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the consumer to buy — thousands of tury has marked the end of competipounds, millions of pounds (more than tion. Mr. and Mrs. Webb in their 300,000,000 a year coming to the book on the Decay of Capitalist Civilizaneighboring market of Chicago alone) tion (dealing with the United States as — were set at defiance by this punywell as England) have attributed the survival of an abandoned market, as downfall of capitalism to a replacethe little fish baffled the struggles of ment of the competitive régime by Antony's rowers and the winds of the monopoly. Mr. Eliot Jones in his Ionian Sea. Like our forefathers in Trust Problem in the United States contheir thinking on physics, we in our cludes that it is impossible to ‘restore sociology fail to understand that forces competition. This understanding of in society are quantitative and measur- recent industrial history arises from a able — that the small forces do not misinterpretation of one set of facts prevail over the great. Pliny says that and an entire oversight of another when a remora stopped the ship of the group of processes which have given Emperor Caligula and was brought to the industrial activity of our day an upon deck it was only a little fish, “it intensity of competition unknown to had no great power.' (It was only any earlier generation. Moles selling his weekly 50 tubs to First, it should be understood that Christian.) The pathetic Elgin Board increased size in manufacturing orcase is, of course, extreme (the anti- ganization is not the same thing as trust agitation is directed in many monopoly. The increase in size has instances against groups not so clearly resulted chiefly from improvements in inferior to the great movements of transportation. When, one hundred commercial activity which surround years ago, it cost $249 to send a ton of them), but it is instructive precisely iron from Philadelphia to Erie, the because it is extreme. The extreme market for iron from any producing case is needed to measure the present- centre was limited to a small radius. day credulity as to combinations and When a ton of iron can be sent from their power over prices. Deep waters Pittsburgh to Vancouver for $18 the require a long plummet.
marketing radius is wide. The indusIt is impossible to review here the trial unit was necessarily small when whole subject of ‘Trusts.' What fol- the market was narrow; it is large in lows is meant to apply only to the an extensive marketing area. The cases mentioned — namely, the ‘Beef change in size of factories and size of Trust,' the Standard Oil group, and the marketing areas does not mean a Railways of the United States. These change in the number of producers have been the chief objects of attack within reach of the buyer. The twenin the antitrust agitation and legis- tieth-century consumer buys from a lation of the last few decades. It seems large factory selling across half a logical, therefore, to meet the prevail- continent; his nineteenth-century aning public opinion on this matter on cestor bought from a little shop or mill the ground which public opinion has which sent its products across half a chosen.
In the small gristmill a family had
few mills to choose from and paid the The opinion has come to prevail same price (or toll) to everyone. The almost universally that the growth of millers could readily agree on prices large-scale industry within a half-cen- without interference by officers of the
law. In my Illinois village we were situation before us is the fluidity, the confronted when we bought meat, not mobility of productive forces, now by a beef trust, but by an entire con- that the craftsman has given way to solidation of the beef industry in one the machine as the dominant factor person, namely, Joe C. We bought in production. The skilled workman, our beef from him or went without having learned his trade, was immobile; Later Charley D. came in — we dealt he could not invade another craft and not with a Big Five and two hundred he had little fear of an invasion of his independents described in the Federal own field by unskilled men or by men Trade Commission report, but with a of acquired ability unlike his own. Big Two. The rich man of the region Tasks like those which formerly rein a neighboring town had his meat quired muscular strength and skill sent in from a distance. This doubled gained through long apprenticeship are the cost. With that one exception and now performed in a large and increasoccasional purchases in the winter of ing percentage of cases by men of little frozen beef from farmers by the 'quar- strength and brief training. ter,'not one family in that region ever In automobile-making 43 per cent found relief from the power of our of all jobs, we are told, can be learned Beef Trust.
in one day; 36 per cent more, in not Not only has the substitution of more than a week; only one per cent large for small producing units result require more than a year. The factory ed in no weakening of competition; worker shifts frequently from one emmore than that, it is an obvious deduc- ployment to another employment and tion, from facts known to all observers, back again. The replacement of the even from the hackneyed common- skilled workman by the unskilled laplaces of recent industrial history, that, borer and the machine is shown strikwith and because of the growth of ingly in the steel industry. 'Steel is capitalism, competition has in our not made with hands. Man does little day become intense and swift and sure more than touch levers while the balbeyond all previous human experience. ance is done by steam and electricity.'
