manufacturers.

The certainty which keeps the large would-be competitor out, even when prices are considerably above such competitive rates, is that after he has entered the business the existing combination must force the competitive fighting so hard that profits will entirely disappear during the contest; and the knowledge that if a combination with the competitor is made, it must be with so large a capital and so much surplus productive capacity that even for a goodly time in the future the profits must be comparatively low, or more probably non-existent; while the endeavor to make profits would push prices up again which might tempt in new rivals.

The only competition that is likely to prove effective, if any does, is that from another great combination in a collateral line of work. For example, a great steel combination might effectively add to its plants some tin-plate mills. This movement has already begun, both in the way of competition and of combinations which attempt to include all steps of manufacture from the mine to the highly finished product. Such combinations will probably extend still further; but this fact does not change the principles laid

down. It simply points to larger consolida

tions.

It will thus be seen that we may make properly a distinction between merely large capital and capital large enough to give an organization a virtual monopoly. It also seems certain that the sources of savings of a great combination, added to this fear of the attacks by great capital, are sufficient, in spite of potential competition, to enable a large combination to secure permanently under existing laws profits considerably above those which could be secured under a competitive system of smaller men, although not so high as might readily be secured by a legal monopoly or by a natural monopoly. This fact seems to justify the use of the expression "capitalistic monopoly," although of course one may readily concede that the power of monopoly in this case is not so complete as in the others.

One may grant still further that experience so far does seem to show that these larger combinations have ordinarily pushed their prices so far above usual competitive rates that other capital has entered the field and pushed prices from time to time back to, or often below, former competitive rates. On the whole, however, the fact

that, during the twelve years of its existence, the American Sugar Refining Company (with capital stock not a little watered, if one judges on the basis of cost of reproduction and running cash capital) for more than nine of these years has been able to keep its margin between raw and refined sugar considerably above the former competitive margin, and has paid dividends of 7 per cent. on its preferred stock and 12 on its common stock, while laying up a surplus, seems to show that its large capital has secured more than former competitive prices, and that it has had certain monopolistic The nature of competition between large competitors as compared with that among small rivals is considered at length in the chapter on Prices.

power.

The assertion made that the Sugar Combination has also received special favors from the railroads may or may not be true. It certainly has not been proved, while the other reasons, and the undeniable facts regarding the increase in the margin between raw and refined sugar, as shown in the chapter on Prices, furnish sufficient cause for the high dividends. A somewhat similar assertion may be made regarding

the Standard Oil Company. It was doubtless true that in earlier years it received great favors from the railroads. It is possible that it has received special favors from the railroads at times since, but it has not been proved that such favors in the form of discriminations (except those coming directly from its large capital, which enables it so to locate refineries and supply markets that it has an advantage) have been received to any material extent, if at all, of late years, while it has been proved that its profits have been much greater during these later years than before.

The other advantages claimed for the capitalistic monopoly, in crushing competitors by local cuts in prices, in transportation, and in other ways that are perfectly legal and normal in their nature, however unjust they may be, certainly seem in themselves enough to explain part at any rate of its high profits. Similar experiences are found in the cases of other combinations of lesser note; and yet it ought to be repeated that so far most combinations have overreached and have paid the penalty of trying to secure exorbitant profits. More experience is needed to teach most of them the art of permanent mo

nopoly an art that, when it is learned, will need to be kept under careful control by society.

Even as regards the special discriminating favors that are mentioned by those who believe that there is no such thing as capitalistic monopoly, it might readily enough be claimed that those special favors in themselves are secured only by virtue of the power of large capital, but that would be a technical claim which need not be made.

Possibly the chief influence in the long run in promoting combinations of capital, as well as their most far-reaching effect, is the element of personal ambition which is fostered by monopoly. There can be no doubt that, in the case of the larger industrial combinations, the belief on the part of the managers that a virtual monopoly can be secured, is a powerful element toward bringing about their formation. The pride of power, and the pleasure which comes from the exercise of great power, are in themselves exceedingly attractive to strong men. As one with political aspirations will sacrifice much and take many risks for the sake of securing political preferment in order that he may in this way rule his fellows,

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