ion of
outsiders on equal terms is prohibited. Where the combination of large
capital and capable administration is indispensable to the possibility
of success in a rival producer, the power of a monopoly is stronger
than where a small capital can produce upon fairly equal terms and
compete. If the monopoly is linked with close personal qualities and
with special opportunities of knowledge, as in banking, it is most
difficult for outside capital to effectively compete.

Sec. 8. These considerations show that the power of a Trust or other
monopoly over prices is determined by a number of intricate forces
which react upon one another with varying degrees of pressure,
according as the quantity of supply is increased or diminished. But a
Trust is always able to charge prices in excess of competitive prices,
and it is generally its interest to do so. It will commonly be to the
interest of a Trust or other monopoly to maintain a lower scale of
prices in those commodities which are luxuries or satisfy some less
urgent and more capricious taste, and to maintain high prices where
the article of monopoly is a common comfort or a prime necessary of
life for which there is no easily available substitute.

FOOTNOTES:

[138] S.C.T. Dodd, _The Forum_, May 1892.

[139] "Trusts in the United States," _Economic Journal_, p. 86.

[140] Baker, _Monopolies and the People_, p. 85.

[141] Cf. Chapter ix.

[142] Mr. George Gunton, in writing upon "The Economic Aspect of
Trusts" (_Political Science Quarterly_, Sept. 1888), claims a rise in
wages as one of the advantages of Trusts, but Mr. Gunton throughout
his argument assumes that a Trust is a large competing capital and not
a monopoly. If a Trust were a competing capital its formation would be
an economic and social advantage, tending, as he says, "to increase
production, to lower prices, and to raise wages." But as a Trust is
not a competing capital it does none of these things.

[143] J.W. Jenks, "Trusts in the United States," _Economic Journal_,
vol. ii. p. 80.

[144] H.D. Lloyd, Essay on "Trusts," reprinted in _Boston Daily
Traveller_ (June 16, 1893).

[145] G. Gunton, _Political Science Quarterly_, Sept. 1888. This
statement, however, appears in contradiction to the "Report of the
Committee on Investigations relative to Trusts in the State of New
York," p. 12.

CHAPTER VII.

MACHINERY AND INDUSTRIAL DEPRESSION.

Sec. 1. _The external phenomena of Trade Depress