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discriminating true monopolies from mere pre-eminence in a particular business which would be less necessary in a country where monopolies were not so frequent a subject of discussion and where the term, in consequence, is not so often used in the same vague sense. After examining many definitions of the term given by economists, lawyers and lexicographers, he defines a monopoly as “that substantial unity of action on the part of one or more persons engaged in some kind of business which gives exclusive control, more particularly, although not solely, with respect to price.” The unity of control need not be absolute. If it be sufficient to affect price, there is to that extent a monopoly. Thus, if there be unity of control over eighty per cent. of the supply of a particular commodity, that may be enough to affect prices and increase profits. On the other hand, the mere limitation of supply without unity of control is not enough to give a monopoly. Thus Professor Ely objects to the term “land monopoly" so often used on both sides of the Atlantic, because in no country is there unity of control over the whole or the major part of the land, but, on the contrary, competition between landowners in selling and hiring their land. Neither is a great retail business a monopoly, even although it practically supplies the whole of one or of several articles required within a particular area. Such a business, however extensive, is always exposed to competition, and works under competitive conditions. But the mere fact that there are substitutes for a particular object of use is not incompatible with a true monopoly in that article. There may exist a real monopoly in tram cars, although you have the alternative of hiring a cab.

Professor Ely is equally elaborate in the classification of monopolies. But only one class of monopolies is really of the first importance or engages much of his attention. Artificial, or, as he calls them, social monopolies were once a favourite mark for the attack of reformers. But monopolies created by law nowadays are either restricted in duration, as patents or copyrights, or else kept in the hands of Government, so that they seem at least to serve the general good. Natural monopolies, on the contrary, have been favoured by the modern transformation of commerce and industry. They are made possible, according to Professor Ely, either by a limitation in the supply of raw material, by properties inherent in a particular business, or by the possession of trade secrets. The possessor of a natural monopoly may be able to create an artificial monopoly for himself or for somebody else in a business in which none of these conditions exist, but which can only be carried on by his assistance. Thus railways in the United States may give a monopoly to certain producers of a particular article. It is, then, natural monopolies and the artificial monopolies growing out of them which the philanthropist and legislator have to study at the present day.

The first question which we naturally ask with reference to the working of monopolies is how they affect the price of goods and services. Professor Ely shows very lucidly and in a popular way that the answer to this question is not so simple as the general public imagine. We may assume that the monopolist will be guided by the desire for wealth, and, in a purely theoretical discussion, we may assume that this desire will be intelligent. The price for his commodity which will give him the largest net profit will be a function of two variables, and may, under certain conditions, be lower than the price at which a dealer exposed to competition could afford to sell. In America this fact is sometimes alleged as a justification of monopolies, whilst by the socialist it is alleged as a reason for thinking that finally competition will disappear and every business become a monopoly. Professor Ely accepts neither of these conclusions. As to the effects of monopolies, he thinks that, whatever pure reason may suggest, a well-established monopolist does not in fact fix prices lower than, or as low as, they would be fixed by competition. The desire for immediate wealth cannot be held in check by long views of ultimate gain. Moreover, the monopolist, once secure, is apt to offer the public a bad article. “The spirit of monopoly,” it has been well said, “ is lazy and oppressive." Besides strictly economic reasons, there are political and moral reasons for disliking monopolies. Professor Ely, therefore, concludes that natural monopolies should not be left in private hands. They should be acquired by the state or the municipality. When this has been accomplished, the artificial monopolies which rest upon the natural ones will disappear of themselves. Subsidiary reforms, such as the mitigation of the tariff, a heavier taxation of large fortunes, a reform in patent laws and a more stringent supervision of joint stock companies, would remove the last traces of monopoly and secure free competition in all undertakings still left to the individual citizen.

