I stumbled across the following excellent bibliographic essay in preparing the previous posting for Dewing and Opie’s 1929 Harvard course, “Economics of Corporations”. The essay provides coverage of the American literature, as well as that of the English, German and French, on the subjects of trusts and cartels, the economic theory of monopoly and regulation and it appears reasonably complete for its time.
I have not found all too much information about the author:
Myron Webster Watkins was born April 2, 1893 in Milford, Michigan and died in Stamford Connecticut December 4, 1979.
A.B. from the University of Michigan, 1914; Ph.D. from Cornell 1917. Faculty member at the University of Missouri (19??-1926), then professor of economics at New York University (1927-1946).
Some information found in Watkins’ New York Times obituary, December 6, 1979. See also: University of Michigan, Catalogue of Graduates, Non-Graduates, Officers, and Members of the Faculties 1837-1921. Ann Arbor: 1923. Page 210.
The leading economist in the deregulation of the airline industry under President Jimmy Carter, Alfred Kahn, was an assistant to the antitrust experts George W. Stocking and Myron W. Watkins during World War II. [Burton Ira Kaufman, The Carter Years, New York: Facts on File, 2006, p. 244].
________________________
Myron Webster Watkins. Industrial Combinations and Public Policy: A Study of Combination, Competition and the Common Welfare. Boston: Houghton Mifflin Company, 1927.
APPENDIX I
A GUIDE TO FURTHER STUDY
[pp. 297-314]
The literature upon the broad problem of the organization of industry is too extensive to be brought under survey within the limits of this bibliographical note. But, attending simply to the material relating to the trust problem, so-called, the whole field may be conveniently divided into three sections. First, there is a mass of documentary and descriptive material reporting and analyzing actual experience with industrial concentration in different forms and in different spheres. In the second place, there is a considerable body of commentaries upon and criticisms of public policy toward the unified control of industry, including legal treatises and court decisions. Finally, there is the literature which deals with the theory of monopoly. These three divisions might be called the historical, the legal, and the economic literature relating to the trust problem. They do not, however, precisely correspond with the contributions of historians, lawyers, and economists, respectively. The major part of the more useful published material has been provided by economists — evidence that they are no longer a sect of theorists, cultivating in secluded cloisters a “dark and dismal science,” but have become a body of investigators of the practical administration of the business mechanism.
These three subdivisions of the field correspond, in the order given, to the aspects of the problem of industrial combination which appeal to students of different degrees of advancement. At once the most interesting and the most appropriate introduction to this branch of study is through the literature which sets forth, classifies, and interprets the actual phenomena which give rise both to political controversy and to economic speculation. Official publications of original source material, general in scope, are not numerous. Most comprehensive and exhaustive at the time of its first appearance, and still an illuminating collection of data of a type rarely made public authentically, is the Report of the United States Industrial Commission (Washington, in 18 volumes, 1900-01). The Commission, in investigating the general causes of social and industrial unrest, had occasion to call upon business leaders from every important branch of industry which had been affected by the consolidation movement to testify regarding the causes, specific circumstances, and effects of the formation of trusts. Most of this material appears in Volumes I, II, XIII and XVIII of the final report submitted to Congress. Comparable collections of source material are those describing the formation of cartels in Germany, and, more recently, the official survey of the industrial situation in Great Britain. In the report of an Imperial Commission of Inquiry appointed in 1902 (Kontradiktorische Verhandlungen über Deutsche Kartelle, 1903-06) and a survey subsequently made under the direction of the Secretary of the Interior (Denkschrift der Reichsregierung über das Kartellwesen, 1906-09) a number of copies of cartel agreements covering various branches of German industry are reproduced, together with the results of an investigation of their operation. The Report of the Committee on Trusts, of the Reconstruction Ministry, in England (Cd. 9236) London, 1919, evinces a complacent attitude toward the problem of industrial monopoly; but an intensive investigation of post-war trade conditions has subsequently been carried through under the direction of the Standing Committee on Prices and Trusts, a special subdivision of the Board of Trade. Sub-committees appointed for a great number of separate industries and groups of industries have, in their reports, brought to light a mass of information respecting the organization of British industry. No such comprehensive and official inquiry into the extent and character of industrial combination has been made in France.
