dustry": to-day it is certainly America that occupies that position. The home market is far larger; it is constituted by a population living on the whole more comfortably, and able to furnish a stronger "effective" demand; both capital and labour are more mobile; and, finally but quite as important as any other consideration, the individualist spirit is more generally diffused and more deeply penetrating. No country ever before offered such opportunities for making a fortune to those who could manage to attract towards them the purchasing power of the public. Accordingly, all the phenomena resulting from competitive production on a large scale have been exhibited in America with an intensity and a reverberating publicity such as was never known before. And the "Trusts" are, in the main, simply an attempt to lessen and, if it may be, avert altogether the disastrous and harassing effects of cut-throat competition, after a completer experience of what that competition means than any country has ever been through before. Their formation has, in most instances, followed upon a period of over-production and consequent depression. For the nerves of the American business man have at last revolted and demanded some decently comfortable measure of stability. This, I am convinced, is the underlying cause of the movement towards combination, of which the "Trusts," as I have already remarked, are but the culminating examples.

A word or two as to the effects of the " Trusts." In the case most commonly cited, that of the Standard Oil organisation, its formation has been followed chronologically by a pretty continuous fall in prices. Owing to improved methods of refining and of transportation, the public has obtained a very good article at a low price, while the combination has reaped enormous profits. Whether without combination prices would have fallen as low or lower, is a question upon which much has been written, but which I see no way to solve. In some other cases combination has undoubtedly been succeeded by a rise in prices; but this is as compared with previous periods when, owing to glut or rivalry, prices had fallen very low; as compared, that is, with a state of things which could not be permanent, and which itself by reaction produced the combination. Of course the "Trusts" do not carry on business from philanthropic motives; but the public has a greatly exaggerated idea of their power to determine prices. Their object must be to secure the largest net returns, and they are shrewd enough to see that a large sale at a low price may pay them better than a small sale at a higher price.

So far as labour is concerned, the formation of a capitalistic

combination undoubtedly puts the employers in a position of advantage in the bargaining for wages; an advantage which can only be neutralised by the formation of a firm combination on the side of the employees. This is usually very difficult to bring about; and some of the industrial magnates, like Mr. Carnegie, have been very successful in freeing themselves from trade union pressure. On the other hand must be weighed the consideration that the combinations have increased the stability of industry : and, so far as the workmen's material condition is concerned, continuity of employment and steadiness in the rate of remuneration are really more important than temporary high wages. It may be added that, as a matter of fact, most of the greater combinations have had little trouble with their workmen.

Undoubtedly, however, the success of the combinations tends at present towards the creation of a régime of what the French call patronage. I know of no attempt in America to bring unions of workmen into the arrangement, giving them a voice in the fixing of prices and using them as additional weapons against manufacturers who break away from the ring. There is, so far, nothing like what has been effected in that most significant and hitherto successful organisation of the Bedstead Manufacturers of Birmingham, or like what was proposed in Sir George Elliot's magnificent scheme for an English Coal Trust. But the great captains of American industry are not all of them mere money grubbers. Many are in their way industrial statesmen; and although the business atmosphere of America is not, it must be confessed, at present very congenial to trade unionism, it is not unlikely that they will perceive by and by how greatly they might strengthen their position by taking their workmen into their counsels.

It might be rash to regard the present posture of affairs in America as justifying any large generalisation as to the ultimate issue of industrial development. It seems as if an effective combination were only possible between a comparatively small number of large businesses; that is, after considerable progress had already been made towards the elimination of the small producer under the operation of the ordinary forces of competition. And such combinations, as we have already seen, have sometimes been but stages towards a completer amalgamation or consolidation. Several may fairly be taken as illustrations of the teaching of Proudhon, that competition is bound to destroy competition. We might even add that, in the case of the Standard Oil monopoly, the development has already reached

a point at which, on the purely economic and administrative side, there could be little objection to the Government taking over the business-if only there were a Government politically capable of the task. But on the other hand we may observe that many of the combinations, especially the looser confederacies known as "pools" or "understandings," are clearly in the interest of the middle-sized undertakings, and restrain or hamper the larger ones in their efforts to win trade from their competitors. They indicate, as has been well said, the existence for the time of a certain equilibrium among the contracting parties, none of which feels itself strong enough to conquer the whole field.