But how if all forms of business are tending at the present day to become monopolies ? The reasons in favour of this familiar doctrine are re-stated with admirable clearness in a letter from a friend which Professor Ely has printed in this volume, but he is not convinced by them. Statistics, he maintains, whilst they show a tendency towards concentration of business in larger establishments than formerly, do not enable us to predict that this process will be continued to the point of monopoly. The greatest of industries, agriculture, shows, even in the United States, an opposite tendency. In manufactures it is doubtful whether the tastes of a public always growing richer and more fastidious will not ultimately make against concentration, e.g., in favouring hand-made goods against machine-made. New inventions for distributing motive power cheaply to many workshops are still more likely to have this effect. The fear of universal monopoly in the United States arises, according to Professor Ely, from the habit of giving that name to every “trust," although very few “ trusts” have succeeded in establishing real control over prices, and many “trusts” are little more than bubbles. Under these circumstances he holds it

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the better part not to risk vague predictions nor to recommend interference with any industry which is still genuinely competitive.

Although the present volume is intended to form part of a large work on the distribution of wealth, it is so far complete as to be perfectly intelligible by itself. The chapters upon the definition and classification of monopolies are evidently the result of long and careful meditation. Professor Ely always writes in a calm, judicial temper, but it was scarcely possible that within the limits imposed upon him he should solve every difficulty or anticipate every objection. Whether a particular kind of business constitutes a natural monopoly must usually be a question of degree. Whether it is more expedient that a natural monopoly should be owned by the State or by private corporations which the State controls must depend partly upon the character of the business and partly upon political conditions. In the most important case, that of railways, experts are still divided. Scandalous as has been the abuse of their power by many railway companies in the United States, a good citizen might tremble at the thought of subjecting the greatest railway system in the world to the discretion of party politicians. Professor Ely holds that as the functions of government are increased the character of those who govern is likely to rise. But history does not warrant our asserting such a sequence at all positively.

F. C. MONTAGUE

America's Economic Supremacy. By BROOKS ADAMS. (New

York: The Macmillan Company. 1900. 8vo, pp. viii, 222.)

This work is interesting in throwing light on an economic aspect of American imperialism. The author contends that England is decaying, “that disintegration is sweeping capital and industry in opposite directions from their former centres—to the east from Paris, and to the west from London" (2), and that the economic “focus" of the world is to be the United States. The “decay of England” is easily demonstrated, by her preference for Dickens to Sir Walter Scott (86 et seq.), by the battle of Colenso, as represented by the author (Essay V), by the realising of her foreign investments, the production of much of their own pig iron by other countries, and the complete disappearance of the supremacy of British textiles and steel (179). That Great Britain “is spending her capital ” (8) is proved by the excess of British imports over exports ; “ however large a revenue the British may have drawn from foreign investments when those investments were in their prime, no one supposed it to be £160,000,000" (7 and 8). We do not suppose for a moment that anybody with any claim to a knowledge of statistics ever did, for such a person would naturally remember shipping services, and other small matters, which Mr. Brooks Adams ignores in the first essay, though he just notices the former in a later argument (30). In view of Sir

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Robert Giffen's acknowledged supremacy as an authority on this question, one would think that it might have been worth while to refute him; and indeed the author does casually refer to the fact that Sir Robert Giffen is led to a judgment different from his, but he goes on to remark; “statistics. can be twisted to prove anything; the chief value of statistics lies in their aptitude to explain accepted facts" (150). It is fortunate for his argument that the author takes this view, since statistics would give no foundation for the belief in the collapse of British industries. To prove that London is losing its international clearing-house business we find the bare assertion

“the world has done its banking to the west and not to the east of the Atlantic" (194). Obviously the United States is to be “the focus” of industry and commerce, whatever that may mean. “ The centre of the economic system of civilisation is in motion . . . . all signs now point to the approaching supremacy of the United States” (192). But apparently the American protective system will be maintained. Nevertheless the United States “ must protect the outlets of her trade, or run the risk of suffocation” (19). "All the energetic races have been plunged into a contest for the possession of the only markets left open capable of absorbing surplus manufactures, since all are forced to encourage exports to maintain themselves ” (29). Herein, and in the fear of “a general glut” (42), are to be found some of the reasons advanced for a forward policy in the East. Comment would be superfluous. And yet this work is not without its instructive passages.

