as individuals, hold a majority of the stock in the old trust refineries, and of course control. The vigorous new partial competition is probably the real cause of the decline. So far as some of the other industries are concerned, however, the case is perfectly clear. There is no doubt whatever that the formation of the Sugar Trust in 1887 resulted at once. in a material increase in the price; that a partial breaking down of the monopoly, through adverse judicial decisions and the building of the Spreckels refineries in Philadelphia, resulted in the lowering of the price in 1890-91; while a later combination that has given the monopoly a control of some ninety per cent of the refining capacity of the country has resulted again in a serious loss to consumers through a decided raising of the price. Notice Diagram I. When one reads in the Sugar Trade Journal the statement that "for the eight years preceding the formation of the Sugar Trust the net cash difference between raws and refined averaged 1.066 c. per lb., while the six years of the Sugar Trust and its successors show an average difference of 1.043 c. per lb.," one is likely to get a misleading impression as to the effects of competition and monopoly. A detailed study of the diagram shows that for some years before the formation of the trust there had been a fairly regular decline in either cost of manufacture or profits or both. In all probability competition had become at times so fierce that profits were small. We know that under pressure of competition great establishments often run for a time at a loss. But the effect of the combination, as given above, cannot be doubted. The manufacturers reaped a rich harvest. In all probability the cost of manufacture, particularly through the special facilities for securing raw material and for distributing the product under the combination, has materially lessened; but of this the Trade Journal takes no account. The late statement by one of the leading men of the company that, if the tariff on refined sugar were removed, they would be obliged to close their refineries, has a humorous effect when one traces the course of prices on the diagram. The effect of the whiskey monopoly has been very marked, though this company has had a more checkered career than the other two mentioned; and to-day it seems struggling against difficulties, with the chances, however, in its favor. The table and the diagram below show that the raising and lowering of prices are matters determined at times almost by the caprice of the managers. The great increase at the beginning of 1893 was the reply to a proposition on the part of Congress to increase the tax. The last three years show enormous profits from the goods sold. It is true, however, that last year great quantities were stored, and sales were so low that large sums were borrowed to pay rebates. As the amount of the rebates given cannot be obtained from the company, the diagram does not accurately represent the profits, and accordingly the same reliance cannot be placed upon it for the last two years as for the earlier periods. TABLE II. — THE WHISKEY MONOPOLY. Market Prices at Peoria for Alcohol and Corn from 1889 to 1894.3 2 From each bushel of corn the average yield is about 4.6 gallons of alcohol. 3 For prices from 1881 to 1889, see POLITICAL SCIENCE QUARTERLY, IV, 311 (June, 1889). The study of the two diagrams, even with the allowances needed, shows that the monopolies concerned, in influencing prices, absorb far more than the waste from production under competition. To that waste they may be said to be entitled, economically speaking. They are not entitled, on economic or social grounds, to much more. Yet they are getting more. These companies, too, might steady the prices of their products if they wished, and thus benefit the business world. That they accomplish this end is one of the chief claims of their advocates in their behalf. But the diagrams give no evidence of any material influence in this direction. But, granting that the prices of necessities are somewhat higher than they would be under a system of free competition, what of that? Is it settled then, as is often assumed, that these monopolies ought to be suppressed, or that the community is any the worse off for their existence? It is clear that they really lessen the cost of production — that they generally use to good advantage, from the standpoint of production, the capital employed by them in production. Sometimes, perhaps, the certainty of a market begets carelessness in production; so far, however, this is not generally apparent, though con A = Average monthly price of corn per bushel at Peoria, Ill. B= Average monthly price of spirits derived from one bushel of corn (obtained by multiplying the value of one gallon of spirits, less the tax of $.90 per gallon, by the yield in gallons from one bushel of corn). The space between the lines represents the cost of production plus the profits. For much of the time before the formation of the trust, assessments for export expenses must be deducted from the profits. tinued success is likely to make it more so. Does not the community then gain, as a whole, even if prices are higher? There has been really, by virtue of monopoly, a greater increase in the wealth of the country, proportionally to the capital and labor expended, than there would have been under a system of free competition. That is a benefit. Has the worse distribution, if it is worse, been enough worse to offset the clear gain ? That is entirely a question of consumption. Nobody can answer it positively, because the problem is so complicated that its different factors cannot all be traced. But the line of argument on both sides may be indicated. So far as the monopolists of sugar and petroleum have squandered in useless luxury or in riotous living these extra gains of monopoly, society has lost as much wealth as it would have lost had the poor consumers of petroleum and sugar spent in the same way an equal amount saved from lower prices; but it has lost no more. It is doubtful whether the worse influence comes from wastefulness on the part of the rich or from wastefulness on the part of the poor. Within the last few years the gains in great part (I do not say a great part of the gains) of monopoly -the expression is not necessarily one of opprobrium - have founded two great universities for the free education of the people. Would the masses of consumers have made any better use of the money? Men whose gains have come in good part from natural or capitalistic monopolies are often at any rate no more to be blamed than those who under a competitive régime have built up a great business by skillful advertising. Men of both kinds have done great good, not merely by such gifts as have been mentioned, which are of course rare, but still oftener by investing their gains in other useful lines of business from which society has reaped yet other benefits from the productiveness of capital. But, on the other hand, the chief source of social progress is probably the improvement of the masses of the people. This improvement, too, is likely to come first through the improvement in their economic welfare, through the raising of their standard of life. I am not sure that more good will not come |