We may not see our way to prophecy; but yet we are bound to recognise that these combinations are "with us" in America, and that in all probability they will continue for an indefinite period to increase in number and extent. So far as they succeed, they remove the determination of prices out of the range of competition; and the self interest of the monopolists, though it is some protection, is yet an inadequate protection of the interests of the consumer. For the greatest net returns may be secured by fixing prices at a point considerably above what would return an adequate profit. Thus the recent legislative proposals of the Austrian Government are dictated by a belief that certain monopolies, affecting articles of large general consumption, have already lessened the taxability of the population. For a large part of the Austrian revenue is derived from indirect taxes, and the Kartelle by increasing prices have diminished the consumption of the taxed articles.

The removal of protection from a monopolised commodity has already been adopted as a policy by the Dominion of Canada, and it has been proposed in the United States and elsewhere. It may furnish a temporary and even necessary relief; but it will not apply to commodities not exposed to foreign competition; and it will not prevent such international combinations as that which has been negotiated, if not yet effected, between the Standard Oil "Trust" and the interests which control the oil fields of the Caucasus and Galicia, or that, to take another example, which seems to have been actually brought about between the English Sewing Cotton Company and the American Thread Company.

I see nothing for it but that, in countries where the monopolising movement is well under way, the Governments should assume the duty of in some way controlling prices. The principle of public determination of maximum rates and

maximum dividends has already been recognised in various countries in various directions; and it will doubtless have to be carried a good deal further. But before this can be done with any chance of tolerable success, any country which thinks of attempting it must provide itself with a fairly efficient administrative service.

Meantime, in view of contemporary conditions, I venture to think there are two duties incumbent upon the economist. One is to give more thought to the theory of monopoly, and by this I mean more than the study of monopoly as it manifests itself in the midst of a society still mainly competitive. I mean rather the anticipation and formulation, by an effort of the economic imagination, of the sort of problems which are likely to arise in a society where prices generally are no longer determined by competition. It may be a result of my own penchant for things mediæval; but I cannot help thinking that the economist may soon find himself confronted in modern life with some of the ideas underlying the old demand for "just prices" and "reasonable wages" which he has been accustomed to regard as quite out of place in political economy. When in the great coal strike of a few years ago the men demanded that "a living wage" should be treated as a first charge, and that wages should determine prices rather than prices wages, the demand was commonly regarded as obviously foolish. But you may have noticed that the fundamental idea of the successful Birmingham combination, already referred to, is precisely "the taking out of costs"; the idea that prices should never be set lower than the ordinary cost of production, including a fair profit for the entrepreneur and a fair wage for the employé. The subject, I know, is full of enormous difficulties, which every tyro in economics can set forth at a moment's notice. But I do not see how it will be possible, in future attempts on the part of the State to assign maximum prices, to avoid dealing very seriously with ideas of this kind. It will not escape the task even if it does nothing but tax the monopolies; for to know how heavy a tax can be properly imposed, it must have some notion how much profit the monopolists should be allowed to earn. Long before we reach the socialist state-if indeed we ever reach it-the fundamental difficulty of socialism, the distribution of the social product without the aid of competition, will have, in some form or other, to be dealt with even by "the practical politician."

And, in the second place, it does seem to me the duty of the economist to ascertain, for the guidance of the public, what the

actual conditions are in his own country in the matter of industrial organisation. A promising beginning has been made in this direction in the United States, partly owing to the immediate and burning interest of the subject, partly owing to the abundant, if somewhat uncritical, material presented by the United States' Censuses. There is some useful literature to be found in Germany on Kartelle and Unternehmerverbände, and the movement has its own journal in the Berlin Industriezeitung. Perhaps it is my ignorance of recent economic work in England ; but I confess I should not know where to look for a systematic account of the structure of any of the great English industries of to-day. Formal combinations are probably rare; and the illsuccess of the Salt Union is the standing consolation of those who believe they cannot take root in England. But informal agreements and undertakings are, I should imagine, by no means unknown;1 and of course the attention of the inquirer, on the look out for the weakening or elimination of competition, would not be limited to combinations. An amalgamation, like that of the Coats Company in the thread manufacture, or of the Armstrong and Whitworth engineering businesses,2 might, under propitious circumstances, have much the same consequences. When we know a good deal more than we do at present about the actual facts, then we may be able to judge in some measure how rapidly the elimination of competition is progressing; what are the industrial conditions which retard or favour it; and, in short, how large is the problem we have on our hands.

And when he can answer

that question, the advice of the economist may perhaps be of some use to the statesman. W. J. ASHLEY

1 Since writing the above I have noticed the article by Mr. H. W. Macrosty on "The Growth of Monopoly in British Industry," in the Contemporary Review for March, 1899, which might serve as a point of departure for further investigation.

2 Or the amalgamation now (May 3) reported between Rickett, Smith and Co. and Cory and Son, in the coal trade.