Reports of more limited scope, setting forth the extent and character of market domination within specific industries, are more numerous. After the establishment of the Bureau of Corporations in 1903, a series of studies was published from time to time each of which treated of separate industries in which consolidations had been formed or control of the market attempted. The reports completed prior to the assumption by the Federal Trade Commission in 1915 of the functions of the Bureau include: the Report on the Beef Industry (1905); the Report on the Petroleum Industry, in three parts (1906,1907,1909); the Report on the Tobacco Industry, in three parts (1909, 1911, 1915); the Report on the Steel Industry, in three parts (1911, 1912, 1913); the Report on the International Harvester Company (1913); and the Report on the Lumber Industry, in four parts (1913,1914). This group of reports, while not entirely free from bias or even innuendo, represents the most exhaustive analysis of the causes and effects of industrial combination in specific spheres anywhere available. The method of procedure was both historical and statistical, and the data upon costs, prices, profits, and capital investment supply a wealth of material for analytical study which the Bureau itself only partially and, it must be added, imperfectly developed.
When the Federal Trade Commission succeeded the Bureau of Corporations as an investigating agency, it was also endowed with certain regulatory functions which seem to have impaired somewhat the performance of its research work. The reports of investigations conducted by the Commission during the first decade of its existence have, with minor exceptions, been fragmentary and of little more than ephemeral interest. There are, for example, a number of reports on costs of production in different industries made during the war or during the post-war boom to facilitate government price fixation or to frustrate “profiteering.” Among these may be mentioned the Report on the Book-Paper Industry (1917); the Report on the Baking Business (1917); the Report on Flour Milling and Jobbing (1918); revised (1920); the Report on Canned Foods (1918); the Report on the Leather and Shoe Industry, 1914-18 (1919); the Report on Copper (1919); the Report on Sugar Supply and Prices (1920); and the series of Coal Cost Reports (1920) dealing with conditions in different production districts. More pretentious investigations reported by the Commission are: the Report on the Meat Packing Industry, in five parts (1918); the Report on the Grain Trade, in five volumes (1920); and the Report on Household Furnishings Industries, in three volumes (1923, 1924). If the industries subject to these investigations were made the object of periodic inquiry the shortcomings of the method of “sampling” the current situation might be largely eliminated. It is possible that this course may eventually be consciously adopted, but at present the only illustrations of it appear to have come about casually, to wit, the Report on Pipe Line Transportation of Petroleum (1916); the Report on the Price of Gasoline in 1915 (1917); the Report on the Pacific Coast Petroleum Industry (1921); and the Report on the Petroleum Industry in Wyoming (1921); the Report on the Fertilizer Industry (1916), ibid. (1923); and the Report on the Tobacco Industry (1921), followed by the Report on the Prices of Tobacco Products (1922). There are obvious positive advantages to commend the policy of recurrent inquiries into industrial and market conditions in the more prominent branches of trade.
Two recent reports by special government commissions may be noted as supplementary to this list of Federal Trade Commission Reports. The Report of the United States Coal Commission and the Hearings before the Joint Commission of Agricultural Inquiry, 67th Congress, 1st Session (volumes I, II, and III) (Washington, 1924), the latter assembling a mass of information on costs of different systems of market distribution, are similar in comprehensiveness to the investigations made by the Bureau of Corporations.
In the numerous unofficial studies of the growth of combinations in various industries the beginner will find some of the most absorbing chapters which the literature upon the trust movement affords. Collections of material covering several industries have been made by Ripley, W. Z., Trusts, Pools and Corporations (Boston, 1916); Dewing, A. S., Corporate Promotions and Reorganizations (Cambridge, 1914); and Stevens, W. H. S., Industrial Combinations and Trusts (New York, 1913). The latter is a compendium of original documents and other source material drawn mostly from court records. Less reliable, but utilizing a mass of information drawn from journalistic sources, is The Truth About the Trusts, by John Moody (New York, 1904). It is, of course, confined primarily to the circumstances surrounding the formation of the early combines, including the financial features of their promotion. Laying emphasis on deeper forces, but proceeding nevertheless on a faulty hypothesis, the late President C. R. Van Hise in Concentration and Control (New York, 1912), brought together a great body of data on the growth of large-scale operations in various industries, and endeavored to connect this tendency directly with the consolidation movement as exhibited in a number of branches of industry.
