are the same, but it means this: where we have sharp competition, the gains are in proportion to expenditure of economic energy, using that term "economic energy" as a composite term implying a certain output of economic force, whether this takes the form of labor or capital or business management.

Each one of the business units will make a specialty of some one line of commodities upon certain days. Special prices will be offered; but that means something very different from the class price which we have considered in our discussion of monopoly. Every one will agree that that is the case. The consumer considers very generally the prices charged as a whole. He knows very well when he goes to one retail establishment that for a certain particular article he may be paying a little bit more than he would pay in some other store; but the retail purchaser as a general rule does not consider each individual price, but he considers all the prices that he pays. It is intolerable for the consumer to go about a town searching for the lowest price of every little commodity, to buy a paper of pins at one place because it is a little cheaper than at any other place, to buy a pound of butter at one place, a pound of sugar at another. People do not ordinarily do that.

Now each retailer looks upon his business as a unit. He tries to derive from the business as a whole the greatest profit. Each one is putting his capacity into the business. One says, "I can do better if I sell this article at cost, or if I sell that article somewhat below cost." It was not very long ago that a large department store in New York City sold the popular magazines at less than was paid for them. That was not a class price in any sense of the term. That was a certain expenditure for advertising

purposes.

To some extent people do go about and try to get all the special prices in each particular establishment, but that is not done usually, so far as purchases as a whole are concerned. On the other hand, there is a limitation very often in the arrangement that a store will sell only so much one pair of gloves or so many yards of silk at a special price to one customer. But we are dealing

here with a different sort of phenomenon from class price.

In wholesale business there is an attempt to unite the business unit competition and the commodity competition. Here the purchases are very much larger, and a person does not hesitate, to a certain extent, to go from one wholesaler to another wholesaler to make a particular purchase of some articles. Many persons would be a little bit ashamed to divide their groceries among a half-dozen grocers so as to get at each place the articles selling at a special price. When we have a unity of these two sorts of competition, then we have what we may call perfect competition,where we have a competition between the business units which includes a commodity competition, so that all articles are selling at the same price and each dealer has net returns in proportion to what he puts in of economic energy.

It is in the nature of competition to cater to various economic classes in the community, and this is an entirely different phenomenon from that in the case of the gas company charging two different prices for an article according to the use to which it is put. Every retailer considers the class to which he will cater. Retailers tell us that such is the case. One will say, "We try to cater to the fashionable, wealthy people, the high-toned people." Another will say: "I do not try to reach the so-called 'best people '; I try to cater to the middle class. My training fits me better to cater to this middle class than to cater to the fashionable people. If I find that I can do this too, very well; but I especially cater to the middle class." We find that at stores like Marshall Field's they recognize the various classes of the community and try to reach the various classes of the community by their basement department, and by their first floor, and the upper floors. But that does not mean the absence of competition in the business as a whole; but, taking the business as a whole, it competes with other retail establishments in Chicago. Here we have a different class

1 It must not be overlooked that there is a variation in cost of doing a retail bustness dependent upon the class of people to which a particular retailer caters. Over against the higher prices charged, let us say by a fashionable grocer, we have to put the higher quality of service. People of wealth and fashion require prompt service, involving expense. Also, frequently the shops that cater to fashionable people give very long credit and lose heavily in many cases. These are considerations of a different kind from those mentioned in the text.

price from that we have considered. We have a competitive class price which, if the competition is perfect, yields no surplus. This does not mean that some will not gain more than others in competitive business. The gain is in proportion to the output of energy.

Monopoly Price High Price. It is often said, and frequently even in judicial decisions, that the monopolist can charge any price that he pleases. We have already seen that this is not the case. The law of monopoly price shows that the price, even in the case of monopoly, is determined by economic forces. It is conceivable that there may be cases in which monopoly price will exactly coincide with competitive price, although the probabilities would be against a frequent coincidence of this kind. There are also cases where monopoly price may be even lower than competitive price. If a monopolist should be able to effect great savings as compared with the expense of doing business under competition, it could theoretically happen that the price which would yield the largest net returns would be a lower price than would be possible under competition. Probably, and in fact almost certainly, under a condition of competition, letters could not be carried as cheaply as they are.

