156 report— 1877. 



In truth I know of no book on political economy, certainly in English, tho- 

 roughly to be relied on as a guide ; but, then, my power of reading has been for years 

 so impaired that I find myself more and more left behind in this and other subjects 

 which I used to study. I have always thought that the valuable works of the late 

 Mr. Mill owed more of their influence to his marvellous clearness of conception, and 

 still more of expression, to the delightful simplicity and unaffected grace as well as 

 lucidity of his style, than to the soundness of his views on several points of political 

 economy. I have already mentioned the increasing dissent from his views on the 

 question of over-population. His chapters on Value have been objected to by some 

 eminent economists, his opinions on freehold cottier farmers (among whom he 

 erroneously classes Norwegian peasants owning 30 acres of land and upwards, -with 

 eight or ten cows) are protested against by others, and his views about unearned 

 increments by still more. He touched very slightly on the important question to 

 which I, a little while ago, adverted in relation to means of transit — the question, I 

 mean, of what services or supplies are in their nature monopolies, and on what 

 principles ought such to be dealt with by the State. His early edition before 1844, 

 I remember, gave a decidedly defective answer to the first question ; and I have 

 not found, though that may be because it has escaped my observation, any more 

 satisfactory answer to it in the last edition I have seen, that of 1862. If I remember 

 rightly, he, in the early one, ascribed the character of a monopoly requiring State 

 interference to the extreme costliness of the fixed capital or plant required for pro- 

 viding that particular source of supply for the public ; but ignored the other more 

 essential element requisite to the character of a natural and practically inevitable 

 monopoly of that kind, namely, that of the local, as distinguished from the general, 

 value of the particular service or supply rendered. 



The largest copper- or iron-mine in the world, if it had a million of fixed capital 

 or plant invested in it, would not have, and ought not to be dealt with as having, a 

 monopoly, because the article supplied has a general value in the market of the 

 world. On the other hand, the gas- or waterworks of the smallest town or village, 

 with a plant of less than £'1000, would have, and ought to be treated as having, 

 a monopoly, because the whole value of the water and the greater part of that of 

 the gas supplied depends upon its position, and the greater part of the cost of sup- 

 plying either consists of the interest on the capital invested in the fixed and perma- 

 nent works. The water, which is to be had for nothing but the trouble of dipping 

 for it in the brook below, derives its whole value from the convenience of its position 

 in the waterpipe, which brings it into the house from the reservoir or forcing-pump. 

 The value of the service of a coach or omnibus depends equally on its localization ; 

 it, like a railway, takes people who want to go from some particular place to some 

 other. But then the cost of its service consists chiefly in circulating or easily 

 transferable capital in the shape of the vehicle, horses, and harness, equally available 

 at a slight expense to render similar service elsewhere ; whereas the materials of 

 the reservoirs and the pumping-engines and pipes in the case of waterworks — and, 

 may I not add, its local act, till lately one of the most costly items — would only, if 

 transferable elsewhere at all, be so at an expense very heavy in proportion to the 

 concern. 



About these local services and supplies, I know not how to put the argument 

 more tersely than I did in my address in this town in 1845 : — 



" In cases where, for the supply of a limited demand, the fixed capital invested 

 bears a very large proportion to what is called reproductive or circulating capital, 

 no effectual competition can take place. Unless the exorbitant charges provoke, or 

 the exorbitant profits tempt, some other party to contend with the original one for 

 the occupation of the whole or a part of a field not large enough for two, the 

 monopoly is complete, limited only by the willingness of the public to consume at 

 the rate charged, and by the dread of the establishment of a rival party. As the 

 probability of this latter occurrence varies, so will the prices ; they will fall when 

 the danger is imminent, and be slowly raised as it subsides. If another capital is 

 invested, for a time competition is sharp ; but before long the two parties find it 

 their interest to coalesce and to charge the public for a supply produced by the 

 application of two fixed capitals where one would have sufficed for the work, as 

 high a price, on the same principle and subject to the same limitations only, as those 

 hwich affected the returns upon the original capital." 