Similar descriptions of monopolistic organization in England may be found in Macrosty, J. W., The Trust Movement in British Industry (London, 1907), and in Rees, J. M., Trusts in British Industry (London, 1922). The latter work, which is not carefully done, is based almost entirely upon the series of reports on conditions in different industries prepared by the Standing Committees on Prices and Trusts of the Board of Trade, already alluded to. For the development of combinations in France no work of general scope is available, though interesting descriptions and comment upon certain pools and corners will be found in Rousiers, P. de, Les Syndicats Industriels de Producteurs (Paris, 1912), and in Dolleans, Edouard, De L’Accaparement (Paris, 1902). Neither of these is essentially a compendium of information, however. The former is in its way a classic. After recounting the development of the trust movement in the United States, Germany, and France, the author with true Latin clarity presents his general conclusions, which are not unfavorable to industrial concentration. In a subsequent survey and in a more journalistic manner, the broad problem of industrial concentration is treated by Payen, E., Les Monopoles (Paris, 1920). Incorporated in Part 2 is an instructive sketch of French state, or fiscal, monopolies. The best work upon the concentration of industrial organization in Belgium is by Georges de Leener, L’Organization Syndicale de Chefs d’Industrie (Brussels, 1911). In this scholarly treatise covering the entire trend of modern industrialism toward concentration, over half of the first volume is given to a description of the cartel organization in various Belgian industries. No inclusive review of German experience with industrial monopolies has ever been attempted, but there is available a current month to month account of the operations and policies of cartels in all branches of German industry which provides a fund of information incomparably superior to any secondary sources upon the combination movement in other countries. The Kartell-Rundschau has been published regularly since 1903 under the continuous editorship of Dr. Siegfried Tschierschky. It need hardly be explained that the publication is devoted to the interests of the cartels, from which it derives its chief support.
For the review of the general historical development of monopolistic forms of industrial organization the outstand ing work to consult is that of J. Strieder, Studien zur Geschichte kapitalistischer Organisationsformen (Leipzig, 1914). Hardly less authoritative, but less comprehensive, is the illuminating monograph by Herman Levy, Monopoly and Competition (London, 1911), tracing monopolistic tendencies in English industrial evolution from the sixteenth century, and pointing out in the final chapter some interesting parallels and contrasts between the experience of England and Germany and the United States. Monopolies Past and Present, by J. E. Le Rossignol (New York, 1901) covers much the same field.
Special studies in separate fields treating of American experience are by no means as numerous as the rich prospects revealed by occasional short articles in the economic journals might lead one to expect.1 However, they include the detailed narrative of the History of the Standard Oil Company, by Ida M. Tarbell (1904); the more or less legalistic treatment, emphasizing financial aspects of the organization of The United States Steel Corporation, by Abraham Berglund (New York, 1907); and the judicious and scholarly work of Eliot R. Jones on The Anthracite Coal Combinations (Cambridge, 1914). Not primarily devoted to the study of the trusts within the given industries, but exhibiting clearly some of the causes and consequences of their formation, are: The Tin Plate Industry, by D. E. Dunbar (Boston, 1915); The Wool Industry, by P. T. Cherington (Chicago, 1916); and The American Wool Manufacture, Vol. II, by A. H. Cole (Cambridge, 1926). Without attempting to give a complete list of the intensive studies which have been made of the operations and policies of particular German cartels, we may indicate the wealth and range of this type of economic literature in Germany by reference to some of the more prominent studies of two or three important industries. The coal syndicates, the most conspicuous cartels in Germany, historically, have been the subject of much research as well as much controversy. Francis Walker’s Monopolistic Combinations in the German Coal Industry (New York, 1904) makes available in English a critical account of the early period, while W. Goetzke’s Das Rheinischwestfalische Kohlen Syndikate (Essen, 1904) covers the same ground from a more sympathetic angle. Under the same title Kurt Wiedenfeld (Bonn, 1912) published the results of a later study, which includes an account of the crucial controversy of 1910-11 over the question of “Imperial Participation,” or control, in this leading syndicate. The political controversy over the organization of the coal industry in 1911 was the forerunner of the warm debate during the war and the reconstruction period over the issue of nationalization of syndicated industries. Merely as casual examples of the mass of brochures on this subject which have helped to enliven the German political scene in recent years may be mentioned, Monopolfrage