THE GOOD AND THE BAD OF TRUSTS 139 



Monopoly is not a pleasant word, and believers in the 

 wasteful and destructive character of competition prefer 

 to speak of trusts as combinations; or, when they use the 

 term monopoly, hasten to explain that this does not imply 

 the absence of all competition. Thus it is said that either 

 actual or potential competition will oblige the trusts to share 

 with the public the savings arising from consolidation, and 

 will protect the consumer from serious injury. Since this 

 argument has been allowed hitherto to pass without serious 

 criticism, the reader is asked to give it a moment's considera- 

 tion. 



When Professor Clark says that the actual investment 

 of new capital is not always necessary in order to restrain 

 the power of a combination to raise prices, because the mere 

 possibility of rivals entering the field may suffice, his argu- 

 ment is not inconsistent or absurd, because he does not be- 

 lieve that a monopoly is a more efficient agent of production 

 than a large independent concern, or that the competitive 

 regime is necessarily destructive and suicidal. And, when 

 he shows that this " potential" competition of new capital 

 can be made more effective by abolishing railroad discrimi- 

 nations and discriminating prices, he makes a distinct contri- 

 bution to the discussion of the trust problem. But no such 

 argument can come, without manifest inconsistency, from 

 economists who believe that a trust is superior to independent 

 companies. The gulf between permanent monopoly and com- 

 petition cannot be bridged, even by appealing to such a sub- 

 tle agency as potential competition. 



In the first place, competition, actual or potential, could 

 not distribute among consumers more than the most infin- 

 itesimal share of the alleged economies of monopoly. The 

 reader will remember that the advocates of combination 

 consider that it is proved that a single company can pro- 

 duce and market commodities at a much lower cost than 

 independent concerns. If this be true, we may assume 

 that, if the lowest price at which an independent company 

 can afford to sell a commodity be one dollar, a combina- 

 tion can afford to sell for still less, say eighty cents, and 

 that the difference of twenty cents represents the savings 