What do we mean by competition? 'In a mill rolling 3000 tons of rails a We ought to mean the ready move- day not a dozen men are seen on the ment of the factors of production - mill floor.' In these last years the labor or productive instruments — to- steel mills have needed additional ward those employments in which laborers; they have drawn on the prices are exceptionally high and profits Mexicans of the Southwest and the large. That is, competition is sub- Negroes of the South. The cottonstantially ‘mobility. Two things are field laborer may almost at once be set necessary for this mobility: (a) knowl- to work in a steel mill. The decline in edge, among persons outside of the power of unions in the steel industry high-priced employment, that it is prof. is a result and an evidence of the wanitable; (b) the possibility of increasing ing importance of manual skill. 'For the use of capital and productive en- the past thirty years they have suffered ergy in employments whose superior an unbroken series of defeats. attractiveness has become known. In If labor is readily diverted from one both respects the tendency of recent employment to another by the allureindustrial evolution has been toward ment of profits, the other great factor making competition more prompt. in production is equally fluid. New
An even more striking factor in the capital — the current accumulation of
thenave dran additio the
surplus income — is unspecialized in- effect as competition, in both raildustrial protoplasm quickly turning in way transportation and manufactures, any direction, attracted by the hope of which have generally been slighted or profit, creating new competing prod- overlooked. One of these neglected ucts with a promptness and certainty forms of competition is what might be unknown in the age of handicraft. called the motive of the empty car.
The owners of investment capital If all railway property in the United and their advisers are looking in- States were united under one owner, it cessantly for the most profitable op would still be necessary for that magportunities for its employment. The nate to place a limit on charges in earnings from oil, from steel, from the order to attract business, and thus to packing industry, from automobiles, employ more fully his trackage and from sugar, from commerce and ship his rolling stock, as more than half the ping, flow into steel or automobiles or expense of railway operation continues oil, or whatever gives greatest promise of even when traffic and revenue are next high earnings. In the production of the to nothing. The same principle apchief staples, every sort of productive plies to manufactures: running at half agency — labor, no longer specialized capacity is ruinous. as in the past but adaptable to any use, Another sort of competition is comand material of every kind — is at the petition between one commodity and disposal of any group of persons pos- another for the purchasing power of sessing the requisite number of dollars. the public. The fact that unlike com
The matter is comparative, and in modities compete has been recognized comparison of past and present we can in the case of the liquor traffic; the say only that in the more general grocer has been biased in favor of Proknowledge to-day of the relative at- hibition by his own interest in detractiveness of business opportunities, stroying a rival. The same sort of in the increasing readiness with which competition is well known in other unspecialized labor and unspecialized cases without being called competimaterial for plant and equipment can tion. For example, an association of be turned with brief preparation, the onion-raisers in the Rio Grande Valley consumer finds a tolerably secure de some years ago developed a market fense against high prices due to re- for their products in Kansas City by stricted supply.
inducing the grocers there to lower the It must be understood that com- price of onions at retail, causing an petitive influences or processes are increased demand for onions by a many. There is competition of the process of competition with the whole obvious sort between rival companies; range of foods known to Kansas City there is the influence of ‘potential housekeepers. competition,' caution in raising prices The development of a market for for fear of calling new rivals into the any commodity by joint action of profield (thus Miss Tarbell showed how, ducers of that commodity (as in the when prices of oil increased, the pro- case of California fruits) through disduction of oil from shale increased and tributing samples, advertising, demnew wells were opened so that Mr. onstrations to teach the public its uses Rockefeller and his associates found and advantages, is inter-commodity that ‘making oil very dear does not competition. It is quite reasonable to pay'). There are other forms of com- believe that, if production of each competition, or processes having the same modity came to be consolidated in one
new wells, and his associat does not
compes that, if produd
pays making oil his associatehat Mr. à
company, the competition of the sev
III eral groups for the patronage of the purchasing public would be as in- An observation of the industrial ortense and as effective an influence to ganizations which this course of develward moderate prices in every line as opment has created brings everywhere any imaginable competition between to view the universal prevalence of rival producers of the same kinds of competition which the growing fluidity articles.