und Arbeiterklasse (4 essays), Wm. Jansson, editor (Berlin, 1917); and, on the opposite side, Für Reform der Industriekartelle (Berlin, 1920), and Das Problem der Staatlichen Kartellaufsichte (Mannheim, 1923), by Siegfried Tschierschky. How this sharpening of the issue and the inauguration of the new government policy of compulsory organization, or Zwangswirtschaft (for a few basic industries), have affected the cartells in the coal industry is shown in Die Zwangssyndikate in Kohlenbergbau, by Walter Thoenes (Jena, 1921). A recent addition to the list of scientific studies of the German coal cartels by an American author, A. H. Stockder, under the misleading title, German Trade Associations (New York, 1924), also reviews this later experience and analyzes the results of the new cartel policy. Special works of some merit treating of the experience with cartels in the potash industry, which was, so to speak, their original home, include: Die Deutsche Kaliindustrie und das Kalisyndikat, by Theodore Stoepel (Halle, 1904); Die Deutsche Kaliindustrie und das Kali Gesetze, by J. Schonemann (Hanover, 1911); Die Finanzierung das Kaliindustrie, by H. A. Giebel (Karlsruhe, 1912); and Das Kali, by Paul Kirche (Stuttgart, 1923). The latter work is partly technical. For the iron and steel industry, selection of but three or four outstanding studies from the considerable number which have appeared, without overlooking the historical significance of earlier researches, is even more difficult. The following, however, may be recommended for the present-day student, in preference to the largely superseded work of Mannstaedt and Zoellner: Beckman’s Der Zusammenschluss in der westdeutschen Grossindustrie (Cologne, 1921); H. Bruhn’s Der Eisenwirtschaftsbund (Jena, 1922); and A. Tross’s Der Aufbau der Eisen-und eisenverarbeitenden Industrie-Konzerne Deutschlands (Berlin, 1923). The latter contains a store of information on the present distribution of control in the industry.
The second main division of our classification of trust literature comprises, in addition to monographs of restricted compass surveying alternative public policies and the treatises still more limited in scope discussing current legal rules, a considerable number of textbooks providing a broad approach to, and usually a generalized “solution” of, the problem of industrial monopoly. To refer to the latter type of works first, it seems best to discuss them in the order of their relative emphasis upon the inductive or deductive method. Perhaps most noteworthy, because of its adherence to concrete facts and its empirical outlook, is J. W. Jenks’s The Trust Problem (New York, 1900). This standard text, after passing through a number of editions, was extensively revised in 1917 and published with W. E. Clark as co-author. It reflects throughout the exceptional opportunities for observation and statistical research of its original author, who was Secretary of the Industrial Commission. The digestive function here scarcely keeps pace with the foraging disposition, however. Business Organization and Combination, by Lewis H. Haney (New York, 1913), likewise is developed inductively, and the distinctive feature of the book is the attempt to connect the growth and special characteristics of monopolistic combinations with peculiarities of the corporate structure and the exigencies of corporation finance. The text by Eliot R. Jones under the title, The Trust Problem in the United States (New York, 1921), is the most comprehensive in scope, cautious in method, and sane in judgment of the general works in this field. Its prevailing conservatism is manifested not only in its substance, but in its form; none of the stock classifications, distinctions, or examples has been omitted. Besides intensive studies of six representative industrial combinations, there is an excellent survey in a short compass of the legal history of “the anti-trust movement.” For the reader who wishes an encyclopedic book of reference on the trust problem, either this text or that by Jenks and Clark should answer the purpose. A simple primer covering the more prominent aspects of the consolidation movement in America is J. F. Crowell’s Trusts and Competition (Chicago, 1915).
Two introductory studies of the trust movement in its initial stages, similar in general viewpoint and style, but different in respect of sharpness of perception and breadth of conception, are: Trusts, by E. L. Von Halle, (New York, 1895), and The Trusts and the Public, by George Gunton, (New York, 1899). These supply essentially journalistic descriptions of events and conditions surrounding the formation of trusts, and an explanation of their causes according to prevalent theories. Both were written from a strongly sympathetic point of view, the former primarily for foreign (German) consumption, the latter as a series of essays in apologetics. This “reporting” angle makes Von Halle’s book lucid and readable, while Gunton’s turn for anecdotes assured a wide audience for his articles. Neither possesses any permanent value as a contribution to the solution of the problem of industrial control. In the same category with these two volumes, except that it is developed from an opposite point of view is: The Plain Facts as to the Trusts and the Tariff, by G. L. Bolen (New York, 1902.)
