, which is impossible, or at all events inconceivable, would infallibly be broken. The only way such agreements may be made effective is for Government to make powerless, or nearly so, the potential competitive elements or individuals in interest. This it does in several ways, or to be explicit, chiefly in three ways.
By Land Laws,
Tax Laws,
Laws Regulating (or that fail to regulate) the use of the steam highways of the country.
I know of no other source of monopoly unless it be our patent laws. But these being—originally at least—rewards of invention, the injury results from their misuse.[4] Even the misuse of patent laws is not one of the chief potent influences in the perpetuation of monopoly. But without, in most cases, adding to the power of monopoly, which derives its strength from other causes, it puts in the hands of the great combinations the power to arrest progress. The value to society of an invention is in its use. Under present misuse of patents, inventions are held out of use and are often bought up and destroyed for the purpose of depriving competitors of the use of like improvements, or because such inventions would often reduce the machinery in present use to the value of old iron. Clearly, if industrial progress is to be made to yield its full results, some change in our patent laws is imperatively called for. Were the law of competition allowed to work freely, the use of such inventions, even under present patent laws, would be determined largely by the law of self-preservation. For the sources we have indicated are also the sources to a degree of the patent monopoly. In a competitive market for the use of an invention the inventor would be less likely to part with his invention, even under the present patent system. Where the bidding is artificially restricted the inventor sells at a disadvantage. Monopoly has the inventor at its mercy. But however this may be, nothing less than the free use of an invention to everyone willing to pay a royalty to the inventor for its use will do justice to the inventor and meet, at the same time, the interests of the great public and the necessary demands of industrial progress.
Certain superficial economists, misled by recent manifestations in trust building, have hastily concluded that the problem it presents is a new one. For example, Collier, in his work on the subject, says: “The problem of the trusts is a momentous one, yet it is unqualifiedly a new one.” Of course it is not new. It is the same old problem of monopoly, and the so-called trust problem is but a phase of it. It is the problem of monopoly crystallized. The evils of the trust rivet the public attention, not because they are more real than the evils of monopoly per se, but because they are more obvious. In some respects the trust, by combining certain elements of monopoly, tends to make monopoly more perfect and its operations more harmful. But it simply avails itself of monopolistic institutions—that is to say, it is built upon land, railroad or tax monopoly; it takes to itself certain privileges which society has created and which have hitherto been appropriated and exercised by individuals. It therefore immediately makes these evils concrete. The trust is thus a manifestation, and the people, with their customary thoughtlessness, attack the manifestation rather than the thing itself—the fruit of monopoly rather than the tree.
The great combinations which suggest themselves when we think of the trust problem—is there one of them which does not owe its existence to some monopoly privilege? What would the Standard Oil Company be but for its control of rights of way, sources of supply, railroad terminals and the preferential benefits it is enabled to secure? What is the Steel Trust but a network of artificial privilege? Has not Mr. Charles E. Russell clearly shown, in his recent articles in Everybody’s Magazine, that the Beef Trust draws its life-blood from its monopolization of railroad privileges? What would the Sugar Trust be without the favors it receives from the tariff in its control of the raw material? Could the Tobacco Trust exist save for the power of taxation which strangles competition?
Those mentioned include nearly all the greater trusts. A more detailed demonstration of the truth we are insisting upon could be given, but the reader can himself carry this line of analysis further. He will find that it explains the existence of every oppressive combination, and that it leaves little unresolved or unexplained. It may happen that injurious combinations will present themselves in which this element of monopoly does not clearly appear. But these are by-monopolies, so to speak, and their sources of power may be traced to indirect association with the giant monopolies.