of industrial agencies and instrumenThe opinion has been generally ac- talities would lead one to anticipate. cepted by writers, legislators, and To find evidence that competition judges that the railway business is survives and increases, one need only singularly noncompetitive. With all examine the rather abundant publicadeference, I believe that competition tions, official and unofficial, which have is in that field singularly powerful. All been designed to show that competistudents of railways do indeed recog- tion has been 'crushed.' One might, nize the influence of railway competi- for example, reasonably expect that a tion, not merely in the simple and work like the Federal Trade Comobvious effort of adjacent lines to take mission's report on the Meat Indusbusiness from each other, but in the try, recommending (and in fact leading case of lines far apart. Whenever two to) drastic legislation for the remedy railways, however remote, carry prod- of monopoly, would exhibit something ucts from competing producers those which might possibly be called “monoplines of rail are competitors. Thus the oly' by a rational person within reach railways of British India and the rail- of a dictionary. The commission reways from the wheat fields of Dakota ceived replies to its inquiries from to the port of New York are com- 225 slaughtering interests engaged in petitors in carrying wheat for the interstate trade, besides 1132 wholeLiverpool market. The same process sale slaughterers doing business within is more evident within the country; for their respective states — in addition example, the shoe manufacturers in St. to the purely retail slaughterers scatLouis and the railways which serve tered nearly everywhere over the counthem compete for the market of the try. That is ‘monopoly.' Likewise the south (Georgia, Alabama, Tennessee) report of the Senate subcommittee in with the New England shoe factories 1923 on the 'High Cost of Gasoline and railways.
and Other Petroleum Products' menThis fact can hardly be stated with tions in addition to the seventeen too broad an application. Practically companies with their thirty-eight reall articles carried by American rail- fineries of the Standard group) a furways enter into a world-wide market ther list of twenty-eight independent where farmers, manufacturers, miners, companies operating fifty-seven refinand carriers of all regions and all na- eries, and (yet further) a number, not tions compete. A combination to put specified, of small refineries. That an end to competition must there- state of things can be classified as fore be world-wide; there is no such ‘monopoly only by a use of the word combination. The corner grocery is (unhappily the prevailing use) so innot more clearly competitive than the definite as to have no real significance. railway, even though the competition These publications not only show a process is not identical in the two multitude of competitors, but they fail cases.
to show (even when in general terms
they allege) the high profits which the its invested capital, about the same word monopoly implies.
rate for the preceding ten years, and 20 In the meat industry during the pre- per cent in the yet earlier period as far war years 1910 to 1913, Armour's prof- back as 1882. its ranged from 3.4 per cent to 9.3 A subcommittee of the U. S. Senate per cent; Swift's, 7.4 to 9.6; Morris's Committee on Manufactures, under 4.1 to 7; Cudahy's 2.4 to 8; Wilson's, the chairmanship of Mr. La Follette, so far as reported, were 6.5 per cent. more than a year ago issued a report The reader is invited to decide for him on the 'High Cost of Gasoline and self whether there is evidence in these Other Petroleum Products' offering figures of monopolistic extortion which the general conclusion that earnings the Federal Trade Commission repre- had been exorbitant, as shown espesents (I am not exaggerating) as a cially by the increase in the value of peril of the first magnitude not only the stock of the various Standard Oil to the people of the United States but Companies from the time of dissoluto the entire human race.
tion of the combination in 1911 to In the war years profits increased, as 1923. Thus a share of the Standard of appears in the following table showing Indiana is represented as increasing in the percentage of gain for the monop- value from $2520 in 1911 to $39,000 in olists and for sixty-five competitors 1923 — more than a fifteenfold inof the monopolists.
crease. The method of making this
calculation was crudely — but as a 65 'INDEPENDENT' BIG FIVE COMPANIES
means of arousing public indignations, (average) (average) effectively — fallacious. The $2520 1914
(1911) was a book value; the $39,000
(1923) was a market value. The book 18.5
22.1 Average — 3 years 13.5
value in 1911 of a company which had 16.3
been exceedingly prosperous for more Why become a monopolist, when it is than a score of years would probably more profitable to be an 'independent'? be much less than its market value.
In 1921 the Big Five endured a gen- The shares were not on the market in eral loss; Armour's deficit was re- 1911, being all owned by the holding ported at $31,000,000; Wilson's at company; but after the dissolution $8,462,000 — five or six times the total they were again sold independently profits of the Wilson Company for the and November 26, 1912, the 30 shares year 1920. The Wilson organization is into which each original share had now (August 1924) in the hands of been divided were valued in the New receivers, and a suit to have the com- York stock market at about $325, pany declared bankrupt has been making for the 30 shares $9750 inbrought by creditors who, departing stead of the Committee's $2520. The from the complaint of the Commission increase to $39,000 is not in the ratio that the company has the consumer's of 151 to 1, but a fourfold increase — purse at its mercy, allege that it can not a phenomenal growth if we renot extort enough of the consumer's member the possibilities of compound wealth to pay its debts.
interest, and realize also the excepAccording to the brief of the Gov- tional conditions attending the oil ernment in the suit to dissolve the business during that period, which Standard Oil Company, that organiza- made large profits comparatively easy tion in 1906 earned 24.6 per cent on without any sort of monopoly power.