The same verdict does not hold for E. S. Mead’s Trust Finance (New York, 1903), though it reflects a not unsympathetic attitude toward industrial combinations. The problem is interpreted almost exclusively in terms of the speculative evils of corporate promotion and capitalization. Data are assembled bearing upon fraud and chicanery in trust formation. Notwithstanding its one-sidedness, this text has its value in focusing attention on a sometimes neglected factor in the trust movement.
One of the earliest attempts at a circumspect analysis of the many phases of the monopoly problem is R. T. Ely’s Monopolies and Trusts (New York, 1900; ibid., 1906). In this pioneer work Professor Ely provided a sound background for more intensive studies of particular issues of social policy to which the growth of industrial monopolies has given rise. The historical perspective, the comparison and classification of different types of monopolistic organization, and the scientific method of approach distinguish this early classic. Of a not dissimilar stamp is J. B. Clark’s The Control of Trusts (New York, 1901), republished in 1912 with J. M. Clark as co-author. This excellent little text presents a closely reasoned analysis of the economic tendencies and legal situation responsible for the growth of trusts, and of the economic tendencies and legal reforms for which the growth of trusts is responsible. The clear statement of the limitations of competition, its advantages, and its necessary safeguards still bears critical examination, and for the reader who does not care for a more detailed treatment of the basic issues in public policy toward industrial organization this book should prove not only serviceable, but stimulating. A conservative, sane, and judicious book is E. D. Durand’s The Trust Problem (Cambridge, 1915).
For a concise and readable account of the socialist interpretation of the tendency toward industrial concentration, Herman Cahn’s Capital Today (New York, 1918) may be recommended. But the interested reader with two hours of spare time will not forego the opportunity to judge for himself the validity of the familiar predictions made by Karl Marx in Part VII of the first volume of his Das Kapital (Hamburg, 1885), American edition (Chicago, 1907), concerning the course of development of ever more inclusive forms of control in capitalistic industry.
Of foreign literature of the general type of the foregoing, it must suffice merely to mention a few outstanding works. The English contributions are meager, in any case. They include: D. H. MacGregor, Industrial Combination (London, 1906) (a deductive analysis, the abstract terms of which permit suggestive references and applications to trade unions and cooperative societies, as well as to different types of capitalistic groupings); G. R. Carter, Tendency Towards Industrial Combination (London, 1913) (a less scholarly but more pointed criticism of the consolidation movement); John Hilton, A Study of Trade Organizations and Combinations in the United Kingdom (London, 1919) (prepared for the Committee on Trusts of the Ministry of Reconstruction). Of the German treatises surveying and criticizing public policy toward industrial monopoly there must be mentioned before the many others Professor R. L. Liefmann’s Kartelle und Trusts (Stuttgart, 1910). This popular treatise has recently been revised and enlarged to cover post-war experience. It provides a useful classification of capitalistic unions, and an instructive analysis of the relation of the several forms to the special characteristics of different industries. In discussing the causes of the formation of capitalistic combinations and their consequences for the primary economic classes, stress is laid upon the tendencies to excess in free competition, on the one hand, and upon the efficacy of potential competition, on the other. This attitude is common among the majority of the German writers, and no doubt reflects in part the leniency of the established legal policy toward trade combinations. But the chief fault of the analysis is the failure to distinguish between the influence of prospective economies and of monopolistic opportunities in fostering industrial amalgamations. This failing, again, is shared by numerous German writers, who exhibit quite generally a certain disregard of the interests of consumers. Professor Liefmann’s article on Kartelle, in the Handwörterbuch der Staatswissenschaften, 4th ed., Vol. V (Jena, 1923), provides a useful short survey of the subject, together with a fairly full bibliography of the German literature. Other significant German treatises, illustrating in varying degrees the characteristics that have just been noted are: H. Mannstaedt, Ursachen und Ziele des Zusammenschlusses in Gewerbe (Jena, 1916); von Beckerath, Kräfte, Ziele und Gestaltungen in der Deutschen Industriewirtschaft (Jena, 1921); and R. Isay, Studien im privaten und öffentlichen Kartellrecht (Mannheim, 1922). The latter is more than the mere legal treatise its title might suggest.
