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tion of their causes. Comparatively little can be said about monopolies that is applicable to all monopolistic businesses. Here, as everywhere else in economics, we need analysis.

Many classifications of monopolies have been given, but we must here confine ourselves to the three which seem of the greatest importance to the general student.

First Classification

A. Public Monopolies.

B. Private Monopolies.1

C. Quasi-public Monopolies.

Public Monopolies are those businesses which are owned and operated by some political unit, and this political unit is the direct and immediate beneficiary; in other words, to this political unit in the first place flow all the benefits of monopoly. A Private Monopoly, on the other hand, is a monopoly owned and operated by a private person; it may be a natural person, that is, a human being, - -or some association of natural persons, as a partnership, or it may be a private corporation. In this case the first and immediate beneficiary of the benefits of the property and business is the private person, although large benefits may flow to the general public.

It is believed that this great fundamental distinction between public and private monopolies is essential both to clear thinking and to sound public policy. Whoever undertakes to tell us what is true about monopolies, and what is wise for society to do with respect to monopolies, must make it plain whether he is talking about public monopolies or whether he is discussing private monopolies. We may also have an intermediate class designated as Quasi-public Monopolies. An illustration is afforded by stateowned railways operated by private corporations; although practically, in the United States, these differ in their management little from the privately owned railways.

'In our classifications the coördinate classes will be indicated by the same letters or marks. The capital letters will indicate the chief classes; the Roman numerals, classes subordinate to them; and the Arabic, classes subordinate to those indicated by Roman numerals, and so on.

Second Classification. — The second classification of monopolies is made with reference to the source of monopoly power, and is based upon a different principle of classification, so that this second classification will cut across the first. We have again two main classes, and these are: A. Social Monopolies; B. Natural Monopolies. These are further classified as follows:

A. Social Monopolies.

I. General welfare monopolies.

1. Patents.

2. Copyrights.

3. Trade-marks.

4. Public consumption monopolies.
5. Fiscal monopolies.

II. Special privilege monopolies.

1. Those based on public favoritism.

2. Those based on private favoritism.

B. Natural Monopolies.

I. Those arising from limitation of supply of raw ma

terial.

II. Those arising from peculiar properties inherent in the business.

III. Those arising from secrecy.

Social Monopolies. - Businesses are social monopolies when they are made monopolies not by their own inherent properties, but either by legislative enactment or by forming so close a connection with great natural monopolies that they partake of the nature of the latter.

As already stated, in old times kings and queens frequently granted exclusive business privileges to favored persons, and permitted no one except those named to engage in such undertakings. Such monopolies, however, became so odious that sovereigns were compelled to cease granting them. Governments still create exclusive privileges by patent and copyright laws, but they do so in behalf of the general public. Authors and inventors are given exclusive rights over their productions for a limited period. These monopolies have justified themselves through the stimulus which they have given to invention and authorship.

The trade-mark is a legal monopoly similar to the patent and the copyright. In connection with lavish advertising, trade-marks in recent days have been made the basis of enormous profits.1

Public consumption monopolies and fiscal monopolies call for a word of special comment. They are to be distinguished the one from the other only by the object which the government has in view in establishing them. If the government manages for itself or grants to another a monopoly of the liquor traffic with the object of regulating the consumption, the monopoly is a public consumption monopoly. If, on the other hand, the chief object is not regulation, but income, the monopoly is a fiscal one. Often the two objects are so blended that it is difficult or impossible to say to which class the resulting monopoly belongs.

Our classification names two kinds of special privilege monopolies. Those monopolies which are due to special tariff advantages or to other legislation are rightly said to be based on public favoritism. The other class of special privilege monopolies consists of those which grow up through special favors granted by other monopolies, especially natural monopolies, such as railways.

