92 TRANSPORTATION 



concerns. There, for the first time, one has studied a great financial 

 success reached by well-organized cooperation of employees in whom 

 the interest of the owner which shows itself so distinctly in little 

 enterprises, does not appear individually. 



But the means of transportation of the present have not only 

 created great organizations; they have also become instrumental 

 to the organization of production in gross. Thus industrial and 

 commercial monopolies were created, and the first example of or- 

 ganized cooperation of independent enterprises without competition 

 was given. 



I need only, in first regard, to point to the history of the Standard 

 Oil Trust, which originated by the discrimination granted to Rocke- 

 feller by railways; in the latter regard I mention the fusions and 

 combinations of English railways, formed in the forties for the 

 purpose of removing competition, and the great development of 

 the pool system in the United States. The institutions of trans- 

 portation, which had always a tendency to uniformity, have become 

 the strongest force for centralization of economics, for preponder- 

 ance of the great industries over the smaller, of the large centers 

 of economic, intellectual, political life over the local districts with 

 individual characteristics of the large cities over the district. The 

 whole modern political economy and the discussion of the socialists 

 about the growing tendency of concentration of capitalistic eco- 

 nomics is connected with the institutions of transportation 1 and 

 their effects. 



Also the doctrine of free competition has been strongly influenced 

 by the modern formation of transportation, and especially by the 

 railways, not only because the railroads proved by themselves 

 that free competition can lead to monopoly, but especially by the 

 fact that, through their influence, the competition of single private 

 enterprises lost its regulating power. The attraction of low freight 

 rates proves to be stronger than the industry and ability of local 

 producers. Who has the enterprises of transportation on his side 

 needs no longer to be anxious about his victory in competition. But 

 where the influence of such factors which are not within the reach 

 of every single man have turned out to be so determinative, the law 

 of free competition is no longer valid, and science has no longer to 

 examine only the effect of free competition, but, above all, to inves- 

 tigate how the conditions for the competitor can again be equalized. 

 These facts have, in the highest measure, contributed to the fact 

 that the doctrine of free competition is much more complicated 

 nowadays, and that we cling less to the simple formulae of the past. 

 But from its effects the principle of state intervention has developed. 



1 Knies, Die Eisenbahnen und Hire Wirkunr/en, S. 123. Cohn, Nationalokonomie 

 des Handcls-und Verkehrswesens, 1898, S. 785 ff. 