Less concerned with the formulation of an ultimately and abstractly sound policy, and treating more particularly of the scope, meaning, and significance of actual public policy are a number of critical works written from the legal point of view, but not intended exclusively for a professional audience. Foremost among the monographs of this type stands Bruce Wyman’s The Control of the Market (Boston, 1911). Here is the most instructive and suggestive treatment within two covers of the legal doctrines developed in the common law for the regulation of trade and industry. There is also a searching criticism of the course of judicial interpretation of the Sherman Act. Incisive in analysis, circumspect in judgment, charming in style, this is a classic which no discerning reader can lay down without a regret that its scope should not have been broader.
Even narrower in compass, as is indicated by its title, is ex-President (now Chief Justice) Taft’s The Anti-Trust Act and the Supreme Court (New York, 1914). This little book might almost be described as a tract, for it was written in defense of its author’s record in the enforcement of the Sherman Act, as well as of the policy which that Act embodies. But it evinces a ripe familiarity with every step in the evolution of federal regulation of trade relations, a process in which the author as a judge has borne a distinguished part, bringing to the interpretation of the law both erudition and insight.
Business Competition and the Law, by G. H. Montague (New York, 1917), has more of an instructive purpose, and is therefore less critical. This collected series of articles is little more than a handbook for use in steering business men clear of the meshes of the anti-trust laws. An earlier exposition of the legal doctrines which govern industrial organization and commercial methods, and one written with a better grasp of the significance of their historical origin and development is T. C. Spelling’s Trusts and Monopolies (Boston, 1893). But for a purely legal compendium the reader will do better to refer to W. W. Thornton’s A Treatise on the Sherman Anti-Trust Act (Cincinnati, 1913), and to the encyclopaedic Trust Laws and Unfair Competition (United States Bureau of Corporations, Washington, 1916). Perhaps the most satisfactory treatment of the general law upon trade combinations, however, is A. M. Kales’s Contracts and Combinations in Restraint of Trade (Chicago, 1918). Here the traditional legal doctrines are expounded with rare force and insight.
More academic in tone than any of the foregoing, but exhibiting nevertheless a tenacious adherence to concreteness in method, is The Policy of the United States towards Industrial Monopoly, by O. W. Knauth (New York, 1914). The discussion of the development of the federal law upon trade regulation and the attitude of successive administrations toward its enforcement is characterized by sobriety of judgment and statement. The conflicts of opinion provoked by the anti-trust law and its interpretation are also carefully reviewed. The reader with a bent for historical inquiry will find an inviting problem presented respecting the origin of the Sherman Act, by a comparison of the Autobiography of George F. Hoar (New York, 1903), and the History of the Sherman Law, by A. H. Walker (New York, 1910).
The legal policies prevailing in foreign countries are so divergent that it is impracticable here to refer to works treating of the special features of each of these distinctive systems. One exception must be made, however. Not only because it has to do primarily with the legal principles governing industrial organization and trade relations in Australia, where the Government’s policy has been modeled on the American anti-trust policy, but also because of its own special qualities, mention must be made of W. Jethro Brown’s Prevention and Control of Monopoly (London, 1914). The author of this book is a distinguished jurist and an independent and clear-headed thinker. The book is an important contribution to the understanding of any anti-trust policy established upon common-law traditions.
In surveying the third principal division of the literature upon trusts or industrial monopolies, it is necessary to restrict attention to such works upon economic theory as deal primarily with the problem of monopoly. There is, of course, in most of the systematic treatises upon economic science some discussion of the nature and effects of monopoly. But as the antithesis of that perfect competition which is the foundation stone upon which the structure of classical economic theory has been reared, monopoly has, as a rule, come in for but scanty analysis in these texts. For example, in J. B. Clark’s The Distribution of Wealth (New York, 1900), there are but two casual references to monopoly, and one of these is in a footnote. Even Mill in the theoretical part of his Principles of Political Economy (5th edition, New York, 1894) devotes but a single page to the explanation of the determination of monopoly price and another page to the discussion of the influence of monopoly upon distribution. At best, in most of the well-known economics texts no more than one chapter is given to the treatment of monopoly problems, and that is usually limited to an exposition of the principle of monopoly value.