Natural Monopolies. - Natural monopolies are those which depend for their existence on natural forces as distinguished from social arrangements. They grow up independently of man's will and desire, and sometimes even in direct opposition to it. The words which we have used in our classification will sufficiently explain the different sources from which they arise. By far the most important of all monopolies are natural monopolies of the second class, chief among which are the following: wagon roads

The full treatment of trade-marks involves theoretical points which would necessitate a discussion too lengthy for the present treatise. They are used largely in competitive businesses, and help to establish what is termed good-will. They are an aid to the shrewd and capable in the general effort to escape what may be designated as the "dead level" of competition. They are a monopoly not in the sense of giving exclusive control of one sort of business, but in the strictly legal sense that no one else may use them. A clever device, coupled with excellence and advertising, may have very high value. The purchaser of oysters, for example, may feel that when he buys oysters of a particular "brand" (trade-mark), he is getting oysters, plus something else; or, in other words, not merely oysters such as others sell, but a peculiar excellence which can nowhere else surely be had. It is merely this "plus something else" that is a monopoly. Great importance is attached thus to "establishing a brand."

and streets, canals, docks, bridges and ferries, waterways, harbors, lighthouses, railways, telegraphs, telephones, the post office, electric lighting, waterworks, gas works, street railways of all kinds. Whenever there is a decided increment in gain resulting from combination, we have a tendency to monopoly which will overcome all obstacles. This increment of gain, which is the cause of monopoly, is always present in businesses that occupy peculiarly favorable spots or lines of land, and that furnish services or commodities which must be used in connection with the plant. This may be said to be the law of natural monopolies.

Many economists believe that combination and production on the largest possible scale give a decided increment in gain, and thus produce monopolies to be designated as “capitalistic monopolies." The question really turns upon the degree of growth of a business unit which adds to the rate of gain; and the position is taken in this book that in most kinds of business the point of maximum efficiency is reached long before the point of monopoly is reached.

One or two very cogent reasons may, however, be stated. An exhaustive study of the cases cited in support of the alleged tendency to monopoly inherent in large capital has failed to reveal a single one in which the monopoly did not enjoy one or many of those monopoly advantages which we have already mentioned and explained. Moreover, many cases in which the possession of large capital seemed on the surface to be a dominating influence, have been cases in which the monopoly was so short-lived as to furnish little support to the argument of those who cited them. After all, whatever may be the advantage conferred by large capital, we must remember that capital is so plentiful that one gigantic plant can always find a rival whenever a slight margin of profit invites its establishment.

Our conclusion, then, may be stated as follows: There is a great and growing field of industry in which competition is not natural or permanently possible, for reasons explained in the text; there is another field within which monopoly does not and cannot exist, and within which social monopoly is unlikely to arise.

Third Classification

A. Local Monopolies

These are monopolies extending over a relatively small area. The gas supply of any city is an illustration. There are various monopolies which are confined to a single locality. Then there

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are temporary local monopolies which, under peculiar exigencies, may arise. Two young men in Chicago a few winters ago cornered the market on eggs, and made fifteen thousand dollars out of the operation. The weather was so cold that eggs could not be shipped to the city, and for a few days these speculators had a monopoly.

B. National Monopolies

C. International or Universal Monopolies

There have been various attempts to secure universal monopoly, of which the copper monopoly of 1889 affords an illustration. These are more or less arbitrary divisions, because a protective tariff may enable a monopoly to exist in one country when the same article or service is not monopolized in another country. There are attempts to establish monopolies beyond the nation, but how large will be the number of cases in which success will be achieved, remains to be seen. There is no doubt that the oil companies of the United States and Russia are endeavoring to establish an international and even a world monopoly.

The area of monopoly is a topic that in an extended treatise would require an elaborate treatment, for it has a significance which has as yet not been anywhere adequately presented. We can narrow down the area of monopoly until nearly every producer of goods or seller of services has a monopóly. A may be the only seller of shoes on a particular street of his city or in a particular block or building on his street. No one is especially disturbed or inconvenienced by a monopoly of so limited an area. In general, it may be said that,

The larger the area, other things being equal, the more significant is the monopoly.

Monopoly Price. Price in general depends upon marginal utility, and that depends upon the intensity of desire and upon the difficulty or ease of obtaining goods or services for the satisfaction of desire. If payment is made in money or in money instruments, price depends on the relative abundance of the supply

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