212 THE AMERICAN JOURNAL OF SOCIOLOGY
is their monopolistic power, enabling them arbitrarily to raise the prices of the finished product, or depress prices of the raw material, in either case exacting or obtaining an increased margin of profit. What is the cause of this monopolistic power ? Does mere mass of capital produce it ? What do the authorities say? Professor J. B. Clark, in The Control of Trusts, 1 says: "Great corporations would never be monopolies if competition were not abnormally fettered." Professor R. T. Ely, in Monopolies and Trusts, 2 says: "No one has yet adduced an instance of an important monopoly based upon mere mass of capital, or upon mere combination without external aid." And again, 3 he says one must "fail to discover any approximation whatever toward a proportion between mass of capital and the extent to which monopoly obtains, or the progress made in the direction of monopoly." The committee appointed to revise the Massachusetts corporation laws, reporting in January, 1903, of which F. J. Stimson, the legal adviser to the Industrial Comis- sion was a member, says in its report :
Moreover, it is apprehended that the question of monopoly, or rather the abuse of large corporations, does not result necessarily from the size of the
corporations engaged in business throughout the United States In
the opinion of the committee, the question of capitalization is not a contribut- ing factor in the fight for monopoly.
Why is it, then, that the possession of vast aggregations of capital cannot give true monopoly power? So long as wealth exists throughout the community, just so long can capital be amassed to compete with other units of amassed capital. This possibility of creating competing units of capital is known as "potential" competition, and its effect, when not abnormally fettered, in restraining monopoly, is of no small value. But it is said that the combinations do "abnormally fetter" competi- tion. The only way any combination can unduly fetter competi- tion is by practicing what is known as "local rate-cutting;" that is, whenever a competitor springs into existence, the com- bination will sell in that community below cost and drive him to the wall. But this practice can be successfully carried on
X P. 12. "P. 174. sp. i 77 . 4p. 23.