It is to the mathematical economists that one must go to collect the fragments of a comprehensive theory of value and distribution under monopolistic conditions.2 The mathematical method appears to lend itself readily to the analysis of market processes under the assumption of artificial manipulation. At any rate, the most significant contributions to this branch of economic theory have come from the mathematical school. The pioneer work of A. A. Cournot, Recherches sur les Principes Mathématiques de la Théorie des Richesses, first published in 1838 and translated for the “Economic Classics” series in 1897, remains an excellent introduction to the study of monopoly value. The employment of the methods of calculus brought a new technique into economic science, and by the device of superimposing demand and supply curves upon a single graph, Cournot opened the gateway to a fruitful field of scientific exploration. But he was not content with pointing the way, and except from the historical point of view these contributions are not what make the study of the Recherches most worth while to the present-day student.
Cournot employed his rigid mathematical methods in a lucid exposition of the effects of monopoly, under varying conditions as to costs, upon prices. He also analyzed, but not with so full a measure of success, the tendencies set up by partial monopoly, or limited competition,— an aspect of the general problem peculiarly significant for one interested in trusts and industrial combinations.3
Not all the mathematical economists have followed Cournot’s lead in setting out to construct a complete theory of value by proceeding from conditions of monopoly and working toward the purely competitive market by a gradual modification of hypotheses. The Lausanne school, so-called, developed the theory of exchanges, after the classical manner, under assumptions of free competition; but this approach has not prevented them from making some acute observations regarding the effects upon economic equilibria of monopolistic influences. Leon Walras, the founder of this group, in his Éléments d’Économie Politique Pure (Lausanne, 1889), developed the theory of general economic equilibrium. The study of monopoly has also been significantly advanced by Professor Pareto, the successor of Professor Walras, in his systematic treatises, Cours d’Économie politique (Lausanne, 1897), and Manuel d’Economie politique, (Paris, 1909). For a clear summary and a just appreciation of the contributions of the Lausanne school to economic theory, one should consult E. Antonelli, Principes d’Économie pure (Paris, 1914). A more critical review of the work of this school, as well as of the mathematical method in economics in general, will be found in W. E. Zawadski, Les Mathématiques appliquées à l’Économie politique (Paris, 1914). Outside of the Lausanne school, which is more than half French itself, the leading French representative of the mathematical method has been Professor E. Colson, and his comprehensive Cours d’Économie politique, in six volumes (Paris, 1901-07), will be found to contain some of the most precise and ingenious demonstrations of the consequences of monopolistic price-making under varying conditions. In particular Volume I, pp. 141-201, and Volume VI, pp. 11- 54, may be recommended.
Probably, however, the most searching analyses of the problems surrounding monopolistic price determination, including its relation to wealth distribution and social welfare, in the last two generations have been made by English mathematical economists. The work of two of the three most prominent of these contributors to an economic theory of monopoly is well summed up in their books, but the contributions of the third found expression almost exclusively in journal articles. Professor Edgeworth’s prefatory Mathematical Physics (London, 1881) called attention to the interesting possibilities in an economic analysis of the operation of combinations in various spheres: the determinateness of the transactions in which they participated, the significance of the reduction in the number of exchange relationships, and the advantages and limitations of concert of action in the market. These questions and similar ones have been minutely examined in subsequent writings, more especially with reference to ordinary commercial transactions in a series of three articles on La Teoria Pura del Monopolio in the Giornali degli Economisti, 1897 (Volume XV, 2d Series, pp. 13, 307, 405), and with reference to the particular case of diminishing cost industries and the attendant power of discrimination, in Contributions to the Theory of Railway Rates, four articles in the Economic Journal (1911-13, Volume XXI, p. 346, p. 55; Volume XXII, p. 198; Volume XXIII, p. 206). It is fortunate that these and other scattered papers of Professor Edgeworth have now been brought together and the articles on the “Pure Theory of Monopoly” retranslated into English. In his complete economic writings, Papers Relating to Political Economy (London, 1925), the articles referred to above will be found, respectively, in Volume I, pp. 111-42, and in the same volume, pp. 61-99 and pp. 172- 91.
