Two Classes Of Incomplete Monopolies

Now these Incomplete or Partial Monopolies may be divided into two classes: those of a private and those of a semi-public character; but they all have this characteristic, that it is only one of their limbs, as it were, on which they can march with safety, the other being shaky and insecure. In semi-public monopolies, as we shall see in the next chapter, some have their selling prices guaranteed to them, but not the cost price or the number of their customers; others have both a given number of customers and a given price, but not the cost; and others again, although guaranteed against competition, have no guarantee for their " turnover" or sales. In private incomplete monopolies, on the other hand, it is the buying or cost leg that is reliable and steady, owing to the possession of natural advantages of production which keep down competition; while the selling one, unless protected by tariff, is weak and insecure, owing to the difficulty of controlling prices in the face of foreign competition, or of controlling sales in the face of alternative substitutes.

Importance Of Monopolies Controlling The Selling End. Monopolies Exercise Drastic Action With Rivals

In this connection it is perhaps interesting to note that no man was more alive to the necessity of controlling the selling as well as the buying end of a commodity, if a monopoly were to be secured, than the late Mr. Rogers of the Standard Oil Trust. In one of his numerous altercations with Mr. Lawson, as recorded in Frenzied Finance, he insisted that economists must be taught the lesson that it was essential to a complete monopoly that it should be able to control its sale end as well as its supply end or cost; that it should not only have full control over the raw material and its various processes of manufacture (either by owning them or being able to put sufficient pressure on those who did), but have full control over all the agents and intermediaries engaged in its sale. It was a question of the sale of copper, if I remember rightly, and Mr. Rogers proposed that sufficient pressure should be put on some rival selling agents with the view of crushing them and driving them from the field if in their sales of copper they should refuse to hold up their prices to the level which he dictated. To Mr. Lawson, himself a great operator, all this seemed to come as a revelation - if one may judge from the ecstasies of admiration into which, in his recital and commentary on the affair, he fell over the genius of Mr. Rogers - but I could not help feeling that it must have been the old Academical Economists whom Mr. Rogers had in his eye when he uttered his gibe; for precisely the same principle was involved in every doctrine of the New Economy which I had embodied.in my Wheel of Wealth.

Stock Rank Of Incomplete Monopolies

Now, it is to be observed that in all these incomplete monopolies, where either the buying or the selling end is so unstable that the two cannot be brought together and adjusted so as to form that closed circuit at which Mr. Rogers aimed, no definite rank can be assigned to the particular stock in the hierarchy of stocks at once stable and safe, but each must "hang by its own head,' as it were, and stand on its own particular merits alone. To get at the rank of each, we have to look not only for its positive merits, but for the special risks to which it is liable. Some positive merits, one would think, all monopolies, complete or incomplete, must have, or they could not have got the start which has given them their supremacy; but, strangely enough, inherent merits are more likely to be found in incomplete monopolies than in practically complete ones where both ends are controlled, like Standard Oil; inasmuch as the stock-in-trade of the latter being imposed by compulsion and not by preference, may, like dirty water to those dying of thirst, or dough pills to those hypnotised by reports of cures, have little or no positive superiority at all.

How To Ascertain The Natural Status Of Incomplete Monopolies

To determine the natural status of an Incomplete Monopoly, practically the question we have to ask of it on its positive side is: To what extent has it merit or superiority enough to exclude competition wholly or in part; and to what extent could it absorb all its competitors into a combine or trust? This answered, we have next to turn it over on its reverse or negative side, and ask : To what special risks, other than competition, is it liable in itself?