S. J. CHAPMAN

Economic Crises. By EDWARD D. JONES, Ph.D., Assistant

Professor of Economics and Commercial Geography,

University of Wisconsin. (Macmillan & Co. Pp. 251.)

The subject of Economic Crises is a very wide one, trenching upon many different departments of Political Economy. Since crises are, in the broadest sense, disturbances of economic equilibrium, an adequate discussion of them demands a consideration of all the forces operating either to maintain or to destroy that equilibrium. There is no systematic work upon the subject by an English economist, the standard books at present being those of Juglar and Wirth. Professor Jones, of Wisconsin University, has rendered excellent service to Economic Science in the work before us, in which he has dealt with the theory, as distinguished from the history, of Crises. The method he has adopted is not, indeed, altogether free from disadvantages, since he has attempted “at once a systematic discussion of crises and a presentation of the chief theories of crises.” These two aims are very difficult to carry out together, so that it is not surprising that the “systematic discussion ” has suffered somewhat for the sake of a clear statement of the different theories. The book would, in our judgment, be greatly improved by the addition of a final chapter, in which the elements of

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truth, which Professor Jones finds in these theories, could be brought together in connected form. But this suggestion must not be taken to imply any disparagement of a very admirable and painstaking work, which, as the numerous citations from German and other writers, and the exhaustive bibliography appended to it are sufficient to show, must have been the outcome of prolonged and careful study.

Before discussing the book as a whole, it is, however, necessary to refer to certain misleading passages, which ought not to be left standing in the second edition. On page 24 it is argued that agriculture is a more stable industry than manufactures because there are alternative uses for its products, but its extreme variability on the side of supply is altogether ignored. Statements on pages 106 and 118 suggest that all the notes of the Bank of England are issued upon gold. Indeed, the whole description of the procedure of the Bank is misleading; while Professor Jones, like so many other writers, ignores the fact that Peel always meant his Act to be suspended on occasions. On page 141 there is a careless -and indeed, as it stands, absurd-generalisation from a particular statement of Gregory King's about the price of wheat; for his tables are actually said to show “that to decrease the quantity of a commodity by fifty per cent. would increase its price by more than fifty per cent.” Finally, on page 174 the English Act against short sales of bank shares is ante-dated by thirty years, while dealings in “ futures are somewhat rashly condemned in an obiter dictum as of

no social service." On the other hand, the criticism of Jevons' sunspot theory is excellent. Turning from details to the general drift of the book, it seems best to try to give some idea of what Professor Jones appears to regard as the true solution of the problem of crises, rather than to summarise the different theories he expounds.

He describes the culminating period of a crisis as a “sudden application of a critical conservatism to business transactions, leading to such a demand for liquidation as to cause a wide-spead inability among business men to meet their obligations.” Some economists have maintained with Roscher, that this state of affairs is brought about by “unpredictable causes," which disturb a normally stable equilibrium, by bringing about a sudden change either in the demand for, or supply of, the products of some important industry. Temporary 'over-production” in one or more directions may result from new inventions, or an exaggerated estimate of the capacity of new markets, or delusive hopes of prosperity caused by a gradual expansion of the currency accompanied by rising prices; a temporary falling off in demand may be produced by changes of fashion or of tariff laws; while a general feeling of distrust, whether it result from threatened monetary legislation, or from a shock given to credit, will throw the whole mechanism of exchange out of gear. Such disturbances of equilibrium are rendered more frequent by the fact that under the modern organisation of industry exceptional skill at reading the signs of the markets is carefully guarded for private use, so that those who

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