The second of the triumvirate referred to has accomplished, better perhaps than any of the other mathematical economists, the difficult task of interpreting clearly and untechnically the results and significance of analyses that necessarily involved types of reasoning that are essentially mathematical. Alfred Marshall, in his Principles of Economics (8th edition, New York, 1920), has done far more than to interpret the contributions of other minds, however, and not less than elsewhere in the sections dealing with monopoly and its incidents. The fifth Book of his Principles, Chapters 8, 9, 12, 13, and 14, cannot be overlooked by any student desiring the minimum essentials of an acquaintance with the literature of trusts and monopolies. The scrupulous faithfulness of the late dean of English-speaking economists in adhering to the rigid premises of his argument when treating of the theoretical implications of monopoly, no less than in other parts of his work, combined with his extraordinary grasp of the limitations of those premises and their relation to the complexities of actual affairs, enabled him to penetrate many obscure compartments and fissures in the economic structure without losing his way. And the reader, if he watches all the sign-posts, can follow him without difficulty. In particular, Marshall explains the relation of various cost tendencies to the development of monopoly, and studies the effects upon the general welfare of the operation of monopoly under varying conditions, natural and imposed.
Finally, the successor of Professor Marshall, both academically and professionally, Professor A. C. Pigou, has given us, in The Economics of Welfare (2d ed., London, 1924), the best all-around account anywhere obtainable of the economic significance of monopoly and of the feasibility of the different means of its regulation in the public interest. The present writer’s indebtedness to this source and to Professor Pigou’s previous volume, Wealth and Welfare (London, 1912), which may be taken as a preliminary edition of The Economics of Welfare, is so patent in the sixth chapter of this monograph that it will not need more than formal acknowledgment here. The relationship is cited here mainly that the reader may gauge better the importance attached to Professor Pigou’s notable achievements in this branch of economic theory.
A compact but rather difficult mathematical summary of some of the more important results reached by Edgeworth, Marshall, Pigou, Pareto, and others is given by Professor A. L. Bowley in his Mathematical Groundwork of Economics (Oxford, 1924).
The contributions of American economists in this difficult field of economic analysis have not been especially conspicuous. For a cautious but very elementary treatment of the problem of monopoly value, the student will find helpful the exposition of the authors of Outlines of Economics, R. T. Ely and associates (New York, revised edition, 1920).
At the moment of going to press, there has just appeared an important series of monographs on cartels and combines, prepared under the direction of the Economic and Financial Section of the League of Nations (Geneva, 1927) for submission to the International Economic Conference of May, 1927. Only the briefest mention of these documents is possible in the circumstances. The one presenting the most acute analysis and the most realistic interpretation of the movement toward comprehensive industrial control is Professor Kurt Wiedenfeld’s Cartels and Combines. A healthy skepticism is evinced by Professor D. H. MacGregor in his very brief treatment of International Cartels. Professor Gustav Cassel takes advantage of the opportunity in a tract upon Recent Monopolistic Tendencies in Industry and Trade, not only to point out the similarities between trade unions and business confederations and amalgamations, but also to exhibit a personal bias, as it appears, by magnifying the economic evils set in train by the former and minimizing even the potentialities of abuse in the latter. The thesis taken by Professor Paul de Rousiers in his Cartels and Trusts and Their Development is that “Industrial agreements between producers are the outcome of economic necessity, bound up with existing conditions of production and distribution.” But as the author does not himself maintain this standpoint throughout the essay, his readers are not likely to be convinced. Still less convincing are a number of the other papers in which logic has been thrown overboard altogether and dissimulation given the job of pilot. These need not be cited. It is enough to note that under the euphemistic slogan of “Economic Rationalization,” which to some means a prudent direction of affairs and to others rationing, or plain division of the spoils, a movement is under way in Europe to smooth the way for supernational industrial control. In some cases this might mean the extension of monopolistic influences over wider spheres, but more frequently probably only the entrenchment of existing privileges within particular national spheres. Several of the documents under review appear to have been designed to lend impetus to this movement.
Notes
Image Source: National Archives and Records Administration. United States, Selective Service System. Selective Service Registration Cards, World War II: Fourth Registration. Records of the Selective Service System, Record Group Number 147. World War II Draft Cards (Fourth Registration) for the State of Maryland. State Headquarters ca. 1942. NARA Publication: M1939. NAI: 563727. The National Archives at St. Louis, Missouri. U.S.A.