Generally there are strong reasons for the position that monopoly price is high price. Monopoly is formed for the sake of gain. Gain may be secured in two ways by monopoly: first, through economies of production; and it is alleged by trust promoters that these economies are a chief motive in their activity. There are some gains of this kind, but it is too early to say precisely what they are. When we compare a monopolistic business with a competitive business organized on such a scale as to secure the maximum of efficiency, the gains of competition in alertness and inventiveness, stimulated by rivalry, have recently been too little considered.

The second source of gain in monopoly is found in the ability to charge high price. In confirmation of the position that monopoly price is high price, we may refer to history, the utterances of which seem to be clear and distinct. At any rate, there can be no doubt that, in the opinion of historians who have treated the subject,

monopoly means high price. Hume, in his treatment of monopoly in his History of England, speaks of the price of monopolized articles as exorbitant, and cites the price of salt, the price of which had been raised by monopoly tenfold and even more. The production or sale of salt, or both, is frequently a government monopoly, and it is generally conceded that in all cases of monopoly the price has been so extremely high as to be a real popular grievance; and it is generally necessary to inflict severe penalties to prevent the people from securing the salt at a lower price from non-authorized sources. But of still greater significance are the results of the investigations of the Industrial Commission of the United States, as seen in the Preliminary Report of 1900 (Vol. I of the complete report). It is there made evident that when monopoly appears in a form at all clear and well-defined, the tendency is plain to increase the margin between the prices of finished products and raw materials.1

The courts of the world have made it clear in their judicial utterances that they regard monopoly price as high price; and, as their opinions are based upon cases actually brought before them, we cannot do otherwise than attach great importance to their view.

Wherever commissions have been formed with power to regulate monopoly price, and these commissions have been comprised of independent and strong men, there has been a marked tendency to reduce monopoly price; because unregulated monopoly price has been found to be excessive and unjust. The judicially minded Railroad Rate Commission of Wisconsin affords an illustration. This Commission has authorized a higher price in a few cases, but generally has been forced to lower prices, although in the notable case of passenger rates it did not go so far as the legislature. The investigations of the Railroad Rate Commission led the members to believe that a reduction from three cents to two and one half cents per mile for all the leading railways in Wisconsin was just; whereas, subsequently, the legislature lowered the rate to two cents

1 See Report in Vol. I (Industrial Commission), by Professor J. W. Jenks, on "Industrial Combinations and Prices," pp. 39-57; and also Chap. VIII, "Prices," in the same author's work, The Trust Problem.

per mile. But even the decision of the Commission (which was accepted by the railways) was a reduction of over 16 per cent. Investigations held have resulted very generally in a lower price for gas. All important investigations of street-car service in the great cities of the United States have terminated in the conclusion that the monopoly price of five cents per passenger is a high price. The recent settlements with the street-car companies of Chicago have been based upon an agreement to maintain a five-cent fare and to give to the city of Chicago 55 per cent of the net gains. According to the statements of the interested parties, even this will leave a very handsome return for the owners of the street-car properties.

In the next place, we refer to the experience and observation of men when they have had dealings with well-defined monopolies. The express companies and the oil business afford illustrations falling within the experience and observation of nearly all readers and students of this work.

Monopolies and the Distribution of Wealth. - We have not the precise statistical data which will enable us to state the exact influence of monopoly upon the distribution of wealth. We have, however, sufficient data to warrant the opinion that the high price of monopoly and the gains resulting from the exclusive position of the monopolist give us a large privileged class in countries of modern civilization, but especially in the United States. An advantage of the monopolist in the United States is found in the law of monopoly price, coupled with the failure to regulate monopoly as carefully in our country as it has been regulated in Europe, generally speaking. Ours is a country in which there is large wealth, in which wealth is easily acquired, and in which consequently people spend freely. Monopoly price must, then, be exceptionally high price and yield exceptional gains. Even when the increment of price is comparatively small, it has large significance in the case of the sale of a vast number of units of services or commodities. The difference between a four-cent street-car fare and a five-cent street-car fare may not appear to be great, but it is a difference of 25 per cent and is enormous.

All the many investigations that have been held recently in